Hansen’s property tax break double-dipping could push Seattle taxpayers into red

One of the mysteries of Chris Hansen’s proposed Seattle arena deal is how it would get $15 million in incremental arena property taxes kicked back to help pay for construction, when the arena would be owned by the public and hence be exempt from property taxes. Now, a sharp-eyed (and -eared) FoS reader points out that at a city council hearing back on June 6, Seattle city officials admitted that those taxes would actually be paid by Seattle residents, not Hansen. Transcript of the key bit:

Councilmember Tim Burgess: Now are we counting the property tax in these—?

Seattle Deputy Budget Director Hall Walker: Yes.

Seattle finance aide Mark Ellerbrook: Yes. The 6.7 includes the property tax.

Burgess: Since the city has the land and the building, actually ArenaCo and Hansen are not paying any property tax. That’s gonna be tax-exempt facility.

Walker: They would be paying property tax on the—

Burgess: On their personal stuff that’s in there.

Walker: Which is not insignificant.

Burgess: But the rest of the city’s property tax owners are, in a sense, going to subsidize directly up to 780,000, or million, or whatever it is for this facility. Correct?

Ellerbrook: Yes.

Burgess: So it’s not true that this is not costing the taxpayers of the city anything.

Ellerbrook: The property tax piece gets covered by everybody else.

This is contrary to how the Seattle Times reported it at the time, which was that “taxpayers will have to make up what the arena owners won’t pay in property taxes,” implying that they’d have to fill in the gap in the general fund left by the arena’s tax exemption. In fact, Seattle taxpayers would be paying up to $15 million in property taxes (in present value, according to the city’s own figures) into the arena fund — which on top of the arena’s tax exemption means that Hansen would be effectively double-dipping on this subsidy.

How does that change the overall Seattle public cost figures? It’s hard to know exactly how much Walker’s “not insignificant” property taxes on “personal stuff” would add up to, but it’s hard to see it being more than a small fraction of the total arena value. Adding an additional, let’s say, $12 to 15 million in public cost means Seattle taxpayers can now expect anywhere from a $2 million gain to a $21 million loss on the deal, after all the tax breaks and value of the arena land are taken into account. That’s still not a huge loss, but it’s slightly less sunny than the roughly break-even result that was projected earlier. And it probably knocks Hansen’s plan to a spot behind the San Francisco Giants‘ Pac Bell Park for “most equitable stadium or arena deal ever,” if you’re scoring at home.

In other Seattle arena news, meanwhile:

  • The West Seattle Chamber of Commerce has come out against a SoDo location for an arena, which if you’ve ever driven to West Seattle should be no surprise. (The West Seattle Chamber of Commerce would probably be happiest if all of SoDo were replaced by a 100-lane highway. Or maybe a transporter pad.)
  • The King County council has moved the arena bill from committee to the full council without a committee vote, which could mean that the county will vote on the plan as early as next week. Or, as some members of the Seattle city council think, that the county doesn’t have the votes lined up yet for the bill and is just trying to put pressure on the city council to hurry up with its own bill. One or the other.
  • Wayne Gretzky has been sighted in suburban Bellevue talking with “officials” about “NHL possibilities.” Presumably Mario Lemieux wasn’t available.

8 comments on “Hansen’s property tax break double-dipping could push Seattle taxpayers into red

  1. Pete von Reichbauer, King County Councilman and opposed to the Hansen arena proposal, reportedly was the reason Wayne Gretzky was brought to Bellevue to talk NHL.

    Local news channel Q13 Fox (tinyurl.com/cvhe8b4) is reporting that von Reichbauer has been actively working for an arena in Belleuve. This would make a lot of sense to why he has been opposed to this deal while strongly behind the SafeCo and CenturyLink Fields. Earlier this week, he had been spotted sitting in $500 seats at the Mariners game and is known to be close to the Mariners leadership.

    All in all, this doesn’t look like an arena extortion attempt by Hansen (if it isn’t passed in A, we will build it in city B), but an attempt to make it look like a competing proposal by von Reichbauer (don’t pass A because we have B).

  2. ‘Or, as some members of the Seattle city council think, that the county doesn’t have the votes lined up yet for the bill and is just trying to put pressure on the city council to hurry up with its own bill. One or the other.’

    What the heck does this mean? A) Why would Joe McDermott, Chair of the committee, and supporter of the Hansen plan, put something to full vote if he is not convinced that this will pass? and B) How would NOT having enough votes for the bill be putting ‘pressure on the city council to hurry up with its own bill’? The only way to put pressure would be to HAVE the votes for the bill to pass the county.

  3. You should watch the clip of the issue being returned to the full committee and the fire in Hague’s statements. The other council members are asking about how they’d amend the MOU on the 30th so I certainly don’t expect it to be passed on that day.

    It gets introduced about the 29:30 mark
    king.granicus.com/MediaPlayer.php?view_id=4&clip_id=3657&meta_id=135001

    I guess having the subcommittee examine it was unusual in itself, but then not taking a vote in subcommittee and passing the ball up to the full council is even weirder.

  4. Brian Robinson of ArenaSolution.org just posted an update on SonicsCentral.com confirming that it is a different proposal from a different investor group that is 100% privately financed.

    sonicscentral.com/blog/?p=2245

  5. I am surprised that a smart guy like Brian is even acknowledging this crap. This is a red herring from arena opponents. They are essentially saying ‘hey councils, slow down. Look, these guys want to build a privately financed arena so no need to move so fast on this SoDo deal. We can get a better deal here’.

    That sounds great, the only problem is, no proposal has been presented to date, no land has been purchased, and no investment group has been identified. Not to mention that we all know this will not be a privately financed arena, but hey, why not at least throw that out there if it helps slow down the Hansen deal. Reichbauer and the Mariners have been working behind the scenes to kill this deal all along, which was never really a secret. Now they are teaming up with, or more accurately ‘using’ Don Levin and Gretzky, two complete outsiders. Mariners going even as far as putting Gretzky on TV at least 10 times during their broadcast, making it a point to make sure everyone knew he was in town.

    I have said it before, slowing down this deal is the only chance the arena opponents have. They know that they are running out of arguments. There are no more mentions of I 91 and even Seattle Times, an arena opponent, is laughing at the Port for not having any facts. At this point, the only hope the opponents have is to kill the momentum. And this is just an example of that.

  6. And ChefJoe, there WILL be a vote on Monday and the vote will be ‘yes’.

    Now the City Council, that is another story.

  7. The excitement builds.

    Man, if it’s only $22M over 30 years, I just don’t see the big deal. It’s not like they’re selling off their parking assets to pay for this.

    I’m telling you, even the opponents aren’t that opposed to this deal.

  8. Very interesting that the Bellevue site is being driven by the NHL interests where the Hansen proposal is obviously by Sonics/NBA. The general feeling has been the county should be the smaller of the two hurdles and their committee report was fairly favorable, but they were also the ones that thought they need more study. Neil’s post on it: fieldofschemes.com/news/archives/2012/07/5013_seattle_arena_s.html

    It seems that the pressure will be on the Seattle City council if this thing gets approved, otherwise they risk Bellevue trying to grab the arena and the Sonics before Seattle does. This may or may not be an issue to them. Key arena impacts hardly should be a top issue anymore. Speaking of which, it is interesting to note that Ballmer (potential owner of the Sonics) is the boss of one of the (4?) owners of the Storm, Brummel. I am sure they have their plans already should a new arena be built in the area.

    (And by the way, for the people that watched the clip as well as seen some of the other public hearings, what is up with the standup America guys?)