Landmark designation and historic preservation play a vital role in the ongoing Seattle arena saga. Expected status for the KeyArena roof and exterior dictated the two responses to the city's request for proposal for a prospective renovation project. It could also help fund the renovation.
So, what is the landmark process, in what ways could KeyArena qualify, and just how can history help pay for a new arena on the site?
Remember the past
Like national and state environmental protection acts that ask governments and developers to consider the environment in their decision-making on construction projects, historic preservation asks them to consider the cultural significance of existing locations intended to be redeveloped.
Seattle's preservation is managed by the city's Department of Neighborhoods. In the case of KeyArena, specifically by the Landmarks Preservation Board, an 11-member board appointed by the mayor and confirmed by the city council. The board consists of at least two architects, two historians, an urban planning specialist, a structural engineer, someone in real estate management, someone in finance, and three others from any kind of background. Each member serves for 3 years.
Designation process
To be designated a historic landmark, a building, object, or site goes through a four-step process: nomination, designation determination, controls and incentives, and a designating ordinance.
Nomination and designation
The property must be at least 25 years old to be nominated. As part of state environmental law, landmark consideration of a location over 50 years old is highly recommended for a redevelopment project to determine if, and to what degree, environmental review is needed. KeyArena and the six other nominated buildings at Seattle Center fall under this older timeframe.
A location can be nominated by any person or group by submitting an application to the Historic Preservation Office. If the application checks out, the board holds a public meeting to consider and approve the nomination in part or whole.
The Landmarks Preservation Board is scheduled to meet on Wednesday, June 21st at 3:30pm to discuss and potentially approve the KeyArena nomination.
If a nomination is approved, another public meeting is scheduled within 30 to 60 days to consider designation. The nominated property must "possess integrity or the ability to convey its significance" and meet at least one of the following standards to be designated:
a) It is the location of, or is associated in a significant way with, a historic event with a significant effect upon the community, City, state, or nation; or
b) It is associated in a significant way with the life of a person important in the history of the City, state, or nation; or
c) It is associated in a significant way with a significant aspect of the cultural, political, or economic heritage of the community, City, state or nation; or
d) It embodies the distinctive visible characteristics of an architectural style, or period, or a method of construction; or
e) It is an outstanding work of a designer or builder; or
f) Because of its prominence of spatial location, contrasts of siting, age, or scale, it is an easily identifiable visual feature of its neighborhood or the city and contributes to the distinctive quality or identity of such neighborhood or the City.
Despite some audible scoffing from many who perhaps don’t think of the building or its distinctive roof as iconic amongst the Seattle landscape, the former Washington State Pavilion, Washington State Coliseum, and Seattle Center Coliseum actually qualifies under all of those standards per a 2013 landmark study.
Controls & Incentives and designating ordinance
When designation is approved, the board submits a report to the property owner and negotiates a controls and incentives agreement. This determines what can or cannot be changed about the property and the incentives to preserve it.
Contrary to popular misconception, a historic landmark can be altered. Landmark status helps to manage any changes not prevent them.
The sides have up to 75 days from the report to come to an agreement. Within 30 days after that, the board reviews the agreement to approve it. Then, it's off the see the council for the legislation process and designation ordinance enacted into law.
Any changes to a property nominated and/or designated for landmark status require a Certificate of Approval, which has its own process. Appeals can happen at nearly every step along the way of the landmark process. It's also possible for a nominated building, object, or site to be denied nomination or designation, which automatically imposes a 5-year moratorium until the property can be nominated again.
History gets you money
In the financial structure of bid winner Oak View Group’s renovation proposal, they plan to use a federal historic rehabilitation tax credit to aid in financing their project.
OVG is said to have applied for $70 million in tax incentives, though their proposal financial paperwork speaks to a use of $50 million in tax credit toward the renovation.
The credit is jointly offered by the U.S. Department of the Interior through the National Park Service, and the U.S. Department of the Treasury, naturally through the Internal Revenue Service. To qualify, a building, object, or site must be placed on the National Register of Historic Places or certified by the Secretary of the Interior as part of a designated historic district.
MSG
The tactic was previously employed by one of OVG’s investors, the Madison Square Garden Company. It received the tax incentive on its 2012-14 renovation of The Forum in Inglewood, CA into a premier music-centric venue.
The former home of the Los Angeles Lakers and Kings was purchased by MSG in 2012 from a church that used it for Sunday services from 2000 to 2009 while continuing to host music concerts. It was listed on the National Register on September 24, 2014. The Forum renovation is seen as a model of sports & entertainment arena preservation.
Historic Resources Group, the consultant that aided that effort, is working with OVG on the push for KeyArena preservation.
The concept of tax credits for an arena came MSG’s way when plans were discussed in the mid-2000s about moving New York City’s Madison Square Garden a block west to free up Penn Station and Penn Plaza for other development. Efforts to displace the Garden have swirled for nearly two decades, specifically in relation to a transit hub development called Moynihan Station. The building the Garden was eyed to moved to, the James A. Farley Building, offered the credits as incentive for the relocation. Though, there were concerns at the time the renovation wouldn’t qualify with NPS.
Interestingly, it was the Garden that kicked off the wide-scale historic preservation movement.
The modern Madison Square Garden was built in the late 1960s by razing the above-ground portions of the original Pennsylvania Station, the historic railway station opened in 1910. The below-ground areas were renovated into what we now know as Penn Station.
Preservationists were outraged at the sheer disregard for history and the iconic architecture in favor of an extensive office, hotel, and entertainment plaza redevelopment. This kicked off new NYC landmarks preservation policies that would eventually inspire and influence the country in the passage of the National Historic Preservation Act of 1966.
National Register process
In its KeyArena proposal, OVG included a letter to Michael Houser, Washington state’s official architectural historian, inquiring about the possibility of adding the facility to the National Register. Houser spoke with the NPS and determined that the site is, indeed, eligible for consideration.
“Despite changes to the building that occurred after the Fair, we have determined that the building is still eligible under criteria “A” for its direct connection to 1961 [sic] Century 21 World’s Fair. This building, along with the Space Needle, was an iconic structure of the fair and retains enough character defining features to convey its history as a fair structure.”
Criterion A evaluates the building by an "event.” “The property must make a contribution to the major pattern of American history.” In this case, the Century 21 Exposition, more commonly referred to as the 1962 World’s Fair.
Similar to the city’s landmark process, a nomination application for the National Register must be filed with the State Historic Preservation Office. After an application review, this is sent to the state’s historic review commission, which can recommend the property to the State Historic Preservation Officer. It’s this officer who officially nominates a property with the Keeper of the National Register. The National Park Service then approves or denies a nomination.
Tax credit
The tax credit OVG is seeking, which would technically be awarded to the city as the property owner if approved, is a 20% historic rehabilitation tax credit that’s been available since 1986. Twenty percent of the cost of the rehabilitation can be credited towards any federal taxes collected for a given year.
Once a property is on the National Register or certified as a historic structure, the rehabilitation must also be certified. A description of the rehabilitation must be filed with the SHPO, reviewed, and then forwarded to NPS to certify per the “Secretary of the Interior’s Standards for Rehabilitation.”
Once the arena renovation is done, OVG and the city would then have to submit a Request for Certification of Completed Work to the SHPO. Reviewed and forwarded, the NPS and the IRS can then certify the project for the tax credit.
While the local landmark process can take months for the better part of a year, the National Register and tax credit process can take 2 to 5 years. The rehabilitated project must be put back into service to be granted the credit, so they would file the last part of certification when the arena opens.
Use it while you got it
Pushing for the tax credit is a fascinating approach to helping fund and/or recoup expenses on developing the new arena. One wonders if there will be rash of arena projects around the country gunning for the same thing, but the very process of the arena game would seem to negate that. Most projects are looking to replace an aging sports palace with an all new spectacle of a building, so these tax credits wouldn’t be available to them.
It’s a smart approach to tap a resource that is unique to your project site, as well as built-in media bait for the preservation story. What’s more is that OVG would likely have been the only one of the two competing bids to take advantage of the tax credit. Concerns over the roof design with Seattle Partners’ proposal might have disqualified them from local landmark status in addition to the National Register and any incentives.
Whatever the City of Seattle chooses to do with KeyArena, they have the potential of the tax credit at their disposal. OVG was wise to jump on this and jump on it early. Even if they don’t ultimately get certified for their credit, MSG has offered to backstop the $50M factored in the project financials. A savvy move either way.
Now, just imagine if we’d actually gotten CylonDome at Seattle Center for the football and baseball stadium?
Comments
Good article, Matt
Hopefully Tim Leweike reads is, especially the part about this being the city’s money.
He’s needs to understand that.
By Mike Baker on 06.12.17 8:23am
The money exist because the roofline exists
So that’s where the money should go in the project, and to any other building included in the application, the remainder to the city, if they choose to gift part of that to the modern portion of the remodel is should be the last option.
By Mike Baker on 06.12.17 8:41am
The flip side to that argument...
The federal tax credit is directly tied and correlated to the cost of construction. So, while yes it is the "city’s money" as its a city asset as you referenced – the credit is only available because OVG is willing construct and privately finance the arena rebuild. So, the credit is available because a private developer is spending private dollars to construct the project. For that matter, I personally (as a taxpayer) feel it’s reasonable that a private developer would want and feel entitled to the tax credit… given they are the one outlaying the cost of the project.
Also, Mike, with all do respect – I don’t think you can really tie the credit to any particular part of the project. For one, the amount of the tax credit is based on the modernization of the entire building, not just money preserving the roofline. And, simply from a process perspective, it sounds as if the tax credit wouldn’t be received until after the rebuild is completed. Not beforehand. Specifying what portion of the remodel the money is related to after the fact would not have any substance to it.
By ksmith1984 on 06.12.17 9:33am
It's also not tied to a specific developer
For instance, it could benefit a reno at Key Arena that re-purposes it at a size that doesn’t include the NHL or NBA. One that would match it’s location in a city park in the middle of a dense urban neighborhood. Maybe that’s OVG, maybe not.
By cortone on 06.12.17 9:42am
Yes.... But
That would be a significantly less expensive renovation. If the city spent $150,000,000 renovating Key Arena, they would only be eligible for a max of $30 million in tax credits, possibly much less as we don’t know exactly what type of expenses are eligible. $70,000,000 is 20% of $350,000,000. So, OVG is excluding nearly 40% of the total project cost as non-eligible renovation expenses. This is the "who the hell knows game" but we do know the absolute maximum tax credit would be $30m under a less expansive renovation option. And, that scenario would require the city to bond and publicly finance this renovation, which totally defeats the purpose. If they find a private party willing to renovate Key Arena for $150,000,000 into a smaller concert venue, there is a damn good chance that the developer would also want the tax credits. Very, very, very few scenarios where the city actually gets the direct benefit of the tax credit without being the entity that funds the renovation…
By ksmith1984 on 06.12.17 9:50am
20% of 150mil to reno the Key in to a round peg for a round hole makes perfect sense to me
I think providing the public bonds (not public funds) outright for a city asset is more advantageous than signing away revenue and taxes, plus parking revenue, and all the other "triggers" that close scrutiny of OVG’s plan will reveal. It also enables a private development in Sodo with its quantifiable public benefits, and opens a currently non-existent revenue and tax stream, some of which can be applied to the smaller Key reno (streams that won’t appear as a result of the OVG renovation). Also keep in mind, that 120mil equals the city’s bonding (not funding) commitment to Sodo via the MOU. This is not an outrageous or fiscally irresponsible approach to the Key Arena.
I have to wonder if the $50 mil Landmark credit is part of why OVG’s financials were redacted.
Of course, it doesn’t solve the problem at the heart of the SCC’s position: avoiding political pressure from the groups that are battling for control over Sodo, fronted by the POS. The voices of influence seem resigned to carefully dancing away from that factor.
By cortone on 06.12.17 11:50am
Could be any developer
There is only one KeyArena.
The tax credit only exists because it is unique.
OVG is not unique. They were one of two developers.
The city could say no, hire yet a 3rd developer that could take advantage of the tax, it would not leave with OVG because it simply is not their money.
By Mike Baker on 06.12.17 11:30am
You are assuming there is a developer out there willing to do so
OVG is unique, in that there are very few players in this space that could and would be willing to put up this money cash on an arena renovation. Yes, the city could look for new partners for a different type of renovation. I just don’t think you’re likely to find a partner willing to do any renovation 100% through private funding AND keeping the tax credit to the benefit of the city unless the city is funding any renovation through bonding. Just my two cents…
By ksmith1984 on 06.12.17 2:16pm
You are making several assumptions as well
First, the 100% financing is required in order to be favorably compared to Sodo. An RFP for the Key does not, by definition, have to be 100% private. If there were no Sodo option, I doubt that the requirement would be fully private. Second, all of the tax and revenue diversions belie the "100% private" development. It’s not, except on paper right now. Third, you are assuming there are no developers out there who would respond to an RFP, fully private or not, for a reduced-scale renovation that targets the performing arts in the 10-12k capacity range. I understand that AEG and OVG sought the RFP process we are seeing play out, but that doesn’t mean no one will respond if the city generates another with a different mandate than NHL/NBA.
Remove the fully-private option, offer $120 million in bonding plus the Landmark tax credit, which is appropriate for a valued city asset, and see who responds. Will $150 million fix the load-in/access/backstage concerns? If not, how far off is it? No need to dig down, change the roof, etc. Will all of those tax and revenue streams work to re-pay the bonding for a city-owned asset? Is that really different from all of the tax and revenue diversions (SC naming rights, parking revenues to OVG, etc.) that the $560 million renovation will demand?
If that lesser renovation can work AND we get the tax and revenue streams from the private development in Sodo, how is that not a win-win?
By cortone on 06.13.17 9:51am
We don't know...
Because it was never asked for by the city. We also only know that the plan provided by OVG contains vague round number cost and revenue assumptions and no compelling solutions to the main obstacle towards building an Arena in that area. We should be prepared that the proposal they have provided will not be close to the one they have to provide when it becomes real. It is just as likely they have a change of tune on what it means to be "privately funded".
Also…we should be 10000% prepared that their changes in terms won’t come until AFTER some news happens with the NHL where suddenly the City will have to make compromise and "time will be of the essence" because a team is available.
By blykmyk44 on 06.13.17 1:36pm
Not only is OVG not unique
But either is the need to build an NBA and NHL arena in that area. You can certainly make an RFP for a smaller venue that leverages the tax revenues.
By blykmyk44 on 06.13.17 1:32pm
I think you will find
A desire for a nexus between what we are asking the money for and the government’s intended use, preservation.
By Mike Baker on 06.12.17 11:32am
I'm not trying to be a contrarian here...
I think you and I just see the world a little differently on this. But, I view "preservation" much more broadly. The roof exists and will be dedicated as a landmark. The space that sits under the roof is vitally important to the long-term viability of the venue. What good is a landmark if the venue is a decrepit and empty piece of crap? OVG’s plan makes the entire venue viable under its current and long-standing purpose (entertainment and sports) and therefore ensures the historic landmark – the roof – is preserved. That, at least how I view the world, is consistent with the governments intent. Obviously this is up to debate.
By ksmith1984 on 06.12.17 2:36pm
I just thought of something
The reason we are in this whole Key Arena debate is because of the port of Seattle & Sally Bagshaw! I realize that 4 other of the council members voted against the conditional street vacation. However she is the first to turn from the Sodo Arena project after first signing off on the deal back in 2012 & having a beer with Chris Hansen along with Sonics fans!
Fast forward 5 years with the whole exploring Key Arena being her initial idea or at least get the ball rolling in that direction. Why the heck was she not at the Key Arena renovation announcement? The great and glorious day for Key Arena?!!! I’m sure it doesn’t mean anything and she will vote against the Sodo Arena street vacation again. I just find it kind of interesting that publicly she is not backing Murray on this?!! In fact on the itinerary it said that all the SCC would be there.
By WoodLandSonic40316 on 06.12.17 10:03am
Don't forget Geoff Baker,
who highlighted the AECOM report section suggesting Key Arena could be renovated to house pro basketball and hockey, by positioning the floor surface diagonally.
The anti-Sodo crowd swarmed around that news like files on horse dung.
Speaking of Bagshaw, it’s also interesting to note that GB also reported the vile backlash from some sports fans which became a rallying point for the feminist constituency in Seattle, which Bagshaw and others were all too happy to join.
By Toasty_B on 06.13.17 2:09am
Bagshaw and the council have to give the impression of independence and due diligence
even though she and, I believe Juarez, want to bury SODO in the worse way. Possibly a mutual agreement in the council, particularly with those that want an independent vetting of the financial and transit benefits or lack thereof.
If they hate or fear the political implications of SODO enough, the council will swallow hard and push the Key renovation through, giving away a little more than they want and accepting the lack of transit solutions. Those Uptown Alliance, LQA, and Seattle Center stakeholders be damned if the agreement doesn’t satisfy their concern for neighborhood and center preservation.
By NWEastcoaster on 06.13.17 5:46am
Given the number and types of stakeholders in that area
If they can’t get as much of what they want out of the situation, then they likely don’t care enough about those things to put up much of a fight.
By Matt Tucker on 06.13.17 6:31am
It just struck me, I've been thinking about the Key arena revamp all wrong.
I work a couple miles away from Seattle Center, so instead of worrying about how much harder it would be to take public transportation over SoDo, I could just get trashed at the game and stumble my ass back to work and pass out in my office until the next morning. And it would save gas money!
By Drunk Viking on 06.12.17 10:37am
Tim Leweike has already hinted that 'stumbling your fat ass back to work because you never left the damn area in the first place' is a vital part of OVG's transportation solution - along with monorails, drones, and jetpacks.
By Bizzquik on 06.12.17 11:56am
Don't forge about Teleporting!! <img src="//fonts.voxmedia.com/emoji/unicode/1f609.png" alt=":wink:" class="emoji">
By WoodLandSonic40316 on 06.12.17 11:58am
I am sure Amazon is working on that !!!!
By Jeff - j1012 on 06.12.17 12:28pm
First step is already accomplished
Teleporting money out of your account. Their brick-and-mortar stores will be cashierless, your receipt will be created as you pick up items, and you will be charged as you leave the building.
By cortone on 06.12.17 1:29pm
This isn't the ratcheted-up marketing approach I was hoping to see
I think more can be done beyond "observe local media publish positive things, tweet links."
By Mr. Shea on 06.12.17 7:34pm
Depending on the timeline between now & the street vacation vote... . .
My hope is more details of the OVG proposal emerge and perhaps some more push back from SLU/LQA is what Hansen is waiting for. And, that’s not necessarily a bad thing. Let the Mayor/OVG have their moment in the sun. Then as more financing details emerge… . . Hansen can go to battle with actual data. If he starts out swinging @ OVG now and with no real back-up data – - could make him look desperate. He’s certainly been hinting that the devil is in the details in regards to the OVG proposal. Does he actually know ? Is he just speculating ? Who knows. But he did do his own evaluation of the Key.
He’s shown to be incredibly patient thus far. . .. . . .so maybe he’s just waiting for the right timing to get visible/vocal with Sodo. Maybe he does have another rabbit to pull out of his hat. At least I hope that’s the case. And, I agree . . . . he does need to publicly ramp up his efforts. Going negative hasn’t ever really been his style. . . but does need to start publicly promoting how/why Sodo is the best option for the City. Especially to the SCC.
By kinsesu on 06.12.17 8:09pm
That all make sense
But if the Sonics Arena team felt it important and timely to tweet those links, that would indicate they recognize that communicating their message to the public has value. With that recognition, do something that is more effective. Are there a lot of people that follow @sonicsarena that 1) are on the fence and 2) hadn’t already seen and read that stuff?
I don’t want them relying on local media to educate the people in the manner they like. THEY should be putting their own message campaign together and paying to get it out to EVERYONE in the region, especially those that don’t already support them or even know what any of this is about.
I hope there’s at least a plan of the type you describe, and that it won’t be too late.
By Mr. Shea on 06.12.17 8:22pm