What to expect next in the SoDo arena process

With the release last week of the timeline of the street vacation vote for the Seattle Arena project, and a post by investor Chris Hansen's Sonics Arena outlet about the lengthy process to get us to this point that echoes our own post from last November, we're left with a significant question: What's next for the SoDo arena?

If there's no team, how does the arena happen? If the MOU ends in October 2017, do we have enough time to do anything or are we pretty much SOL? Are there enough GIFs in the world to express the plethora of thoughts and feelings that surround this whole protracted process?

We'll take you through a clear and concise breakdown of the next steps of the arena process moving forward. We avoid getting too far into the weeds on this, but there is a little length here. Grab some coffee or your favorite brew or spirit and dive on in.

DISCLAIMER: This is based on the standard available process. Anything is subject to change per the law and the parties involved.

The plans for the proposed Seattle Arena require a two-block vacation of publicly owned street right-of-way on Occidental Avenue S in the SoDo district. The city would cede this portion of the street in exchange for other benefits to the public, including repavements of S Massachusetts and S Holgate streets; traffic light and sidewalk improvements along 1st Ave S; a publicly available plaza/park space; public art investment; a pedestrian bridge across the train tracks along Holgate; and the $40 million transportation infrastructure improvement fund for SoDo amongst other things.

With the financial framework of the public financing portion of the project, which could be up to $200 million with the acquisitions of both NBA and NHL teams, the city would take ownership of the land and arena, as well. In essence, the street vacation would be for eventual city-owned property.

A quick look at the process for a street vacation, per the Seattle Department of Transportation:

Pre-Petition - Potential petitioners for a street vacation meet with SDOT team members to determine if a petition would meet with the city's vacation policies.

Petition - Submission of a petition for street vacation and an administrative fee.

Review and Issue Identification - Various agencies, businesses, and community groups are sent the petition for review and to identify any issues with the proposal. Two key groups, the Seattle Design Commission and the local Design Review Board -- in this case, Downtown, determine the urban merits of the project that needs the vacation, as well as the benefits the public will receive in giving up the street right-of-way.

SDOT Recommendation - SDOT reviews all information presented by these agencies and groups, including the official recommendations of the SDC and the DRB, prepares an analysis, and presents a recommendation to the Sustainability & Transportation Committee of the city council.

Public Hearing - The S&T committee will hold a public hearing to take all comments in support or opposition of the proposed street vacation. Notice of the hearing must be posted at least 28 days prior. The committee will consider all information presented and either fully accept SDOT's recommendation or alter the conditions, mitigation, or public benefit proposal for the vacation. They then forward this to the full city council for consideration.

Final Ordinance - There are two parts to final street vacation approval: a conditional approval where the petitioner can work on the project to meet the conditions set by the council; and a final payment of all fees and council acceptance of conditions met to make the vacation official.

A typical street vacation can take between 8-10 months, depending on the required environmental and agency reviews. As the arena project required an environmental impact statement (EIS), the length of time for this vacation process has been significantly longer.

Timeline

February 3, 2016 - Petition for the Occidental Ave S street vacation filed with the City Clerk's office (CF 312905) and placed with the Sustainability & Transportation Committee.

February 8, 2016 - Resolution 31650 to place street vacation public hearing on the council calendar passed 8-0. (CM Tim Burgess was absent from the full council meeting.)

March 15, 2016 - City Hall, Council Chamber, 5:30pm.
Public hearing on proposed street vacation.

April 5, 2016 - City Hall, Council Chamber, 2:00pm.
S&T committee meeting to review street vacation proposal and public comments, and to contemplate filing legislative bill with City Clerk's office for full council consideration. Open to the public for further comments at start of meeting.

April 19, 2016 - City Hall, Council Chamber, 2:00pm.
Second S&T committee meeting to review street vacation proposal and review public comments. Vote to file bill and move out of committee to full council expected. Open to the public for further comments at start of meeting.

April 25, 2016 - City Hall, Council Chamber, 2:00pm.
Earliest full council could review bill in open session and vote. Open to the public for further comments.

If approved, the street vacation is good for a five (5) year period. Quarterly updates to SDOT are required. Expectation is that a project begin within 18 months of council approval. If a project hasn't made use of the vacation in five years, an extension request can be filed.

A master use permit is an umbrella land use permit necessary when a project is complex and requires multiple permits. The Seattle Arena group, WSA Properties III, LLC, filed for a master use permit (MUP) on April 30, 2013. Review for the MUP has gone on since that time.

The final step necessary for the newly rechristened Seattle Department of Construction and Inspections (formerly the Department of Planning & Development) to make and issue a decision on the MUP request is the street vacation approval. An MUP may be issued based on the conditional approval rather than having to wait for the final ordinance. This allows DCI to issue its MUP decision at any time after the conditional approval. There is no set time.

A quick look at the MUP process:

Research - Applicant must and should research information on intended project site, including zoning, permit history, and environmental issues.

Permit Application - A preliminary application is submitted to get a project number. A pre-application site visit (PASV) is done to discuss site conditions. Project exemptions based on location and environment are filed. Then, a permit application is filed.

Public Notice - There are five types of MUP. The arena project requires a Type II MUP, which in turn requires a public notification. Notice of a proposed project is posted and the public may comment on it.

Review, Decision, and Appeal - DCI will review all information gathered about the project, including an EIS, the street vacation approval, public comments, and recommendations from the Design Commission and Design Review Board. They will make a decision based on that review and publicly issue that decision. At that point, the appeal process can begin.

Once issued, the MUP is good for a three (3) year period. An extension for two or three years can be requested depending on facts of the situation. An MUP must be issued before building, demolition, or other permits are approved.

Based on SEPA law and city municipal code, once a decision on the MUP is made, appeals can be filed. If the MUP is denied, the arena group can file an appeal for reconsideration. If the MUP is approved, the arena opposition has their first opening in the process to appeal the project.

Back in October 2012, about a week after the MOU was signed into effect, the International Longshore and Warehouse Union Local 19 filed a lawsuit against the agreement. That lawsuit was dismissed in February 2013 as being "premature," that the MOU itself was not an administrative action taken in violation of SEPA law, as the ILWU contended, but a necessary blueprint to explore administrative action. That dismissal was appealed, but the state Court of Appeals upheld the decision in September 2013.

A second lawsuit, brought by citizens claiming the financial framework negotiated in the MOU violated the infamous Initiative 91 that prevents public subsidizing of sports facilities in the city of Seattle, was filed in January 2013 and similarly dismissed in April 2013.

Appeals of the MUP take on two forms or two steps. The first form/step is an administrative appeal. As the MUP is a Type II, administrative appeals are allowed and are filed with the City Hearing Examiner.

With SEPA, a procedural administrative appeal can be made on the basis of the adequacy of a threshold determination that a project requires an EIS or not, or on the adequacy of the EIS itself. The arena FEIS is expected to be a point of contention for appeal by the opposition, claiming that the number of alternative locations reviewed was not enough and that the traffic and freight mobility analysis was insufficient. Also, the fact that it was classified as a "private" project rather than a "public" project for SEPA review is sure to be a major sticking point. The legal requirements for each are different, though the city and county amended the review requirements to mirror a public project on the locations reviewed per the MOU. A substantive administrative appeal would claim that the MUP decision was made without following SEPA law.

With the municipal code, an administrative appeal would be on the grounds that the decision process did not follow city law.

City law requires that appeals to the Hearing Examiner be handled expeditiously, and that "all parties shall make every effort to avoid delay" at every step along the process. The window to file for an administrative appeal is two weeks from the public issuance of the MUP.

If addressing the appeal on the basis of SEPA law, only one administrative appeal can be filed. If it is denied, no further administrative appeals are available. Per SEPA, "the limitation on appeals restricts the practice of filing one appeal after another to delay a proposal." If addressing appeal on the basis of municipal code, multiple administrative appeals can be filed.

Once the administrative appeal process is exhausted, then the lawsuits can begin. Judicial appeal is the second form/step. As seen with similar projects, like the Washington State Major League Baseball Stadium (now Safeco Field) and Seahawks Stadium (now CenturyLink Field), the projects can begin while lawsuits are addressed in the courts.

Please keep in mind that we are not lawyers. If any lawyers out there with knowledge and experience with SEPA and/or city law have more to add or a different read on things, by all means let us know.

With a street vacation granted and an MUP in hand, WSA Properties III ("ArenaCo") can actually begin construction of the arena at any time they want.

What's that, you say? I thought they needed to get an NBA team first, you exclaim.

Here's a point that needs to be made clear. As Chris Hansen and his arena investment group own the land that will be used for the arena, with a street vacation and MUP (and various other permits they can then get), the land would be theirs to do with as they please. They are not beholden to anything to keep them from privately financing the start of construction on the arena.

By all means, that's a simple read of the situation, and certainly the relationship they've established with the city and county would likely temper such actions. Plus, they made very clear that completion of the project isn't feasible without the public contribution. The reality, though, is they would have the option to be able to start the project, with or without a team secured. Keep in mind they would still be required to supply the public benefits they agreed to for the street vacation.

Where a team comes into play has to do with the public financing.

Per the negotiated financial framework in the MOU, acquisition of an NBA team is required for the Transaction Documents of an Umbrella Agreement between the city of Seattle, King County, and ArenaCo to be finalized and city and county bond capacity made available. With an NBA team, the city would sell bonds for up to $115 million and the county would sell bonds for up to $5 million. If the private investors were to acquire an NHL team as well, the city and county would provide up to an additional $5 million and up to an additional $75 million through bond sales, respectively.

The public financing would be used to purchase the land and the arena from ArenaCo via two installment payments. The final cost to the city and county may be less but will not exceed $200 million, if both NBA and NHL teams exist.

When the MOU was enacted in October 2012, Section 1 of the Understandings of the agreement laid out the term, or length, of the agreement.

This Agreement will terminate upon the earlier of the effective date of the Umbrella Agreement (defined in Section 7) or five (5) years from the Effective Date of this MOU.

This is an oft-quoted timeline that frequently gets misunderstood.

There are two conditions to the term of the agreement. The one most focused on is the five-year date, which would end the MOU on October 18, 2017. The forgotten condition is that the MOU terminates as soon as an umbrella agreement between the city, county, and ArenaCo goes into effect. Whichever happens first is when the MOU is finished.

The MOU serves two roles. The first is to establish a blueprint of the steps necessary on both the public and private sides of the relationship to move forward with the arena. The private side has the responsibility of purchasing the land; completing environmental review, traffic assessment, and economic analysis (with the city's assistance); obtaining permitting; proving financial solvency; and acquiring private financing for the project. The public side has the responsibility of providing resources to complete reviews (reimbursed by ArenaCo); commissioning a study to determine the future use of KeyArena; establishing land-use protections for Port, maritime, and industrial areas in SoDo; studying land-use and policy for the Greater Duwamish Manufacturing and Industrial Center (including a potential Port Overlay District); and due diligence on the bond market.

The second role is to establish the financial framework and rights and responsibilities of the relationship between the three parties that will be used to form the basis of negotiations for an umbrella agreement moving forward. If the blueprint steps on both public and private sides are met, they can begin the transition to an umbrella agreement.

Like the MUP for the various other permits, the Umbrella Agreement (UA) is the overall document that establishes the public-private partnership in construction, operation, tenancy, bond repayment, and revenue distribution of the arena. Additional terms, such as the requirement that the NBA team be called the Seattle SuperSonics, the use and eventual repurpose of KeyArena, the non-relocation agreement, a community benefit agreement, and a labor peace agreement, all fall under the purview of the UA.

Transaction Documents (TDs), which would represent the agreements on public financing, as well as the installment payment structure, are a key aspect under the UA. It's these documents that authorize the city to issue the bonds for the public financing and pay ArenaCo for the land and arena. The Transaction Documents will not be agreed to and finalized until at least an NBA team is acquired. But a UA must be in place to be able to negotiate the TDs.

If we look back to Section 1 in the MOU, once a UA is effectively in place, the MOU is officially terminated, thus killing the 2017 clock.

So, how do we get from street vacation vote to the Umbrella Agreement to be in the conversation for NBA and/or NHL expansion or relocation?

The first thing I would suggest doing is to drop all thoughts about the NBA or NHL. Sure, it seems completely counter-intuitive, but the reality is that there is nothing the leagues can really do until the arena is a viable entity. They will continue to make all sorts of pronouncements about Seattle's chances or future, but until we handle our arena business, not a single thing can change as far as they are concerned. So, tunnel vision on the arena is vital for the immediate future. (Perhaps "tunnel vision" isn't the best phrase at the moment given the Bertha fiasco, but I digress.)

The pressing concern is to get to the street vacation vote and to get it approved. That approval will trigger the MUP decision. If it's in the positive, which given the recommendations of the Design Commission, the Design Review Board, SDOT, and then approved vacation on top seems quite likely, we'll have to wade through the appeal process for a little bit.

Now, the administrative appeal process seems fairly expedient, so it shouldn't take months spent languishing. Once those are through, the city and county can then put a call out for bids on the arena project. They do this through the Puget Sound Daily Journal of Commerce for two weeks. ArenaCo is certainly welcome to put in a bid, if they'd like, but if no bids are received, they are automatically the default winner. Once the bid process is done, then the three parties can begin negotiating the Umbrella Agreement.

In an interview with KJR 950AM last May, Chris Hansen made mention of establishing a new clock, a new end date for the project. In negotiating the Umbrella Agreement, the parties can certainly agree to a similar condition that the UA have a term of agreement rather than be open-ended, just like the MOU. The term would be along the lines of the effective date of the Transaction Documents, which means a team has been acquired and the public financing portion can be enacted, or, say, three years from the effective date of the UA. The terms are for the parties to decide, but for those worried that the October 2017 end date is the end of the line for the entire project, that simply isn't the case.

Why aren't we hearing more about this potential time extension? Hansen himself talked about not getting bogged down in the specifics of the date because it takes away from the urgency to get something done, not just with the arena but on behalf of the leagues. The spectre of October 2017 is much more beneficial to our cause in the abstract than getting into specifics about setting a new target date.

In the meantime, let's focus on what we as fans actually have the ability to do. The March 15th public meeting on the street vacation is a perfect opportunity to turn out and voice our support. This is the next domino we address to send us zooming down the path laid out above.