Chris Hansen offers to forgo public financing for Seattle Arena
Could a new Seattle Arena be built without public financing? A new proposal indicates that principal investor Chris Hansen is now open to the possibility.
A King 5 report says that Hansen’s investment team has offered to forgo public financing to build a sports arena in SoDo. The group also offered to cover a funding gap to build an overpass over Lander Street to ease concerns about congestion near the Port of Seattle.
The offer, signed by Chris Hansen, Wally Walker, and Pete and Erik Nordstrom, could be a major turning point in Hansen’s attempt to bring a professional basketball and/or hockey team to the city. Conditions of the offer include that the city agrees to vacate a one-block stretch of Occidental Avenue, waive the city’s admissions tax and have an adjustment made to the city’s B&O tax for revenue generated out of town. The street vacation was a major hiccup in May, when the city council voted 5-4 to reject the vacation proposal.
The investment group posted a letter on Sonicsarena.com addressing the issue Tuesday, writing that they decided to take a “step back” to evaluate their options and better understand the council’s concerns following the rejected proposal:
For the past five months, we’ve been doing just that. We have carefully considered the various concerns expressed by Council members and identified steps we could take to address those concerns. In a letter to the Mayor and King County Executive — both of whom share our goal of bringing the Sonics and NHL back to Seattle — we described the steps we are willing to take to move the Arena project forward.
First, we will direct contributions to a package of additional SODO traffic improvements, which will improve freight mobility through the area.
Second, we agreed to commit future payment of compensation for the vacated street to the city’s financing package for the Lander Street Overpass, thereby helping to close the funding gap for that important project.
Finally, we have agreed to revising the street vacation petition to eliminate public financing of the Arena. Terminating the MOU would allow the city and county to recoup the $200 million in debt capacity and free-up Arena tax-generated revenue streams.
To make this all possible we have asked for approval of a revised conditional street vacation, a waiver of the city’s admissions tax, which has been granted for the other sports venues in Seattle, and an adjustment of the city’s B&O tax for revenue generated out of town.
We are hopeful these additional steps will address the concerns of the Council so the Arena project can move forward – which remains the critical first step to bringing the NBA and NHL back to Seattle.
— Chris Hansen, Erik Nordstrom, Pete Nordstrom, Wally Walker
King County Executive Dow Constantine issued a statement Tuesday in response to the offer to privately finance the arena, saying: “Chris Hansen today demonstrated his continued commitment to building an arena, and to take advantage of an improving economy. His efforts will strengthen our ability to compete for an NBA team. We won’t stop until we bring the Sonics home.”
Taxpayers have played major parts in subsidizing the city’s sports arenas — CenturyLink Field and Safeco Field– and helped pay for a renovation to KeyArena, which previously housed the Sonics until the team moved to Oklahoma City in 2008.
There are currently no teams on the cusp of leaving their respective cities, but NBA.com’s David Aldridge wrote Monday that he believes the NBA should do right by Seattle and bring the Sonics back as an expansion team. He writes that, though the league doesn’t need to be watered down any more than it already is, the league is in prime financial condition and that franchises have never been more valuable.
“You could make an argument based on geography, on making things easier for the Portland Trail Blazers and Utah Jazz by adding another team closer to them,” Aldridge wrote. “But this isn’t about scheduling. It’s about doing what’s right. Things got very bad between the city and the league toward the end, and there was a lot of bile and bad feeling generated on both sides. But that has to stop.
MOU with Chris Hansen set to expire
The Memorandum of Understanding between Chris Hansen and his group with the city and county that was signed in 2012 is set to expire next year.
Here’s an excerpt of the letter, via King 5:
The recession is behind us and we are deep into this new economic cycle. Interest rates have declined and the NBA has completed its new national television contract, creating more financial certainty in the industry.
These considerations lead us to suggest a new proposal. Our goal has always been to return the NBA to Seattle and to build a new arena to make that possible. Our partnership with the City and County started five years ago was based on a recognition that private financing of a new arena in the prevailing economic conditions was not economically feasible. The goal of this partnership was to build the arena and bring an NBA team to Seattle. Public financing was simply a mechanism that made that possible at the time.
We have concluded that a changed economic climate makes possible the private financing of the arena. For that reason, and to address concerns expressed by City Council members, we would consider revising the street vacation petition to eliminate public financing of the arena. In such a case the MOU would be terminated and the rights and obligations of the parties under the MOU would end. The City and the County would recoup the $200 million in debt capacity and tax revenue streams generated by the arena would cease to be encumbered for arena debt service.