Transaction Details

Memorandum of Understanding (MOU) between the City, County and the Investment Group caps public participation at $200 million, which will be fully repaid by Arena generated revenues.

  1. Taxes include incremental property tax on increased property value of the Arena, B&O taxes on Arena and team operations only, sales tax on merchandise and concession at Arena events only, and Admission tax on Arena events only.
  2. Insures only those attending Arena events will pay for its cost.
  3. While there is unquestionably a “substitution” of entertainment dollars in the region that will be re-directed toward Arena events, there is minimal substitution of the taxes in question as the property tax is on the incremental value of the property created, the B&O tax is on businesses that would not exist (NBA/NHL), the admissions tax does not apply to most other forms of entertainment, and the city does not collect admissions tax on Seahawks', Mariners' or Sounders' game tickets.
  4. Security reserve fund will be increased if Arena does not meet minimum profitability thresholds.

The MOU includes many important taxpayer protections, including:

  1. No new taxes being sought for construction or operations.
  2. Binding non-relocation agreements in place for duration of lease.
  3. Security reserve fund established to provide additional level of taxpayer protection.
  4. Security reserve fund will be increased if Arena does not meet minimum profitability thresholds.
  5. Annual debt service guaranteed by investors.
  6. Private investors solely responsible for any cost overruns and operating revenue shortfalls over the life of the facility.
  7. Investors will contribute $2 million per year into a capital expenditure fund and will pay for building maintenance and capital improvements.
  8. While investors will pay for any tax shortfalls, tax surpluses will go into a Capital Reserve Account used to make capital improvements to the building or pay down the public debt.
  9. If only an NBA team is acquired, public contribution is capped at $125 million until an NHL team is acquired.
  10. City will own the land and Arena structure outright.
  11. City and County have priority repayment position from Arena revenues.
  12. The Investor Group’s equity investment in the Arena and NBA franchise will serve as collateral against the City’s contribution.

Prior to any public financing the following conditions must be met:

  1. Acquisition of NBA franchise and NBA acknowledgement of the Arena lease and non-relocation agreement in place.
  2. Successful completion of all land use processes, environmental reviews and permit acquisition.
  3. Construction financing secured and Arena and NBA Team domiciled in Seattle for tax purposes.

Why is Public Financing Needed for the SoDo Arena? »
Answering Questions About Land »
Arena Public Exposure and Risk Comparison »
How Seattle Compares to Other Pro Sports Markets »
Seattle City Council’s Schedule for Arena Review »
Clarifying the Arena Proposal for the Seattle Times »