This was posted on another thread, but was suggested that it might do well to be a fanpost. So, here are tenets of the proposed ordinance that would provide an agreement between Chris Hansen's WSA Properties, III, LLC subsidiary Horton Street LLC and the City of Seattle to lease and operate KeyArena.

These are notes taken from the joint meeting of the Government Performance & Finance Committee and the Libraries, Utilities, & Center Committee of the Seattle City Council held on the morning of May 1, 2013.

Key Discussion Points

• Hansen still fully committed
• City wants to be well positioned if Hansen successful
• Contingent on NBA approving relocation of a team to Seattle
  • Bagshaw mentions the recommendation and is confused as to why this is being presented if the NBA voted against relocation.
  • Budget Office guy explains that this was only a recommendation and that there is still a vote to happen.
• Burgess explains this is about getting ready if a team is awarded
• Godden asks about I-91
• Conlin concerned about options for KeyArena if a team isn't secured and agreement is on hold
• Clark explains that this is merely exploratory now and there is no vote on the agreement (Bagshaw was somehow still lost.)
• Godden asks if run by city attorneys and if they feel comfortable with the I-91 compliance.
  • Budget Office won't speak for attorneys but stresses that they have been involved all along the way of creating this agreement
• Licata says it sounds good; asks about the once-discussed $30-$50M renovation costs
  • Renovation costs not factored in this agreement; discussion for life of KeyArena after this agreement is done
• Licata says great for short term but another agreement would have to be made for long-term improvements
  • Seattle Center head stresses this agreement is strictly about short term use of KeyArena for an NBA team
• Agreement will not be signed if there is no team coming to Seattle

Terms

• Length of agreement in ordinance is 2 years
  • Starts July 1, 2025 and expires June 30, 2025
• Possibility of 1 year extension
• Only good right now if team is coming in the fall. Timeline would need to be amended if team procurement is dragged out.

Staffing & Employees

• City employees would continue to staff all KeyArena events
  • ArenaCo would reimburse city all expenses for employees working events
• ArenaCo will fulfill all CBAs between city and KeyArena/Seattle Center
• ArenaCo will retain an experienced arena manager or contract a third party manager
  • City has right to conduct due diligence on third party option

Use Fees

• Minimum $2M on use and patron fees collected by city annually
  • $1.5M Annual Use fee
  • min $500K Patron fee
  • • $1 ea for any non-NBA, non-Storm, non-city event for tickets $25 or lower; $2 ea for tickets $25+
• Additional $750K if NHL team plays at KeyArena

Capital Improvements

• ArenaCo invests min of $3M in upgrades
  • Seating upgrades
  • TV broadcast infrastructure
  • AV equipment
  • Improvements to suites
  • Improvements to locker facilities
• Will have a separate construction agreement with Seattle Center with specifics of the upgrades
  • Ordinance cannot be approved until construction agreement is completed
• When installation of improvements occurs:
  • city and ArenaCo will negotiate which improvements will remain at the end of the agreement
  • Minimum of $3M of improvements will remain for the future
  • Improvements expected to be more than $3M but $3m is minimum
• When approved ArenaCo will have to get their own permits and would have to work around existing events that are being held at the Center and KeyArena
• Americans with Disabilities Act (ADA) Improvements
  • City responsible for complying with ADA structural improvements
  • ArenaCo responsible for non-structural ADA improvements

ArenaCo Rights & Responsibilities

• ArenaCo assumes all responsibilities and operations of KeyArena
  • Includes concessions, ticketing, advertising, event scheduling
• Assumes all existing agreements
  • can terminate agreements but not those that involve other Seattle Center facilities unless KeyArena can be terminated separately
• Right to rename arena
• Right to retain all revenues obtained at KeyArena
• Responsibility for paying all the direct operating expenses
• Have to honor all of the scheduled event agreements

City Rights & Responsibilities

• City responsible for maintaining KeyArena "bones"
  • the building shell, roof, walls, rafters, etc.
• City cap improvement responsibilities consistent with what is spelled out in the Seattle Center cap improvement plan
• City would provide routine maintenance and repair
  • reimbursed by ArenaCo for expenses
• Responsible for general 24-hour building security
• Provide ArenaCo with 500 parking permits in 1st Ave garage for NBA and related events
  • Standard agreement with tenants, including the Storm
• City will have right to continue to use KeyArena for Bumbershoot events free of charge

I-91 question

• Last 5 years of net revenue
  • Losing about $1.2M in 2009, generating up to $630K in 2012
• Current projections – net $700K for FY2013
  • Does not include capital costs, CIP funds outside of that
  • • remaining settlement funds will go to funding capital improvements
• Agreement with ArenaCo guarantees $2M in net rev, almost triples net rev as base
• Expected growth of work, supplying more net rev
• City employees get more work, operating expenses covered, more for cap improvements
• Difficult to put in context of I-91 because of the vagueness of law and interpretation
  • Specifics can come later with more research
• High-level overview: City is guaranteed $2M net rev on top of whatever reimbursements ArenaCo pays to cover costs
  • Staff costs and day-to-day maintenance
• Minimum of $2M of SoDo Arena taxes set aside for future of KeyArena (Not clear if this is per year or not.)
• Assorted taxes at KeyArena still go to city (some might figure in the new arena deal)

What happens if there is no team

• Continue on the same course that the Center has been operating with
  • Went from 170+ events in 2007 to 84 in 2009
  • Brought in AEG and devised a 5 year plan to turn things around
  • • 130+ events scheduled in 2013
• Sponsorship money is affected by new arena talk
• Waiting to hear from Godden's group on future of KeyArena
• Currently booking events (working with ArenaCo), holding dates for NBA but booking dates just in case
  • Not losing opportunities right now because of potential of NBA games

Staff impact

• Applauded at presentation of agreement terms
• Surprised and happy they would be keeping jobs and there would a return of revenue to the city

If NBA team comes, what happens to ancillary stuff at Center (parking, etc.)

• Center would get those revenues to pay off existing Center loans

Naming Rights question

• ArenaCo can only sell naming rights for term of lease, must take name with them when they leave
  • but Center can come into negotiation should a long term rights agreement prove beneficial and keep name

Again, this was not voted upon by the committees and will not be presented to the full City Council until a team is secured. If it is 6 months before a team is available, terms and numbers used will likely remain the same. If it is years before a team is available, terms will have to be renegotiated, using this non-enacted ordinance as a framework.