Yesterday, Chris Hansen dropped a bombshell by saying he would like to rip up the Memorandum of Understanding (MOU) that he currently has with Seattle and just finance his SoDo basketball & hockey arena himself (or his group, at least). It sounds like an impressive carrot to dangle but is it actually a better deal for the city? You have questions, we have answers...
Wait, I thought the arena was dead after that city council vote.
You thought wrong! Yes, the city council’s 5-4 vote denying the vacation of a critical stretch of Occidental Avenue made Hansen’s plan for the arena impossible. Instead of trying to work around it or find a new location, Hansen simply decided to make the offer something he hopes the council can’t refuse.
So what’s different now?
In the MOU, part of the arena financing was going to include as much as $200 million in municipal-bonds from the city and county. Hansen and his investors would cover the rest and eventually pay back the bonds. Per Hansen’s letter, his group will just go ahead and cover that themselves.
Well that makes much more sense. Those greedy billionaires don’t need our money!
Sure, that’s true. It’s debatable that this is a “better” deal for Seattle though.
Wait, what?
Well, as mentioned, those bonds would have been repaid, which means in the end the taxpayers wouldn’t have lost anything. But under this new deal, Hansen’s group is requiring tax breaks, which means money that the city and county would have made under the MOU won’t be made now.
Like so many things, this might have been more of a semantics shift than anything. During an election cycle, that’s a savvy move.
What are these tax breaks?
Hansen’s group wants two tax credits.
First, they want aa waiver on the city's admissions tax. That’s usually tacked on to any ticket purchased in Seattle for entertainment venues. The current tax rate is 0.05 (5%). Incidentally, both Safeco Field and CenturyLink Field received a credit on this tax, which makes you wonder if they would have gotten it anyway.
Second, they want an adjustment to the city's business and occupation (B&O) tax rate for "revenue generated out of town."
Is that all?
Well Hansen also needs the city council to go back and vote again on that Occidental Avenue street vacation. He still needs that land in order to build the arena and make the surrounding area what it’s supposed to be with parking lots, plazas, and other amenities.
Isn’t that street vital to traffic flow in SoDo so the city can’t live without it?
No, not really.
What if Hansen pays for it?
In a roundabout way, he is. Under the MOU, Hansen’s group would have paid $18-20 million for the street vacation and as a contribution to the South Lander Street Overpass project that the city really needs to get done. Under this new deal, Hansen says his group "will agree, following street vacation approval to commit to the future payment of compensation for the vacated street to the City's financing package for the Lander Street Overpass."
What is the South Lander Street thing again?
The idea is to build a bridge on S Lander Street between 1st Avenue S and 4th Avenue S, crossing over four train tracks and making it easier for freight to move in and out of the neighborhood. Because of concerns over the way the arena could affect freight and port traffic, it’s been linked as a means to get both projects funded. There is a $27 million funding gap for the bridge right now so Hansen’s money would cover most of that.
So is everyone on board with new offer?
Oh my goodness, no. The Port of Seattle and maritime unions have been against the arena the entire time and they’re against it now. Port of Seattle Commissioner John Creighton told The Seattle Times, “It doesn’t change a thing.” Their concerns are that traffic will make it difficult for freight to move freely to and from SoDo, amongst other things.
There’s also the five city Memorandum who voted against the street vacation (to say nothing of how some people reacted to them). There’s no word yet as to whether or not this offer changes anything for them. Hansen just needs one of them to change their vote next time, assuming there is a next time.
After that, you can assume the port and other interests will do what they can in the courts to stop the arena. So, take everything one step at a time.
So let’s say this goes through, do we just get the Sonics back?
Sloooow down. So if this does go through, that makes a couple things much easier.
First, yes, it makes it much more likely that if the NBA chooses to expand, it will choose Seattle. The league is reportedly ramping up relocation talk behind closed doors and could do so once the new collective bargaining agreement between the league and players is ratified. Seattle would be competing with cities such as Louisville, Pittsburgh, Las Vegas, Vancouver, Mexico City. But the fact that Seattle has proven they can support a team and they’d have a state-of-the-art arena would give them a good shot.
Second, this actually makes it much easier for Hansen to attract an NHL franchise as well. Under the MOU, Hansen was required to secure an expansion franchise from the NBA in order to build the arena. Getting an NHL expansion franchise would not be good enough. Now, it doesn’t matter. If the NBA decided to take it’s time, Hansen could focus on bringing pro hockey back to Seattle first to get the ball rolling (or puck sliding).
What happens if the city council says ‘thanks but no thanks?’
Then Chris Hansen needs to figure out what to do with a crapton of SoDo property.
As for Sonics fans, you’ll probably have to accept the fact that if the team ever does come back, they’re going to be in Bellevue or Tukwila, cause Seattle won’t see very many deals, if any, like this again.
- Chris Hansen to Seattle: I’ll just pay for the arena myself [CS]
- Seattle Arena group offers to privately finance arena, fix Lander Street [K5]
- Chris Hansen pledges to go with all-private funding for proposed Sodo arena [ST]
- With arena move, Chris Hansen takes one big step toward bringing Sonics back to Seattle [ST]
- "Vital" Occidental Avenue Stretch Not Actually All That Vital [CS]
- South Lander Street Bridge project designs looking for feedback [CS]
- Multiple sources: NBA expansion to Seattle is on the table [SR]
- Chris Hansen somehow found more SoDo he didn’t own. Now he does. [CS]