King County Council to delve into $490 million arena proposal
May 22, 2012
By Warren Kagarise
King County Council members intend to scrutinize a proposal to build a $490 million sports and entertainment arena in Seattle to determine whether financing for the plan is feasible and if arena-related traffic could harm other businesses in the area.
County Executive Dow Constantine and Seattle Mayor Mike McGinn, joined by investor Chris Hansen, a San Francisco hedge fund manager, on May 16 announced agreements between the county, city and the ArenaCo investment group to govern financing for a proposed arena near Safeco Field.
Construction could start after a professional basketball franchise is secured for the arena. Moreover, the public investment could drop if backers cannot secure a professional hockey team for the facility.
The amount of public support is capped at $120 million if organizers secure only the basketball franchise. The total could rise to $200 million if a hockey team is added to the equation.
Plans call for the public financing to come from 30-year bonds.
The proposal heads to the County Council and the Seattle City Council for additional study. Both entities need to approve the agreement for the project to proceed.
The investment group intends to contribute $290 million to construction and more than $500 million to purchase a National Basketball Association franchise. Investors also hope to land a National Hockey League team for the arena.
“The commitment to invest upward of $800 million of private capital in the arena and purchase of two teams represents a strong vote of confidence in the future of our city and county, especially in this challenging economic climate,” Constantine and McGinn said in a joint statement about the agreements. “It is one of the largest commitments of private capital ever made for a project like this in North America.”
Plans call for the facility to hold up to 19,000 attendees for concerts, 18,500 for basketball games and 17,500 for hockey games.
Constantine and McGinn said the project includes numerous protections for taxpayers.
The proposal does not include additional taxes for construction or operations. Investors agreed to be solely responsible for cost overruns and operating revenue shortfalls.
Officials said revenue sufficient to support annual debt service is guaranteed by the investors.
In addition, no public funds can be committed until a basketball franchise is acquired, and the completion of environmental review and permitting processes.
The proposal includes binding nonrelocation agreements for the NBA and NHL teams to cover the full term of public financing.
County Councilman Regan Dunn said the proposal requires scrutiny from the council.
“In the coming weeks I will work with my colleagues on the council to see that this proposal is thoroughly vetted to ensure the county’s interests are protected,” he said in a statement.
(Dunn represents rural areas south of Issaquah and Newcastle on the council.)
County Councilman Joe McDermott, Budget and Fiscal Management Committee chairman, said the proposal “is an exciting proposition, but, of course, there are many questions yet to be answered.”
Constantine and McGinn praised the proposal as a way to bring NBA basketball back to Seattle.
In 2008, team owners relocated the Seattle Sonics to Oklahoma City and renamed the team as the Thunder.
“With this proposal we have a positive opportunity to embrace new professional sports teams and a significant new private investment into our community,” Constantine and McGinn continued.
Still, the prospect of another sports arena near Safeco Field and CenturyLink Field raised concerns about traffic in the neighborhood and congestion concerns at the nearby Port of Seattle.
“Yesterday’s proposal for a multipurpose arena is one more step towards a private public partnership that would potentially bring professional basketball, hockey and other events to our region,” County Councilwoman Jane Hague said in a statement. “On the day after, let us leverage the energy and enthusiasm for this breakthrough and resolve to deal with the issue of if we build it, how will they come — and go?”
Constantine and McGinn pointed to the transportation hub in the neighborhood around the stadium — King County Metro Transit and Sound Transit bus lines, Link light rail, Washington State Ferries, interstate highways and the planned deep-bore tunnel to replace the Alaskan Way Viaduct.
Warren Kagarise: 392-6434, ext. 234, or firstname.lastname@example.org. Comment at www.issaquahpress.com.