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Vision for Seattle Partners’ KeyArena renovation and traffic revealed (UPDATED)

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Does possibility outweigh public finance request?

Seattle Coliseum (Seattle Partners)

UPDATED 5/3/17 - Seattle Partners reached out to make us aware that the arena designs and plans document is now available to the public to see more details on the actual arena.

Arena details and plans

Rather than digging down to expand the footprint, SP proposes slicing into the roof at about the halfway mark of the slope on the southern side. This will allow them to expand the southern end of the building about 75 feet. That portion of roof will be replaced and expanded to cover the extension.

A lobby structure will be built at the southern end of the arena with entry from the east and west of the lobby. Subterranean VIP parking and 7 loading docks will be housed beneath the lobby structure with ramp access from Thomas Street.

South of Thomas Street, the existing parking garage will remain. Beside it, along 1st Avenue North, SP will build a residential building with ground floor retail space for food and beverages, and underground parking. A new team store will be built on the same spot as the old Team Shop, positioning itself between the west plaza and the southwest “arrival” plaza at the corner of 1st and Thomas.

A fitness loop and community basketball court and skate park are planned along the east plaza. One of the planned mobility hubs will be along the corner of 1st and Republican Street.

The expanded footprint will allow for a revised lower bowl that will seat over 6,700 for basketball and hockey. Total seating for basketball is planned for 18,113. Total seating for hockey is expected to be 17,120. For end stage concerts, they plan for 15,750, and 18,864 for 360-degree center stage concerts.

While I’m not fully sold on the approach to the arena expansion, it’s great to get an idea of what they envision and how well it seems to blend into the Seattle Center experience. What do you think?

Original story follows...

Seattle Partners' proposal to renovate KeyArena is a thick tome that speaks quite a bit to AEG's experience, says very little about the actual arena they plan to build, yet spends a surprisingly fair amount of time on potential traffic and parking solutions.

The bulk of the massive 690-page proposal, released to the public on Monday, reads like an advertisement for the prominence and accomplishment of AEG in the arena game. A large number of pages are bios & CVs to introduce the city to the various key individuals involved with the entities making up the Seattle Partners group, in particular the key executives of AEG and Hudson Pacific Properties.

Quite impressive is the roughly 80-90 pages of endorsements written to the city and mayor from myriad sources. Four NBA teams and four NHL teams, music and event promoters, talent agencies like UAA and CAA, a dozen cities and sports commissions, including Kansas City. U.S. Soccer, the U.S. Tennis Association, the National Collegiate Hockey Conference, PBR, and the WWE offer letters of support. Local endorsements include the Greater Seattle Business Association, the Urban League of Metropolitan Seattle, the Plymouth Housing Group, Pacific Northwest Ballet, Easy Street Records, The Stranger, and more.

Outside of that, though, the proposal is fairly light. A second document with detailed drawings and plans was not made available. Sorry, folks, no new arena porn for the time being.

What is included directly addresses the city's key asks from the Request for Proposal in a fairly straightforward, workman-like fashion.

Financial proposal

The estimated cost of the project, involving the design, entitlement, review, and construction, is around $521.5 million. Seattle Partners will offer nearly $271.5 million in equity to the project.

Though it was subsequently referred to as a "suggestion" in the media following the reveal that there might be a public financial component to the project, the proposal does confirm that SP is requesting $250 million in financing backed by 30-year bonds issued by the city. The proposal promotes the idea as a "true partnership" with the city of Seattle. Interest on the bonds would add about $23 million to a $546 million project cost. Nearly $48 million saved in potential interest and fees by using the government bonds bring it down to the $521.5 million estimate.

In many ways, this mirrors the financial framework negotiated in the 2012 Memorandum of Understanding on the Seattle Arena project proposal in SoDo. Seattle Partners will guarantee repayment of the bonds annually. This accounts for claims that the proposal offers no risk to the city.

The investors in the SoDo project have since offered to fully privately finance their project. The competing proposal for the KeyArena renovation by Oak View Group will also be fully privately financed.

Proposed annual rent is $5 million per year on a 35-year lease and three (3) optional 10-year extensions. They request a deal with the city to not pay sales, use, or business & occupation taxes during construction, and any property or similar taxes during construction and operation of the arena. As the city would levy a leasehold excise tax in lieu of property tax on a private development on the public land at Seattle Center, this would suggest they would like to not pay this tax. If they can't work out the deal, they anticipate changes to the financial terms of the proposal.

They plan to include a $5.00 "facility fee" on all publicly-ticketed events with all revenues going to the city of Seattle to aid in repayment of the bonds. They'll also create a capital reserve account to help maintenance and improvements of the arena over its lifetime. They plan to pay to the account no less than $500,000 per fiscal year in the first 5 years of the lease, no less than $750,000 per fiscal year in years 6 to 10, and no less than $1 million per fiscal year for every year of the lease after.

Seattle Partners estimate the city will receive over $3 billion in tax revenues generated by the new arena over the life of the lease. They also see nearly $144 million in excess revenue to the city over the lease, likely from the facility fee after the annual bond repayments.

Naming rights and sponsorships

SP proposes to take sole ownership and responsibility to sell any naming rights, sponsorships, and premium seating rights for the arena and for any structure within the designated redevelopment site. They also propose the same for sponsorships for all of the Seattle Center campus, in exchange for an annual payment to the city based on a historical baseline average of the revenues generated by sponsorships on the campus for the three years prior to the signed agreement.

No two-venue solution

One of their asks is for "exclusive" rights to the Seattle large arena market. During construction and for the first 30 years of the lease, they ask the city not to directly or indirectly finance, subsidize, or incentivize the construction of a 10,000 to 25,000-seat arena that could potentially compete.

The traffic question

The approach to the questions of traffic and parking in the proposal is a "doubling down" on current, planned, and proposed programs and infrastructure rather than a radical new concept. They plan to hire a Director of Transportation for Seattle Coliseum to oversee a strategy of spreading support across the existing system and to invest in key areas. This director would partner with Seattle Center, the Uptown/LQA neighborhood, Seattle Department of Transportation, and other community groups focused on effectively moving people throughout the area.

Points of focus include a network of shared mobility hubs where people can easily transfer between auto, bike, transit, light and potentially commuter rail, and rideshare services. They look to leverage parking lots in South Lake Union and Downtown to encourage people to park just off the freeways and shuttle into the Center. Partnering with the Seattle Monorail is suggested, as a means to take people from light rail or parking at or near Westlake Center that last mile or two. They also talk about autonomous shuttles (small driverless transit) that could shuttle between Westlake and Seattle Center to supplement the monorail.

Increasing rideshare and carshare through transportation network companies usage, as well as transit, are high on their list. As is working with TNCs, like Uber, Lyft, and Chariot, to subsidize fares to make for seamless trips between different modes of transportation in a single trip. Possibilities for something similar with transit or the monorail are also considered. A direct tunnel from the planned light rail stop, expected in 2035, to the arena is also envisioned.

Investing in adaptive traffic signal improvement software is another approach. They plan to aid in developing and promoting urban trails throughout the Center and neighborhood to encourage a thriving pedestrian arts & events environment. This includes helping with green development for pedestrians and cyclists along Thomas Street, one of the east-west streets soon to be reopened following the opening of the Highway 99 tunnel. Contributing to a Republican Street festival walk plan, a 1st Ave North walking district, and the Lake2Bay urban trail concept from Lake Union to the Center also factor into their plans.

Estimated contribution to the termed "sustainable" transportation plan is $5 million. This breaks down to:

  • up to $500,000 toward a 6% reduction of single occupancy vehicle "drive-alone" trips;
  • $1.5 million toward the mobility hubs, specifically up to $1 million towards the hub at Seattle Center;
  • up to $1.5 million towards the walk and bike improvements to increase such trips up to 2% or more;
  • up to $1 million toward the signal control systems to increase flow along Denny Way, Mercer Street, and Elliott Avenue/15th Avenue;
  • up to $500,00 toward vehicle and bicycle parking, including an event parking plan, shared parking programs, reserved arena parking, e-park services, and event shuttles

They anticipate an annual maintenance of $50,000, plus the $125,000 salary for the Director of Transportation, and a 30% burden (or indirect cost) for administration and labor.

Timeline

A detailed entitlement, design, and construction schedule is included in the proposal. Seattle Partners expects a 16-month period for entitlement and design, starting in July. They plan for construction to begin on November 1, 2018, and to last 26 months. March 1, 2021 is their prospective available date. They are scheduled to begin hiring arena staff starting August 1, 2018.

Some odd findings

Curiously, amongst a number of case studies for each of Seattle Partners' entities meant to provide examples of their work, architectural firm Gensler offers a project for various landholders in the SoDo district (pg. 206). The urban planning project involves a 15-20 year plan to develop SoDo into what they call a "District of Neighborhoods." The plan is seen as a mixed use development with housing, which seems to contradict much of the industrial pushback against the competing SoDo arena project.

Conclusions

With the hefty financial ask from the city, it would seem to most that Seattle Partners' proposal would be dead on arrival. Though, consider that the deal isn't that far off from what Chris Hansen had negotiated with the city five years. They guarantee debt service payment each year on the bonds used for the financing. It would be hypocritical for all of us who had praised Hansen's deal to now say that the arrangement would be something bad for the city.

Of course, the financial game has changed. With the OVG proposal offering to be fully privately financed and the SoDo group offering the same, Seattle Partners' proposal does seem a bit antiquated now. (Sportspress NW’s Art Thiel asks why this is necessary.) It’s widely believed that the public financing was one of the big reasons why a number of councilmembers voted against the street vacation for the SoDo project last year.

Yet, don't count it out. The pedigree of AEG alone is a strong counter. More, the city is quite aware that it would have to shell out some cash (or issue bonds) to renovate KeyArena on its own, so the ask might be negligible. Given the guarantee to cover the risk, the bonds might just be a wash.

More concerning, though, is the seemingly small contribution to the traffic solutions. One certainly can't shake a stick at $5 million, but in the size, scope, and scheme of these kinds of projects it seems relatively tiny. Granted, there are additional future items discussed that have the potential to raise those contributions. It's also quite possible that $5 million actually fits with the amount of money often associated with these kinds of changes.

Money aside, I'm somewhat impressed by the thorough consideration given to traffic in the proposal. By all measure, this is a foundational step, a jumping off point, and can't -- or shouldn't -- be considered final in any way. Traffic studies and analysis need to be done to get a comprehensive picture to make informed decisions. As a first pass, though, it's hard to fault the rationale employed in their approach to the issue and the work that has already been done.

The lack of plans and drawings to wade through is disappointing. They were likely not included for proprietary reasons. Perhaps that second document will be made available to the public ahead of the open house to discuss the two KeyArena proposals on May 11th. More information on the office and residential buildings they plan to include in the redevelopment zone would also be helpful.

As a sheer deluge of praise and demonstration of the pull AEG has in its marketplace, this was an impressive proposal. As a document on just what they are trying to sell us on, it falls short.

Article was updated from original published content with information on the naming rights and sponsorships proposal.