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ESPN: What’s the future of the NBA in Seattle?

ESPN’s Brian Windhorst recently penned an article overviewing Seattle’s work to attract an NBA team. Several excerpts are presented below:

“…the complexities of the so-called New Arena at Seattle Center, the building’s working title, may make it challenging for Seattle to compete for a team if and when the time comes. The situation could even require Seattle to have a second new arena with the NBA team as the main tenant if the city wants to outbid other markets to attract a team, multiple ownership sources told ESPN.”

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“With others in line to get lion’s share of profits, an NBA team would be arriving last to the party. That could dim the NBA’s desire to move into the market when more lucrative options may be available elsewhere, league sources said. In essence, it’s possible Seattle might finally have an arena — but the wrong arena for the NBA.”

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“NBA teams in deep-pocket markets are looking to control their own buildings to capture new revenue. The Warriors’ privately-financed new arena set to open next year in San Francisco is a game-changer: It will open a fountain of new revenue that will make other big markets jealous. Clippers owner Steve Ballmer is in the process of trying to build his own arena in large part because he earns tens of millions less per season than the Lakers in the same building.”

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“This changing landscape is why investor Chris Hansen, who tried to buy and relocate the Kings to Seattle in 2013, is still planning to construct his own privately-financed arena in the SoDo district of Seattle near the baseball and football stadiums.”

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“His arena wouldn’t have the space and traffic limitations at KeyArena and could make an NBA team the primary tenant and therefore be more attractive…[and] would be a strong alternate option…”

Same Street, Better Benefits

Proposed location of SoDo Arena and requested street vacation in Seattle’s Stadium District.

Just over a year ago we submitted a revised application for a conditional street vacation of a one block section of Occidental Avenue South in SoDo, where we hope to build a state of the art arena for the Sonics.

A lot has happened since then, so we wanted to update everyone on where things stand.

As you all know, the Oak View Group has an agreement with the City of Seattle to renovate KeyArena as a new home for the NHL, a venue for Live Nation promoted concerts, the Seattle Storm, and possibly even an NBA team. We’re excited for local fans and wish Oak View Group and city leaders the very best.

But our goal to bring the Sonics back to Seattle doesn’t end there.

We believe having two viable arena options would put Seattle in the best possible position to attract an NBA team. And we believe having competitive proposals effectively creates an insurance policy for the City. If, for example, some future NBA ownership group is unable to make KeyArena pencil out, or if renovating KeyArena to meet NBA standards proves difficult, Seattle will still have a path to attract a team if one becomes available.

So, we’re continuing our work to have an arena project that is shovel-ready, which is an important factor for the NBA to consider Seattle for league expansion or team relocation.

The last piece required for our project to be shovel-ready is the approval by the Seattle City Council of our revised application to vacate a one block section of Occidental Avenue South in Seattle’s zoned Stadium District.

If the Conditional Street Vacation is approved by Seattle City Council, this one-block section of Occidental Ave S. would be purchased from the City at fair market value and vacated for Arena construction if an NBA team is acquired.

Our proposal fell short of approval in 2016 when the City Council last considered our application. Since then we’ve listened to the concerns of the council members and the community and updated our proposal with several key differences. Those changes include:

  • PRIVATE FINANCING – The arena is now 100% privately funded and requires no public financing or subsidies. Plus, the arena would pay many millions in property and other taxes which would benefit of the City and Seattle Public Schools.
  • ZERO RISK – Approving the conditional vacation will not expose the city to any risk or cost because the arena would not be built, and the street would not be vacated, until and unless a team has been secured. Simply stated, no team means no street vacation, which means no risk to the city.
  • IMPROVED FREIGHT MOBILITY – We agreed to contribute an additional $1.3 million to implement SDOT 2016 Freight Master Plan projects, including the Lander Overpass that was approved since the council last considered the vacation. Importantly, the new overpass will not only help freight mobility but also dead-end Occidental just south of the proposed arena, making the one block section of Occidental even less useful for the SoDo transportation network.
  • PUBLIC BENEFITS – Our updated public benefit package totals almost $27 million. Including the cost of purchasing the one block stretch of Occidental plus SEPA mitigation, more than $60 million will be spent in exchange for a small and lightly trafficked portion of a non-arterial street.
  • COMMUNITY BENEFIT AGREEMENT – We have committed to an expanded Community Benefit Agreement (CBA) to foster equity and social justice and provide meaningful benefits to the local communities. The CBA includes economic development, targeted local hiring and contracting, family wage employment opportunities, job training and apprenticeships, and a strong mechanism for ongoing dialogue and partnership. The agreement also establishes partnerships with organizations that serve youth and underserved communities, especially in areas with health and education disparities, and includes a strong commitment to foster the establishment and growth of Women and Minority owned businesses. 
  • JOINT SCHEDULING CONDITIONS – Scheduling conditions suggested by the City Council remain an important part of the street vacation petition. Those conditions will ensure a coordinated approach to traffic and transportation issue in the Stadium District and minimize the potential for multiple events on the same day.

On April 6, 2017, the Seattle Design Commission approved the urban design and public benefit of the proposed SoDo Arena and recommended the conditional street vacation be approved by the Seattle City Council.

Occidental Avenue South – Existing conditions

We look forward to making our case to the City Council, and we remain committed to doing everything possible to bring back the Sonics and build an asset that will benefit the region for many years to come.

By approving the conditional street vacation for the SoDo Arena, the City Council can send a strong and clear message to the NBA that our city is ready – and eager – for the return of the Sonics to Seattle.

Happy Holidays – 2018 and Beyond

As we look forward to taking some time off this holiday season, we want to take a moment to say thanks to all of you who have worked so hard to help return the NBA to Seattle.

We’re excited by the news that the NHL will be accepting an application for a Seattle team to play at KeyArena, and we wish Oak View Group and city leaders the very best in making that dream a reality for fans.

And in the new year, we look forward to working with Mayor Durkan and the City Council to advance our street vacation petition. We still believe our proposal to build a 100% privately financed arena in Seattle’s stadium district is the best path to bringing back the Sonics. Having a shovel-ready arena project in SoDo will only help Seattle put its best foot forward in attracting the NBA back to our city.

Our goal has always been and will always be the same…to see the Sonics playing again in Seattle. We will continue to do everything we can to help make that happen.

Thank you again from our entire team. We wish you happy holidays and a happy new year!

— Chris, Wally, Erik, Pete, and Russell

Sonics Arena Team on the Seattle City Council’s approval of the Oak View Group MOU

More than six years ago, we began our effort to bring the Sonics back to Seattle. That remains our goal today.

While we respect the City Council’s decision to approve the Oak View Group MOU we continue to believe our plan to build a 100% privately funded arena in SoDo represents the best chance to bring the NBA back to Seattle.

Our team of local investors first came together because there was no effort underway to bring the NBA back to Seattle. We purchased land in Seattle’s Stadium District, paid for a lengthy environmental review, traffic and parking studies and economic impact studies. We worked with the Seattle Arena Review Panel, King County Expert Review Panel, the City and County Councils through numerous hearings, the Seattle Downtown Design Review process and Seattle Design Review Commission. In short, we did everything asked of us by Seattle officials. We believe this lengthy review, along with the input we heard from the broader community, resulted in a better proposal for everyone.

Today we remain steadfast in our goal to have the NBA once again playing in Seattle, so we will keep the land we own in Seattle’s Stadium District until that commitment has been made.

Having two viable arena options puts Seattle in the best position to attract an NBA team. If some future NBA ownership group is unable to reach a competitive deal at Seattle Center, having an alternative is vital for the City and Sonics fans.

We ask the City Council to consider our revised application for a conditional vacation of a one-block section of Occidental Avenue South. We will not break ground on an arena unless a team is secured, so granting the conditional vacation poses no risk to the City and it doesn’t impede Oak View Group’s arena plans.

And if Seattle Center does indeed end up once again being the home for the Sonics, we’ll be right there with you to cheer them on.

— Chris Hansen, Wally Walker, Erik Nordstrom, Pete Nordstrom, Russell Wilson

Public Subsidies in the OVG Proposal

The Seattle City Council is currently working to finalize an agreement with Los Angeles based Oak View Group (OVG) regarding their proposal to renovate KeyArena as a sports and concert venue. Their proposal has been promoted as being 100% privately financed, but our own financial analysis has identified a taxpayer subsidy of $464,890,000 over the initial 39-year term of the proposed lease at KeyArena.

A transparent, public process to thoroughly vet any project of this magnitude is critical to protect the interests of the public, and it’s an appropriate expectation by Seattle taxpayers. It may be that after a public discussion of this public subsidy, our elected leaders will choose to enter into a formal agreement with OVG.

But we ask why the council is rushing the approval process before a thorough and transparent review of their proposal’s financial details can be conducted. And we ask why they inserted “exclusivity” language into the MOU, stating the city shall not support any live entertainment venue with a capacity of more than 15,000 seats within Seattle. This clause hands OVG a monopoly and diminishes the city’s negotiating power and chances to attract an NBA team.

We believe our own proposal to build a 100% privately financed, multi-purpose arena in Seattle’s Stadium District has benefited from such a thorough review. And the time the city has taken to conduct a robust and transparent vetting process has created a better deal for the public.

For example, our proposal now includes a privately financed plan to remodel KeyArena as a mid-size music and arts venue. A plan we believe better fits the Uptown neighborhood, the mission of Seattle Center, and the long term transportation goals for our region. And our proposed arena in SoDo will be built on private land, which, unlike the OVG proposal, means we will pay property tax. Those taxes should generate over $300 of property tax revenue, over half of which would go to Washington State Public Schools.

Here’s a breakdown of our analysis of the publicly available details of Oak View Group’s proposal:

Analysis of the Oak View Group MOU for the Redevelopment of KeyArena

OVG has publicly described their redevelopment as 100% privately financed. Technically, this is a true statement because the lenders and investors will be private. But, this fails to acknowledge the source of the revenue streams that will pay off the financing. The MOU reveals that the redevelopment will be publicly funded to a large extent.

The MOU includes public funding streams totaling more than $460 million to be paid by the City to OVG to subsidize its operations over the life of the lease. A summary of the streams is in this table:

The amounts of each subsidy are based on “incremental revenue” according to the MOU, which suggests that the City is being “made whole” on its revenue sources from KeyArena (via a Baseline Rent payment). But OVG negotiated inflation-only (CPI) increases to the City’s “make whole” payment, rather than increases based on performance of the Arena or financial needs of Seattle Center. The City’s “make whole” revenue streams are capped, while OVG’s upside is unlimited.

Based on the MOU, in year one of operations, the subsidy streams should yield a $7.4 million payment to OVG. The $464 million assumption is based on that $7.4 million and a best case scenario for the City (inflation and growth both fixed at 3% for 39 years). The more likely outcome is a continuation of the historical trends (summarized in the table above), meaning the CPI-adjusted Baseline Rent will increase only modestly, (3% or less) while Arena and Team revenues increase at a much higher rate. The MOU has the City assuming this risk for a full 39 years, plus the potential for another 16 years.

What happens if historical trends hold true? If Arena revenue increases by 4% and CPI averages 2%, by the 10th year of 39, the City subsidy to OVG will have increased by approximately $5 million to over $12.3 million per year, while the Baseline Rent that the City keeps will increase by only $1 million per year. By the later years of the MOU, the City will be providing massive subsidies to OVG decades after most other public entities have stopped providing these large subsidies.

Some financial elements of the MOU are not included above. 100% of Arena naming rights that historically have been shared with the City, as the owner of the facility, will go to Oak View Group under the terms of the proposed MOU. Recent naming rights’ deals suggest that this means the city is forgoing between $4 and $6 million annually (contracted escalator clauses take it much higher), or about $195 million (at the midpoint) over the course of the proposed lease.

Oak View Group will pay no property taxes despite being a for-profit Limited Liability Company based in Los Angeles. While this is not a direct public subsidy, it is a very large opportunity cost to the City, its taxpayers and our schools. A $600 million private arena should generate hundreds of millions of property tax dollars over 39 years, over half of which would go to Washington State Public Schools.

The City receives an inflation adjusted baseline rent which begins with a baseline calculated from recent four years’ operation at Key – a baseline significantly lower than what was generated for the City when the Sonics were a tenant or would be if the stated goal of securing an NHL franchise to play at the facility is achieved. In other words, the baseline rent is being calculated from the recent, relatively depressed KeyArena levels.

Additionally, over the first ten-years of the MOU term the City is shorted on the baseline rent payment by $3.5 million. (MOU – Page 9 – “Baseline Rent Payment” provided, with respect to each of the first ten (10) full calendar years after the initial calendar year in which a Baseline Rent Payment is due, such amount shall then be reduced by Three Hundred Fifty Thousand Dollars ($350,000))

The City is obligated to make up to $2.6 million annual relocation payment to the Seattle Storm during any KeyArena renovation that could take 2-3 years – that’s $5.2 to $7.8 million, a figure not included in the public subsidy amount.

Finally, the MOU grants a 3-year exclusive option to OVG, but does not charge them any meaningful amount for that option. This could preclude other arena options from being considered during that time.

A Summary of Public Subsidies to the OVG Seattle Center Project

Other Subsidies Not Included:

  • Naming rights revenues previously went 50% to the City, as the owner of KeyArena. This was a $1MM per year payment during the previous Sonics lease (1995-2010), which is not included in the “baseline payment” calculation. The MOU gives 100% naming rights to OVG. This represents a further subsidy of an estimated $4-6MM per year from the City to OVG (based on recent naming rights deals) or $195MM at the midpoint.
  • The OVG baseline payment meant to “make whole” the City is to be shorted by $350K per year for the first 10 years of the MOU.
  • The City of Seattle is obligated to make relocation payments to the Storm in order to facilitate OVG’s renovation efforts, totaling $2.6MM per year of development. Not included in the total public subsidy above.
  • Despite being a private, for-profit entity, OVG pays no property taxes, which would potentially push the property tax bill onto the Seattle taxpayers. This is because the arena may cause total value of taxed real estate to rise, but the number of taxpayers will not. The SoDo Arena may generate over $300MM in property taxes over 39 years, more than half of which would go to Washington State Public Schools.

Footnotes:
• Consistent with the MOU, 3% growth is assumed on each line item, including the City’s baseline share of each line item
• Per the MOU, the subsidy on 1st Ave Garage and Admissions Tax is 100% of incremental revenue for all 39 years of MOU
• Per the MOU, the subsidy on all other streams is 75% of incremental revenue for 10 years, 50% for remaining years

 

A Proposal to Redevelop KeyArena

Today, our investment group is making an offer to privately develop KeyArena into a mid-size concert venue, following the completion of construction of the new SoDo Arena. We believe our creative, privately financed proposal offers an ideal solution that ensures the continued vibrancy of the Seattle Center, while minimizing the negative impacts on the surrounding residents, businesses, and stakeholders.

In summary, we are offering to privately finance and build three new and unique venues: The SoDo Sports Arena, The Seattle Center Concert Venue, and The Seattle Center Amphitheater.

The key highlights of our proposal are as follows:

Three New Venues at KeyArena Site: As shown in the attached drawings and animations, following the completion of the construction of the SoDo Arena, we would develop KeyArena into two mid-size concert venues and a 500-seat theater. KeyArena would effectively be split in half, with a 6,200-seat indoor concert venue on one side and a 3,000-seat outdoor, covered amphitheater that flows outward toward the Seattle Center fountain on the other side.

Complement to SoDo Arena: We believe these new venues would be a perfect complement to the larger SoDo Arena’s 16,000-21,000-seat flexible capacity. It would also address the City’s need for a mid-size concert venue and amphitheater. We believe the combination of a completely new and modern SoDo sports arena and the new Seattle Center Venues is vastly superior to a single, site-challenged sports venue at KeyArena.

Additional Parking: By raising the floor, we would add over 500 permanent parking stalls, which could be used for both day and event parking.

Minimizes Negative Impacts: We believe the reduced capacities and added parking for these two venues would greatly reduce the traffic and transportation impacts on the surrounding residents and businesses that plague alternative proposals to redevelop KeyArena.

Privately Financed: Our group would cover all construction costs, ongoing capital improvement costs, and cost overruns. We would not seek any public financing or public subsidies except for negotiating a mutually agreed upon long-term ground lease for the arena site. There should also be a short-term waiver of admissions taxes on the arena if an NHL or NBA team plays there as a temporary home during the construction of the SoDo Arena.

Ensures Continued Vibrancy of the Seattle Center: Most importantly, we believe our creative, dual venue solution would be an ideal fit with the current Seattle Center tenants and stakeholders. This solution would greatly enhance Seattle Center community events such as Bumbershoot, and would ensure the continued vibrancy of the Seattle Center for many decades to come.

Preserves KeyArena Optionality: Our proposal would also ensure the city has a venue that can host an NBA or NHL team as an interim solution if an opportunity to acquire a team materializes in the next three years. If KeyArena was demolished, we do not believe there is an alternative venue in the area that would meet either league’s standards. We also wanted to reiterate that we would welcome the opportunity to work with an NHL partner, to host professional hockey at the SoDo Arena.

We would also like to make clear that our proposal is an offer to the City of Seattle – not a demand. There has been some legitimate concern on the part of the City as to the future of KeyArena and the Seattle Center, if a new SoDo Arena was completed.

We have always been committed to helping the City find a long-term solution for KeyArena, and under the old MOU had dedicated $7 million to help the city determine a long-term solution. Now, with the MOU expiring in December and the City evaluating a plan to develop KeyArena into a publicly subsidized sports arena, we felt compelled to offer an alternative solution that we believe better meets the needs of the City, the Seattle Center, the Lower Queen Anne neighborhood and prospective professional sports’ tenants.

Why SoDo is the Better Deal for Seattle

Recently, SoDo Arena investors Pete and Erik Nordstrom talked about the benefits of our plan vs. the plan put forward for KeyArena in the pages of the Puget Sound Business Journal. Benefits that include:

  • Private financing
  • Sizable tax revenues for the city
  • A more economically attractive location for potential team owners

You can check out the Nordstrom’s full piece from the Puget Sound Business Journal here: http://bizj.us/1p8xe3

— Sonics Arena Team

UW Evans School Compares Tax Revenues From SoDo Arena and KeyArena

A couple months ago, we funded a study by the University of Washington’s Evans School of Public Policy & Governance for a public finance analysis of the SoDo and KeyArena proposals. We wanted the Evans School to independently analyze how each proposal would affect the tax revenues of Seattle.

The final report is now out, and it has some interesting findings. As they write (emphasis ours throughout):

Under a “base case” set of assumptions applied to both proposals, the model suggests the following:

SODO’s estimated contribution to the City General Fund is three times OVG’s. The SODO arena would send an estimated $103 million (inflation-adjusted) of new tax revenues to the City General Fund over 35 years. Under the same base case assumptions OVG would generate just under $34 million. These estimates are also consistent across different scenarios. For example, under an “aggressive” set of assumptions SODO would send just short of $111 million to the General Fund, where OVG would send just short of $47 million. “Aggressive” in this context means more successful teams that could command higher ticket prices, higher attendance at games, and other assumptions that would increase revenues. By contrast, under lower ticket prices, lower attendance, and other “conservative” assumptions, SODO and OVG would send to the General Fund just short of $67 million and just short of $25 million, respectively.

Both plans redirect roughly the same amount of tax revenue. In the base case scenario, the SODO plan redirects approximately $205 million of City admissions tax. The City admissions tax has historically financed the public’s share of capital investments in publicly-owned Seattle sports and entertainment facilities. The SODO group’s position is that collecting that tax on a privately-owned facility puts team owners at a competitive disadvantage relative to markets that do not collect that tax. OVG asks the City to redirect to the City Arena Fund approximately $167 of new City retail sales tax, construction sales tax, admissions tax, parking tax, and the leasehold excise tax. If OVG asks the state and county to redirect their respective portions of those same taxes, then under the OVG plan the total taxes redirected exceed $200 million.

OVG’s impact on the City’s finances hinges on revenue sharing. OVG has said it will consider transferring some portion of the revenues from the City Arena Fund to the General Fund once the City Arena Fund has received $40 million of redirected revenues. Our model indicates the City will reach that threshold in approximately year 9, and it assumes an annual transfer to the General Fund equal to 10% of the revenues that flow to the City Arena Fund each year. Of course, the City could negotiate a much higher sharing rate and send more revenue to the General Fund as a result. This assumes, of course, that the Arena Fund revenues are more than adequate to cover the arena’s annual capital spending needs. It also assumes the City Arena Fund would not be the funding mechanism for a major arena renovation. Recent experiences suggest that even with a properly-funded capital spending plan, most NBA facilities require a major renovation 12-15 years after opening, with renovation costs ranging from $50 million (New Orleans) to $192 million (Atlanta). If the City Arena Fund is the funding source for a renovation, those costs would almost certainly exceed OVG’s contribution to the General Fund.

SODO would contribute approximately $100 million of property taxes to local governments other than the City of Seattle, especially schools. We focused on City of Seattle tax revenues because we can assume both proposals will advance the tax arrangements with the City outlined in their public statements to date. We are less sure about similar arrangements with King County, the Port of Seattle, Seattle Public Schools, and other overlapping local governments. However, we can be sure that: 1) OVG will not pay property taxes because the renovated Key Arena will remain publicly-owned; 2) SODO will be privately-owned; and 3) SODO has pledged to pay all applicable local property taxes. Seattle Public Schools’ tax rate in 2016 was $2.18 per $1,000 of assessed value, and the State School Fund rate was $2.17 per $1,000 of assessed value, for a combined schools rate of $4.35. At that rate, SODO would contribute $53 million (inflation-adjusted) to public schools over 35 years. Note also that after the state budget passed in late June, the State Schools Fund rate in Seattle will likely increase. Add to that an additional $3.51 per $1,000 for the ports, emergency medical services, and other local taxing jurisdictions, and SODO’s total property tax contribution to governments other than the City of Seattle is approximately $98 million.

While tax revenues is just one of many factors the Seattle City Council needs to consider, we believe the findings of the Evans School — when combined with the clear traffic/parking/transportation benefits of SoDo, as well as the fact that our project will be entirely privately financed — highlight that our proposal for a NBA/NHL arena in Seattle Stadium District will benefit, rather than burden, Seattle and its taxpayers.

You can check out the full Evans School report at their website.

The Three Ts: Transportation, Timing, and Taxes

In response to recent questions raised by some, we would like to share a financing letter provided to us by JP Morgan Chase & Co, the largest bank in the U.S. and one of the pre-eminent lenders in professional sports. While similar in some respects to Oak View’s Goldman, Sachs & Co financing letter, a notable difference is that there is no mention of “tax rebates” in the JP Morgan financing letter. This is because no public tax money is required for the SoDo Arena project.

As we have highlighted on a number of occasions, with over $150 million in capital invested in real estate and legal and entitlement costs related to the arena project, we have already invested the vast majority of the equity necessary to build a world class sports venue. Accordingly, this letter should provide clear evidence of the ability of our group to finance the project — and do so without public financing from the City, County or State.

We continue to believe that an arena in SoDo is the best option for the City and the region as a whole. It is clearly the location with the best parking and transportation infrastructure. With a world-class design and an entitlement process nearly complete, the timing of our project is years ahead of any KeyArena redevelopment.

Finally, since our arena project will be completely privately financed — with our group covering all construction costs and cost overruns — there will be a significant tax windfall for the City, County, and State.

We believe that when you compare our plan and the plan for KeyArena, it all comes down to these three Ts: transportation, timing, and taxes. And on every front, the SoDo Arena offers a better solution for the City and its sports fans.

— Chris Hansen, Wally Walker, Erik Nordstrom, Pete Nordstrom, Russell Wilson
View the financing letter:

SoDo Arena Comparison with KeyArena Proposals

From arena design, to transportation and parking, to the need for public financing and funding, to city tax revenue generated — there are major differences between our arena plan in Seattle’s Stadium District SoDo and the proposals for KeyArena.

 

  • The RFP said no public financing. The Oak View Group (OVG) and Seattle Partners (SP) proposals both require public financing. We do not.
  • OVG and SP both offer “music-first” proposals that could make attracting a NBA or NHL team less likely.
  • Our SoDo proposal does not ask for exclusivity. If OVG or SP proposals are granted the exclusive right to build an arena in Seattle it could force prospective NBA or NHL owners to look outside the City to seek a better share of arena economics.
  • The OVG and SP arena proposals will cost the city — public financing, taxes, parking, sponsorships, exclusivity, etc. In contrast, our SoDo arena proposal will benefit the city: 100% private financing, no financial risk, $27 million in public benefits including $8 million in public art, and significantly more new tax revenue that flows directly to the City.
  • Is the Port of Seattle really considering spending $25-30 million of King County property tax money on a parking garage for OVG while investing only $5 million in the Lander Street Overpass that directly benefits the Port?
  • The OVG and SP proposals both ask for significant public subsidies — the present value of which we estimate is well in excess of $200 million.
Financing
OAK VIEW
GROUP
SEATTLE
PARTNERS
SODO
ARENA
Total Cost $564M $579M $600M+
Hard Owner Equity ? ? $200-300M (including $100M+ invested to date)
Synthetic Equity/Quasi-Equity ? ? 0
Private Debt ? ? Balance
Public Debt 0 $250M 0
Risks to City
OAK VIEW
GROUP
SEATTLE
PARTNERS
SODO
ARENA
Entitlement/Development/Deposit Cost Risk Yes Yes No
Cost Overrun Risk Yes ? No
Capital Improvement Cost Risk Yes Yes No
Exclusivity Risk ? Yes No
Public Subsidies
OAK VIEW
GROUP
SEATTLE
PARTNERS
SODO
ARENA
SODO ARENA
ESTIMATED TAXES*
City County State Total
Admissions Tax Waiver or Recapture Yes Yes Yes
Taxes on Arena Construction Yes Yes No 11.5 2.0 29.0 42.5 one-time
B&O Tax ? Yes No 1.6 1.6 year one
Sales Tax On Concessions & Merchandise ? Yes No 0.4 0.1 3.9 4.4 year one
Property Tax ? Yes No 1.5 0.4 3.2 5.1 year one
Lease Excise Tax Yes Yes No year one
Parking Tax Yes Yes No 0.6 0.6 year one
Utility Subsidy ? Yes No
Parking Revenue Subsidy Yes ? No
Seattle Center Sponsorship Sales ? Yes No
Landmark Designation Benefits Yes No No
Total One-time Taxes 11.5 2.0 29.0 42.5
Total Annual Taxes (year one) 4.1 0.5 7.1 11.6

*Based on two team building (NHL & NBA)

 

For Reference: KeyArena RFP Redevelopment Submissions to City of Seattle

SoDo Arena Project Updates

On April 6, the Seattle Design Commission approved the urban design and public benefit of the proposed SoDo Arena and recommended the conditional street vacation of a one block segment of Occidental Avenue South be approved by the Seattle City Council.

This video is a condensed version of our presentation to the Design Commission, highlighting how the new proposal addressess the concerns raised by the Seattle City Council, including additional public benefits, mobility improvements for the Seattle freight community, and importantly, the SoDo Arena project is now 100% privately funded.

The next step is for the Seattle City Council to vote on the street vacation. If approved, we stand ready to get to work bringing the Sonics and the NHL back to Seattle!

To the Sonics Faithful

We’re excited to announce that we just submitted a new petition to the Seattle Department of Transportation (SDOT) requesting the vacation of a portion of Occidental Avenue South to allow construction of the SoDo Arena.

If approved by the City Council, this conditional street vacation will finally put us in position to work with the NBA and NHL to acquire teams for Seattle.

This is the piece of Occidental Avenue S. we’re asking the city to vacate.

Since we last submitted a street vacation petition, we have reworked our proposal to address the concerns raised by Seattle City Council members.

This new petition incorporates all amendments to the previous petition considered by the City Council, and builds on it with several important differences:

  • The Arena Will Be 100% Privately Financed – The Arena requires no public financing – it will be 100% privately financed.
  • Traffic Improvements – We are contributing an additional $1.3 million to implement several SDOT projects in the 2016 Freight Master Plan – on top of the benefits recommended by SDOT and Seattle Design Commission.
  • No Team Means No Arena Means No Vacation – There will be no vacation unless and until an NHL or NBA team is acquired and the arena is under construction. If a team isn’t acquired and the arena project does not get built in this location, the street will not be vacated.
  • Joint Scheduling Agreement – An agreement has been made with the Seahawks, Mariners, and Sounders, ensuring no major event will occur at the arena at any time that overlaps with major events at Safeco Field or CenturyLink Field.

Also, since the City Council considered the previous street vacation petition last year the long-stalled Lander Overpass project is close to being fully funded, with the SoDo Arena making a contribution to that important freight mobility project.

In addition, the Community Benefit Agreement and Labor Peace Agreement remain in place.

Recent rendering of the arena — picture a sea of green and gold as tip-off approaches.

All told, the new benefit package totals almost $27 million, not including the mitigation that will be required by the Master Use Permit approval or the cost of purchasing the section of Occidental.

The years-long Environmental Impact Statement for the arena proved that this little-used section of Occidental will have minimal effect on the flow of traffic through the stadium district. Just like the vacation of Occidental that was approved for Safeco Field two blocks north of the Arena site, the public benefits of the new venue will far outweigh the minimal effect.

As we’ve said before, approving the street vacation will not interfere with the City’s RFP process for Key Arena. Any Key Arena renovation plan will take 5-7 years to complete. Our plan, on the other hand, can be ready to go quickly with the street vacation. This puts the city in the best position to take advantage of any franchise opportunities.

At the end of the day, our #1 goal is bringing the NBA and NHL back to Seattle, and we look forward to working with the Mayor and the City Council as they consider the revised petition.

Let’s Bring ‘Em Back!

— Chris Hansen, Wally Walker, Erik Nordstrom, Pete Nordstrom, Russell Wilson.