Hansen proposes to redo KeyArena as concert venue with own money, Seattle mayor says “meh”

I had a long article published at Deadspin on Wednesday, in which I examined the ongoing negotiations between the city of Seattle and various would-be arena builders or renovators, and determined that whatever the outcome, all things considered this could be better than a poke in the eye with a sharp stick:

In coming weeks, the city council is set to decide between two plans for new or refurbished arenas, both of which would involve some public money, but in either case far, far less than the 75 percent that is typical of modern sports facility deals. Whatever happens, Seattle is not going to get royally hosed, and as things go these days, that’s a not insignificant accomplishment.

The current frontrunner, as I discuss in the article, is almost certainly Oak View Group’s proposal to renovate KeyArena in exchange for $40 million in tax breaks (and $50 million in historic preservation credits), which is slated to have a formal MOU submitted by the mayor next week. That would leave Chris Hansen’s plan to build a new arena in the Sodo district (for $70 million or so in tax breaks) out in the cold.

And Hansen apparently sees the writing on the wall, and doesn’t like it, because yesterday he dropped a bombshell announcement: If his new arena is approved, he’ll spend $90 million of his own money to convert KeyArena into two theaters, one indoor, one outdoor:

There are some obvious questions here, like: Is $90 million really enough to do this kind of major retrofit? And, are there enough concerts to go around in the Seattle area to fill both a new arena and a pair of smaller theater spaces? And, who’d be collecting the revenue from these new theaters, and who would pay for maintenance and operations on them? You get the idea.

Still, if you’re running a bidding war for the right to be Seattle’s arena proprietors — which is very much what Seattle should be doing, to get the best deal possible — it’s something you absolutely have to at least look at, if only so you can go back to OVG and say, “Okay, now top this.” Seattle Mayor Ed Murray, though, seems less than enthused, as his development office issued a statement saying, in effect, “too little, too late”:

If the SODO Arena Group was interested in redeveloping KeyArena, they should have submitted their proposal during the RFP process, which would have shown a willingness to work with the City on this project. They did not submit a proposal and continue to show no interest in working in partnership with the City.

This is not how I would play it, needless to say, even if taking a look at Hansen’s latest plan might delay putting the finishing touches on that OVG MOU. And it certainly seems to validate complaints by Hansen’s backers that Murray is trying to grease the skids for the OVG deal, less for reasons of hard cold economics than just because it’s politically easier to get it passed before the mayor leaves office in disgrace at the end of the year. Hopefully the Seattle city council will at least vet all the plans on the table before signing off on anything — at this point it’s likely a decision between one problematic-but-not-awful plan and another, but that still doesn’t mean you shouldn’t stop to consider if one arena proposal is more equal than the other.


22 comments on “Hansen proposes to redo KeyArena as concert venue with own money, Seattle mayor says “meh”

  1. One plan with an RFP to be released on Tuesday has a group with a soft build-timeline in mind committing to build based on concert-only projections and another plan that finally addresses the KeyArena white elephant hinges on Hansen building that SoDo arena he only will build after he gets an NBA team.

    The announcement on SonicsArena (I haven’t seen any release of the 10 page letter he supposedly sent to city council) starts “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.”

    Not the worst problem to have, but it’s probably not fun to be a responsible politician who has to remind sports fans about the bird in hand vs two in the bush.

    • It’s a potential opportunity, though, too: The council has it within its power to say, for example, “Fine, we’ll give you 12 months to get a team and start construction, or else we’re going with OVG.”

      (Not that I think that’s going to happen, but it’s what I’d bring up if I were on the council.)

      • Possibly, although I wonder what the city would be expected to give OVG for introducing that sort of delay and uncertainty about the project. Although maybe that possibility is enough to catch the eyes of a few councilmembers.

        I could have sworn there was some discussion in council chambers about potential legal issues in saying a street vacation only applied to the approved MOU/its timeline, but a lot is being made about it being the hurdle to bringing in new investors/teams/etc. I’m unsure if the council could issue a conditional/short term street vacation permit without opening the city up to legal issues (probably juju about using street vacation processes to dictate development).

        • The city could grant a conditional street vacation especially for that street which for that area is a glorified alley. The Port of Seattle opposes it because they believe that is their territory (although that terminal closest isnt gonna be running or maybe already has stopped). The Port wants to build their own entertainment sector and want all the land. The Port sickens me because they are subsidized although all other west coast ports dont need a 100 million a year in taxpayer money but have opposed the Sodo project on false grounds for years and with their clout and what I perceive as corruption with city hall (we know the port is and it sure looks like city hall is).

          Hansen is offering to solve all their problems with Key and a world class arena and they are saying no to a huge freebie (mostly) for a project by OVG where they are giving up most rights to the center (not just Key) and putting a not insignificant amount of risk in especially with traffic considerations. If nothing else they should be using Hansen’s proposal as massive leverage against OVG. In the end, maybe the council does just that. Most of everything to this point is the mayor’s office and OVG but the council has the final say…not a lame duck, disgusting human being, mayor.

          Its gonna piss me off royally if we find out that 100+ million of taxpayer and/or city bonding capacity is used for an inferior project vs. the waiving of some taxes to begin Sodo (forgot the specific tax but its par for the course in these projects and OVG expects the same).

      • I think there is a bit of urgency to get shovels in the ground as the NHL door is open the widest, but could also close the fastest. League has been waiting on the Seattle market for a long time, and further farting around on Seattle’s part coupled with Houston opening up as a potential market could finally push their patience over the tipping point.

        • True if only because the NBA door is so closed there currently is no door. Every team that looked like they might consider moving over the past few years has now been locked into their current cities. And nobody sounds keen on expansion anytime soon. They’ll have an NBA team again someday but it’s realistically several years away–maybe a decade or more. Absolutely fastest imaginable would be them getting the nod in 3-4 years with then a couple year wait before they actually started play.

  2. While the plan may seem like a hail mary, it makes a lot of sense for the area. Traffic was always a concern: if only one small venue of three will be in use at a time, this alleviates it along with the two levels of parking garage. Having three new venues from one in KeyArena would also be a huge boon to the music and arts festivals, Bumbershoot and Folklife as well.

  3. Just wanted to say that there is rumor that the council is not thrilled with the OED saying what they said. Remember Hansen has a MOU till December and he didnt enforce it to stop the city from going thru the RFP and the subsequent rigged process to choose OVG. The number is FAR greater than 90 million BTW. For lower Queen Anne to accommodate the massive business influx (Expedia,Google,etc) plus a new NBA/NHL venue, the transportation needs will probably reach as high, if not higher, than the cost of the new arena. Now obviously some of that is because of the new businesses but at the same time the arena plays a part in that.

    The Hansen idea for Key Arena makes far more sense with the culture of Seattle Center and for the betterment of the city. Put the stadiums in the stadium district like they should be.

    Remember Ed Murray (disgusting human being that he is) is lame duck and OED’s message comes from him. He should already be under investigation for plenty of things but also the OVG deal is shady as hell. He is trying to ramrod this thing through because it can be part of his “legacy” although most people agree that the NBA wont come to the Key if renovated because first…its probably not likely for 5-10 years but the NHL will come sooner and in 5-10 years time the renovation wont look so great. Especially to the overtly demanding NBA and they will want new digs within 10 more years. They know the political climate and if the city goes OVG, Hansen will re-purpose that land and make money some other way.

    The Hansen v. OVG proposals as it stands today based only on whats on offer is so far in Hansen’s favor (on merit) that one has to wonder how much corruption is going on at city hall to ignore it completely.

    Furthermore if lets say they did ignore OVG and went Hansen’s way and SODO doesnt happen because teams never can be acquired…the concept and cost for the smaller Key venue is probably something that another private party would want to take a crack at even if an eventual major arena comes to Puget Sound. There is definitely enough business for a venue like Hansen proposed to make it and actually would be quite refreshing and would be in line to what most people would like to see the Center become.

    /rant

    • Yeah, I’d want to see all 10 pages of Hansen’s revised offer before saying the city council should halt the RFP process.

      If it has commitments to build, requirements for non-relocate agreements with teams, and the terms he’ll operate this new KeyArena don’t have major downsides (losses are on the city vs our current agreement with AEG with guaranteed payments and profit sharing), it might be worth exploring.

      If it’s “I’ll throw X0 million to reconfigure some seats and add some walls/floors for a parking garage” to make it smaller and then it’s the city’s mess to deal with, that’s not exactly enticing.

  4. Great fodder for discussion, but (as I’ve said here before) it’s all moot because the fix is already in: OVG will get to renovate and operate the Coliseum and there’ll be snowball fights in Hades before Hansen’s group ever get that street vacation…the City doesn’t want competition for their arena from a private facility in a better location.

  5. If there’s an RFP, Hansen didn’t respond and they haven’t rejected all of the RFP bids, the mayor is 100% correct. If the City even entertained the Hansen “bid” while the RFP responses were still active, there’d be one hell of an easy lawsuit. The purpose of the RFP is to have an open and transparent process (regardless of what you think of the parameters) for competition within a specific framework. This is government 101.

    • The city rights and options section of the RFP claimed a lot of flexibility. https://www.seattle.gov/Documents/Departments/economicDevelopment/Seattle%20Arena%20RFP%201-11-2017.pdf

      1) The City reserves the right, at any time and in its sole and absolute discretion, to reject any or all proposals, to waive any irregularities or informality with respect to any proposal, to modify the review period and/or request additional information from proposers to inform and support the evaluation process, and to amend or withdraw the RFP without notice.

    • The MOU, that is valid till December, also states that Hansen can change the public benefits at anytime yadda yadda. He already has before during negotiations along the way. The RFP didnt ask for any other ideas other than a NBA/NHL facility. So yes its outside the scope of the RFP but Hansen can change his public benefits offer at anytime.

      Remember Hansen allowed them to even explore this option (Key) mainly it was coming anyways and has been since Murray entered office (that is when the count became rigged against Hansen). Hansen played nice and allowed it and then it gives shoved back in his face again.

      Anyways, the only reason I care is if the Sonics return but they wont be anytime in the next couple decades. NBA will find somewhere else if they relocate/expand. The Key is a terrible location and they arent gonna be 3rd at the dinner table for a subpar arena and area. So its becoming a whatever situation to me anyways once OVG gets the greenlight.

      • I still have no idea why an MOU approved/signed by the mayor in October 2012 (the effective date?) with a 5 year period somehow ends up with this often stated December expiration. Is there some 45-60 day period where the mayor’s signature is in limbo ?

        http://clerk.seattle.gov/~archives/Ordinances/Ord_124019.pdf

        This Agreement will terminate upon the earlier of the effective date of the Umbrella Agreement (defined in Section 7) or five (5) years from the Effective Date of this MOU.

        • I guess there is a statement about the ordinance being in effect 30 days after being signed by the mayor, so that’d be October 16th + 30 days.

  6. Well the esteemed Mayor Murray resigned today because a fifth victim came forward and alleged that he sexually abused them. The press conference was then cancelled abruptly that was to announce the new MOU with the OVG.

    With the mayor out (thankfully) will this change what has gone on. It sure seems like he is the one who has ram-rodded this whole Key Arena rebuild down our throats!

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