Full private financing, zero exclusivity, a significantly smaller tax benefit request, and little risk to the city are key advantages of the Seattle Arena project in SoDo, according to a comparison by the SoDo group of the three arena projects the City of Seattle is currently entertaining.
Following prominent media outreach by the group this week -- Chris Hansen sat down for an interview with 710 ESPN Seattle's Mike Salk and Brock Huard on Tuesday; Wally Walker was in studio with 950AM KJR's Dave "Softy" Mahler on Wednesday -- they released a comprehensive comparison on their website Thursday to make the case why their project offers the best opportunity for the city.
Seattle Partners (AEG, Hudson Pacific Properties, et al.) and Oak View Group, the two groups with opposing bids to renovate KeyArena, had representatives at an open house at the KEXP offices on Thursday evening to present the proposals to the public. At the open house, Seattle mayor Ed Murray told Chris Daniels of KING5-TV that his recommendation for KeyArena bid winner could come sooner than the previously announced June 30 deadline.
Financing
The comparison is quick to point out that both KeyArena proposal don’t meet the publicly stated objective of the RFP to have no public financing. They stress at numerous points that the SoDo project is fully privately financed, including the entitlement process, any construction cost overruns, and operation & maintenance of the facility.
An argument could be made that OVG’s proposal does not ask for public financing for the arena, but the parking garage that features prominently in its proposal is contingent on financing from a public entity other than the city.
The Port of Seattle has been rumored as the targeted source for the garage.
Taxes
The comparison also identifies the potential of $200 million or more in public subsidies that each of the KeyArena projects is requesting through tax breaks and incentives. These include sales & lease excise taxes, parking garage revenues and taxes, utility subsidies, sponsorship sales, and landmark designation benefits.
The SoDo group is asking for an exemption on admissions taxes akin to what both CenturyLink Field and Safeco Field currently receive. In their previous letters to the city regarding their new offer, they had also asked for a reduction in business & occupation taxes levied on revenues made outside of the city of Seattle. That ask does not appear in the comparison.
They estimate they will pay over $40 million in sales taxes during construction of the arena and $10-13 million in annual taxes, including sales, B&O, and property taxes. This could generate the $300 million in tax revenues that Walker recent wrote of in an open letter on the benefits of the SoDo arena.
Exclusivity
The group argues that its “Team First” approach speaks to its civic minded motivation behind the project. The intimation is that the focus on “Music First” with the two KeyArena approaches could make it less likely to attract either NBA or NHL teams.
In particular, they note the ask for arena exclusivity in Seattle Partners’ bid as a possible deterrent or cause for concern for potential team owners. If a team owner is unable to negotiate favorable terms, the potential exists for the team owner to look outside the city of Seattle for alternatives. The comparison also posits that OVG’s request to redirect taxes into operation and maintenance could put an unfair financial burden on team owners.
Risk to the city
When speaking about risks to the city, the SoDo group points out that their private funding presents no deposit risk, no entitlement risk, no construction or cost overrun risk, no operating risk, and no capital improvement or maintenance risk to the city.
By contrast, they look to the request for public financing as risk to the city. At first blush, this would appear hypocritical given their original ask for up to $200 million in bond-backed financing in the 2012 MOU with the city and county. That provided risk to the city, as well, but was backed by layers of guarantee for the bond repayment. The comparison argues the guarantee isn’t as clear in SP’s proposal.
OVG’s language on responsibility for cost overruns in the proposal appears to offer potential that the city could be at risk for significant overruns depending on how the development and lease agreements are negotiated. Because the breakdown of OVG’s financial offering was redacted from public view, the comparison notes that there is no clear amount offered for transportation mitigation, potentially putting the responsibility on the city.
Conclusion
All told, it’s a compelling comparison. While it is sure to energize the fanbase and supporters, it will be interesting to see how it reads with politicians, civic leaders, and average citizens.
Comments
please use reply button when replying to posts
to response the the idea of an outside of seattle arena is everything is focused right now in Seattle either at sodo or at Key arena. It would be just about impossible to get a outside of Seattle arena actually funded ( see tukwila arena for example)
By gstommylee on 05.11.17 9:28pm
Sorry in taxi in la.
Sorry about the format issue. Doing from phone in a taxi.
By Don Kojas on 05.11.17 9:38pm
Honestly, you think this won't read well for the average citizen?
I get the concern about politicians and "civic leaders" who have their money on a different horse, or who feel like public subsidies for the Seattle Center are appropriate because of the city-asset aspect (despite the requirements of the RFP). But the average, non-sports-fan citizen? Especially given the offer to help maintain the Seattle Center’s viability, which is the primary argument of substance against the Sodo Arena: "What do we do with the Key?"
The answer to that question has been outlined on SonicsRising. AEG and OVG may turn their noses up at it (or not), but they aren’t the only players in this game. They’re just the ones with the big league pedigree who may be able to convince some owners to settle into LQA. The Key isn’t the best option for the big leagues, and Arena Co. will help sort out a better option for it, along with a much lower public contributions to whichever group does take up the project.
Thank you, Chris Hansen.
By cortone on 05.11.17 7:22pm
I know this is probably asking for too much
but it would be great to see the Hansen group release a financial analysis of the that shows the viability of Key Arena renovated for smaller music events if SoDo was built.
By itsanospreybich on 05.11.17 7:24pm
Why isn't RUSSELL WILSON
serving as the PR guy for the SODO?? I love Wally, Chris, and the Nordstroms, but I assumed Russell joined the group precisely for moments like this.
By 206er on 05.11.17 7:46pm
The opening acts are doing there jobs
and the headliner is waiting for just the right moment…
By cortone on 05.11.17 7:49pm
I wonder if Sonicsarena will have their own meet and greet and rally
By Jeff - j1012 on 05.12.17 5:20am
Will there be sweet cupcakes and vague financial plans?
asking for a friend
By Seattle_Fan1980 on 05.12.17 10:06am
Hansen will be speaking at Civic Cocktails
Not sure if this qualifies as a rally like in 2012 but he will be presenting on June 7th. https://www.eventbrite.com/e/civic-cocktail-june-7th-bringing-an-arena-to-seattle-tickets-34340232560
Good to see that he continues to stay visible and share SODO arena details with other folks in Seattle who don’t follow as closely as we do here.
By bgramer on 05.17.17 12:22pm
He just had a new daughter
Give the man a break.
He’ll be around to stump for the arena.
By Matt Tucker on 05.11.17 8:01pm
If he really cared he would have named the baby SoDo Arena.
By itsanospreybich on 05.11.17 8:09pm
Well, now seems like the time...
I realize he just had a kid but can’t let his wife watch the kid for an afternoon and make a trip down to city council/do a phone interview from his house? Compose a short statement? It’s his $$ on the line. I just thought this is exactly what he added to the SODO team.
By 206er on 05.11.17 8:12pm
Okay, forget the sarcasm font?
By cortone on 05.11.17 8:15pm
RW is the rah-rah "GO SODO" face of the group. Tasked with providing reminders of how important sports is to a community - - especially to kids.
He’ll have his time to take center stage. . . .
By kinsesu on 05.11.17 8:26pm
I just don't want him to have to scramble to get the ball over the goal line.
By TheTrialist on 05.12.17 10:55am
I was at the open house, here's my report
https://twitter.com/tweetmrbaker/status/862835232554209280
By Mike Baker on 05.11.17 8:18pm
Looks like a lovely cupcake soiree. But, did anything actually get discussed or answered ?
By kinsesu on 05.11.17 8:33pm
"lovely cupcake" is an oxymoron to me
so not into cupcakes.
Pie, on the other hand!
By cortone on 05.11.17 8:35pm
You can keep both the cupcakes & pies.. .. . . GIVE ME ICE CREAM !!
By kinsesu on 05.11.17 8:40pm
I got it, you...ice cream, me...pies
let them eat cupcakes
By cortone on 05.11.17 9:35pm
Chocolate completes me.
By JetCityWoman2 on 05.12.17 12:12am
As long as it's dark chocolate. Goes really well with red wine.
Really dislike white chocolate, tho.
By kinsesu on 05.12.17 12:16am
White chocolate is just...
so wrong. I can’t explain it. It just is.
By JetCityWoman2 on 05.12.17 12:21am
White chocolate is an oxymoron
It’s chocolate with the chocolate taken out. So all that’s left is the cocoa butter. It’d be like eating a steak but with all the meat taken out leaving only the fat.
OTOH, "White Chocolate" was a very good nickname for Jason Williams.
By mkt42 on 05.12.17 11:04pm
When I walked up 1st a little before 5, I saw a lot of the presenters' crew on the back side of KEXP
So I went to hang out back there and see the sausage get made. What I found out later were SP people were panicking and exclaiming "where are the cupcakes???"
As I said in my novel below, the cupcakes were good, but it was like they thought the cupcakes were gonna turn the tide. The cupcake shop itself is a few blocks up the street from me, and they sometimes have their truck even closer. I can still get the cupcakes AND have basketball if SODO wins out.
By Mr. Shea on 05.12.17 12:24am