Messages from Chris
I was at the game in NYC with my wife, kids and close friends and needless to say it was a lifetime experience for me just as it was for so many of you. As a diehard Seattle sports fan living in California for the better part of the last 25 years, I have had to sit quietly as friends have celebrated the numerous titles from the Lakers, Dodgers, Niners, and Giants. I have been in SF and witnessed the unbridled joy of three championship parades. And I have stood aside with envy as bars of loyal fans raised their right index fingers in the air and sang "We are the Champions."
After watching a game that can only be described as a blur of joyous domination, when I saw Paul Allen and Pete Carroll hoist the Lombardi Trophy in MetLife amidst a snowstorm of blue and green confetti, I hugged my kids and just started to tear up. Like all Seattle sports fans, I have waited so long for this moment, and the gravity of it was just overwhelming. I honestly kept thinking to myself, "Is this really happening?"
After celebrating with my kids on the bus ride back to Manhattan, I headed out to a 12th man pub in NYC called Carlow East to celebrate with friends. We sang and danced and hugged and cried. And for the first time in 35 years, I held my right index finger high in the air and belted out "We are the Champions" in a packed bar full of Seattleites and just thought to myself… "We did it. We finally did it."
So I would just like to commend Paul Allen, Pete Carroll, the Seahawks organization, and most of all the players for delivering the title that our city has so desperately craved and deserved for the last 35 years. Few have the opportunity in life to do something that means so much to so many. And I know I speak for all Sonics fans when I simply say thank you.
And for anyone who has any lingering doubts as to whether Seattle is a "sports city" capable of supporting an NBA and NHL franchise, there are about 700,000 of us that have a few pictures from yesterday we would be happy to share with you.
— Chris Hansen
Messages from Chris
It’s been a while since I have posted anything here but hope you don’t take that as a lessening of my commitment or an indication that work on the Sonics Arena has slowed. My team and I have been working through the city’s environmental and design review processes and without getting into a lot of detail I can say that I am pleased with the progress we have made.
While we are focused on this important work our opponents continue to raise the same arguments and issues we have heard so many times over the past year. I guess they think that if you just keep saying the same thing over and over again it somehow becomes true.
For some reason, this seems to hold especially true for the editorial writers at the Seattle Times. With a history of completely fair and unbiased reporting on the Arena issue, is it really a surprise that a report that was not only paid for by the Arena opposition but was also rife with errors in legal interpretation, math, and basic reasoning qualifies as the basis for their latest sensationalistic criticism?
The Times Editorial Board apparently didn’t feel the need to consider the fact that our arena proposal went through a lengthy public process in which its legal and economic merits were completely and thoroughly vetted by both the City and County Councils. No need to take into account the fact that both Councils appointed independent committees of experts who analyzed and concluded that this was a good deal for the City. No need to weigh the fact that both Councils employed inside and outside legal counsel to advise them on the legal aspects of the deal (including I-91). And certainly no need to consider the parade of local and national experts who called this amongst the best arena deal any city has ever received.
Based solely on the apparent legal expertise of the Times’ Editorial Board and a biased report paid for by the opposition, the MOU is apparently illegal and our group is apparently receiving over $700 million in illegal subsidies. Great work. I guess everyone else involved just missed this.
While we have covered the MOU’s compliance with I-91 in numerous past posts and writings, in the interest of sanity I thought it would be helpful to point out a couple of the more significant miscues in the so-called report by Private Valuations.
- Above all else, alarm bells should clearly sound on the credibility of a report that is paid for by the opposition and which claims that the subsidy we are receiving ($773 million) is nearly four times the amount the City and County have agreed to invest in the project — especially with all the public sector vetting and guarantees we have put in place. As the saying goes, if it walks like a duck...
- Having said this, the first major mistake the report makes is NOT basing the I-91 calculations on the “net cash-on-cash return” of the project. This is the exact language from the I-91 legislation — and language the writers of the report “conveniently” fail to consider or address.
- Under the definition of “cash-on-cash” returns (from the finance textbook of your choice!), the return is calculated by dividing the net cash returns (after deducting financing costs) from the project by the “cash” equity invested (EXCLUDING debt borrowed). Thus the City is either financing their entire investment and investing ZERO cash in the project (which would make the calculation infinite) or the City is considering the entire investment as “Cash Equity” under which the financing costs must be excluded in calculating the cash return BY DEFINITION. Under this latter interpretation the City would generate a return that exceeds Treasuries by a very wide margin. It is a blatant error to count the $200M investment as equity and then turn around and treat the funds as if they were borrowed and count interest expense as a reduction in the cash return to the City. It is simple double counting. This is an obvious error that Private Valuations should publicly acknowledge as it renders the bulk of their I-91 subsidy conclusions in the report invalid.
- In much the same manner, the second significant error the authors make is the absolutely ridiculous argument that we are not paying taxes since the incremental taxes generated by the arena go to repay its investment in the project but that same tax money paid by us to the city also doesn’t count toward bond repayments as it is not secured. Huh? So by their math we don’t get credit for either paying our taxes or the bond repayment — and both are cited as a subsidy. Clearly this makes no sense. I guess they are assuming the money we pay the city just vanishes into thin air once it is collected by the tax authorities. Rest assured Seattle, we will be paying taxes to the City and County as defined by the MOU. And we have secured those tax payments with collateral and guarantees that would result in any major lender in the world considering them “secured.”
- The final major miscue in the report is a claim that the City and County will be denied its share of property taxes by purchasing the land and arena as part of this transaction. While I-91 in no way prohibits the City from purchasing land, the analysis is also 100% factually incorrect. The City and County will see no reduction in their gross property tax receipts as a result of purchasing the property and leasing it back to us.
So when we see our opponents and the Seattle Times Editorial Board raising the same issues time and again I would just encourage you all to keep in mind that the arena MOU was approved by the Seattle City Council and King County Council after a thorough vetting process, numerous public hearings and close scrutiny by two independent review panels.
In closing I want to wish you and yours a very Happy Thanksgiving Holiday. This is a time to put aside our disagreements and focus on family, friends (and maybe a little football). Go Seahawks!