Two private developers express interest in renovating KeyArena, world has turned upside-down

In the wake of Chris Hansen’s surprise announcement that he’d shoulder all the construction costs of a new Seattle arena (or at least front the money for all of them, though he’d still pay some of them off with tax breaks), another potential bombshell: Both the Oak View Group, an entertainment venue business launched last year by former AEG exec Tim Leiweke and artist manager Irving Azoff, and AEG itself have expressed interest in renovating KeyArena to bring in NBA and NHL teams.

“We believe in the KeyArena location,” Leiweke, CEO of the 11-month-old Oak View Group, told The Seattle Times in an interview Thursday night. “We believe that the studies have proven — and we will continue to do additional studies as we go through this process — that there is a chance to renovate and make that arena work for music and sports.

“And the economics are such that if the right private-public partnership can be established, that it will stand alone on its own two feet without the rest of the land around it having to be developed.’’

If you’re like me, your alarm bells probably went up at “the right private-public partnership,” since that is almost always code for “we’ll build it … for a price.” The last best estimate of the cost of Key renovations was $285 million; while Leiweke told the Times that “we understand that the private sector is going to have to do the heavy lifting here,” there are no details yet of what exactly Oak View would be asking for from the public side, in either cash or tax kickbacks.

That said, Seattle could do far worse than suddenly having three different developers fighting for the right to build a new or renovated arena. As the Times’ Geoff Baker writes:

That’s great news for NBA fans and anyone wanting the NHL here. Two arena locales close to the downtown core will openly compete; with NBA and NHL leadership looking on, knowing a winning site won’t be in some distant suburb… Seattle has become a wealthy, desired place where many more people and businesses than ever, sports leagues included, want to be. And like the most beautiful woman at the dance, we don’t have to leave with the first guy showing up in a designer suit.

That’s, um, only a slightly creepy metaphor, Geoff, but the point is valid: All else being equal, it’s always better to have options, since you have the potential to drive suitors into a bidding war. Possibly not a hugely lucrative bidding war — I remain skeptical that there’s a ton of money to be made in building or renovating a Seattle arena — but competition is always good for getting the best price, so kudos to Seattle politicians for driving a hard bargain. Now to see if they can pick a winner based on what will be the best deal for residents, and not just on which powerful locals are shouting the loudest.

Hansen offers Seattle arena with no public money, fine print means he’d still get public money

Well, huh: Would-be Seattle NBA owner Chris Hansen, apparently realizing his plans were going nowhere since the city council’s May vote to disallow closing a street to make way for his proposed new arena, has upped the ante by saying he will now build the project entirely with private money if it’s approved. Sort of, anyway:

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 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.

  • Approval of the street vacation
  • Granting of a waiver of the City’s admissions tax for the arena, just as similar waivers have been granted for the other sports venues
  • Adjustment of the City’s B&O tax rate for revenue generated out-of-town

So how much money would this save taxpayers compared to the original deal? To determine that, we need to revisit the prior arena funding plan, which I don’t appear to have ever totaled up in one post — let’s start with this summary of the not-quite-final plan, plus this update, and see how we can do:

  • The city and county were going to take out $200 million in bonds, which would be repaid by Hansen in the form of rent and kickbacks of arena-related taxes. These bonds would now be eliminated, but so, presumably, would be the rent payments.
  • The first tax that would have been redirected was $71.8 million worth of arena admissions taxes. Now, instead of being collected by the city and then used to pay off public bonds, this money would be not collected by the city and then could be used by Hansen to pay off his private stadium costs. So, a wash.
  • Hansen was to get an additional $15.7 million in reimbursed business taxes. Without knowing exactly what “adjustment” he now wants to the business tax, it’s impossible to say if he’d still get this full amount, but he’d certainly get some of it.
  • Hansen would get to keep $15.1 million in incremental property taxes on the arena site, plus $5.8 million in arena sales taxes. He’s no longer asking for these tax breaks, so far as I can tell.
  • Hansen would put up $40 million to pay for road improvements for the Port of Seattle, which has been griping that its trucks would face more traffic from games at the arena. This is presumably still on the table.

So most of the public money that Hansen was asking for, he’s still asking for — it just would go to pay off his private loans instead of city arena bonds. The good news is that this wasn’t a terrible deal for taxpayers to begin with: The tax breaks were small enough that Seattle was going to come reasonably close to breaking even anyway, and still would if enough consumers chose to spend money in Seattle rather than the surrounding area as a result of the new arena. (This would mostly cannibalize spending from elsewhere in Washington state, of course, but taxpayers in the city itself at least wouldn’t lose out much.) The less-good news is that Hansen’s new proposal is mostly just reshuffling the bookkeeping deck chairs, so if you hated the old plan, there’s little reason to like the new one any better.

Guess we’ll see what the Seattle city council thinks, since their opinion is the only one that matters. Or, since the new proposal would dispense with Hansen’s soon-to-expire MOU, giving him more time to cut a deal, maybe the next city council after the 2017 elections. Give Hansen credit for persistence: He really really wants to own a new Seattle Sonics basketball team, and he’s clearly not going to go home until the fat lady has sung her last note.

Ballmer: Seattle not getting NBA team anytime soon, probably not arena either

Steve Ballmer, who owns the Los Angeles Clippers but is from Seattle and was possibly going to be part of an ownership group for a new team there before buying the Clippers, says don’t hold your breath for Seattle getting an expansion team, at least in the next year or two:

“It’s just not likely to happen,” Ballmer told those attending the conference. “There has been no discussion about expansion since I have been involved with the league. So, I don’t think that will happen. The league has really moved to favor teams staying in their current markets. You’d have to find a team that’s at the end of their (arena) lease, where it looks hard to build an arena and where they’ve tried really hard to build an arena.”

The next year or two is an eyeblink in league expansion time, so that’s really no surprise. Why it’s significant is that the city’s memorandum of understanding with Chris Hansen expires in November 2017, so even if the Seattle council works out its qualms over closing a street to make way for the arena, there may not be an NBA team to build one for, which is required as part of the deal.

Hansen’s best chance of building an arena, said Ballmer, is to find an NHL team to bring to town — something that would take some fast footwork, since Hansen doesn’t have a team owner lined up, and the NHL just announced expansion that didn’t include Seattle, and there’s at least a $100 million funding gap if Hansen brings hockey to town instead of basketball, and also Hansen doesn’t really like hockey. Verdict: mostly dead.

Could Hansen seek a Seattle NHL team now that Vegas has one? Sure, but don’t hold your breath

Speaking of getting an NHL team by waving a $500 million check around, our old friend Geoff Baker of the Seattle Times suggests that Chris Hansen might want to do just that if he ever wants to get a Seattle arena built:

For now, with the NBA not expanding and the NHL needing another Western team to balance conferences, it might be worth giving that “NHL first” option another look.

Las Vegas built its arena with private funds, resulting in limited political delays. Of course, an all-private venture for a $500 million arena in Sodo would be tougher without public-bond money.

Yeah, it sure would be tougher: The finances of an NBA arena in Seattle looked difficult enough under Hansen’s original plan, and it would only be tougher with a hockey team (which is projected to bring in less money) plus paying off $200 million that was supposed to be covered by city bonds — though about half those bonds were going to be paid off by Hansen’s rent payments anyway, so presumably he could just replace those with plain old bank loans. Yes, an NHL franchise would probably be cheaper than an NBA one at this point, but you’d also end up with a less valuable asset for your money, so really the concern here is whether Hansen could turn an operating profit on an NHL arena after paying off construction costs — I’m guessing no, but if he wants to give it a shot, more power to him.

Of course, that’s the other thing: Hansen, like Fannee Doolee, loves basketball but doesn’t think much of hockey, so he might not be willing to risk his money just to become an NHL owner. Baker’s theory is that at least it’ll let him build an arena, maybe, so that down the road he can get an NBA team, maybe, which … sure, maybe. I don’t really expect to see Hansen jumping at this option, but stranger things have happened.

Seattle councilmember says despite vote against arena, she still likes shiny things

One of the Seattle councilmembers who voted to block Chris Hansen’s SoDo arena plans on Monday attempted to explain her vote to KING 5’s Chris Daniels yesterday:

“I had to balance fact and fiction,” [Debora Juarez] told KING 5. “The fiction is a third arena and no NBA team, and a living breathing port with people and jobs and traffic, and that’s what concerned me the most.”…

“I really, really want a basketball team in this town,” Juarez said.

“I went to Sonics games. I want a shiny new arena in this town, I just don’t believe it belongs in SoDo.”…

However, the North Seattle district representative says she’s not about to push for a Key Arena remodel.  Juarez, who chairs the Council committee overseeing Seattle Center, says it has issues too.

“The zoning would have to change dramatically in that neighborhood, and I cannot see those neighbors saying wider streets, more upzoning, more parking, more congestion,” said Juarez about Seattle Center. “It’s reached a point in its life where it’s become a public space, a public park, a cultural icon, and that’s why I would like to see a brand new shiny arena somewhere else”.

So: Juarez likes basketball, and likes shiny things, but didn’t like this shiny thing, because it might not have basketball and also JOBS! And TRAFFIC! That’s clear as … something not very shiny.

Proponents of the arena responded in appropriately measured tones:

There’s still a chance that this eventually leads to everyone taking a step back and figuring out what makes the most sense for Seattle, outside the emotional debates about bringing back the Sonics. But for the moment, the future looks not very shiny at all.

Seattle council rejects closing street for SoDo arena by single vote, madness ensues

The Seattle city council met last night to vote on approving the final piece of Chris Hansen’s SoDo arena plan that was initially okayed by the council way back in 2012, and — whoa, didn’t see that coming:

Stunned gasps emerged from a crowd at Seattle City Hall on Monday as Councilmember M. Lorena González cast a decisive vote that could effectively torpedo a proposed Sodo District arena.

In a 5-4 decision, the Seattle City Council voted against giving up part of Occidental Avenue South to entrepreneur Chris Hansen for his arena. Though a Memorandum of Understanding between Hansen, the city and King County runs through November 2017, odds of a new deal being struck by then seem remote.

What the heck happened? Lobbying from the Port of Seattle, certainly — the councilmembers who voted to keep the street open all name-checked port workers in their speeches, including Kshama Sawant declaring, “I do want to help bring back the Sonics, but I cannot do that on the basis of undermining our working waterfront and good-paying unionized industrial jobs.’’ (She also called the Port a “cesspool of corruption” but said she was voting out of solidarity with Port workers who are “trying to stand up against these forces of gentrification.” Now I really need to hear this speech.) But with five women on the council voting no while all four men voted yes, there may have been something else at work as well: The Seattle Times’ Geoff Baker cited one source (unnamed, take with grain of salt — Geoff, try to ID your sources better in the future, please) as saying “the three female council members who were undecided had become increasingly put off in recent days by the personal attacks [councilmember Sally] Bagshaw was taking from male sports fans on social media and certain talk-show hosts on Sports Radio KJR.”

Regardless of whether it was insider lobbying, obnoxious talk-radio hosts, or both, the Hansen plan is now, if not dead, floating listlessly in limbo, with no way to clear space for the arena that had its funding approved four years ago. Bagshaw says she hopes the city will now conduct a cost-benefit analysis of renovating Key Arena instead; Hansen released a statement saying, “We now need to take a little time to step back and evaluate our options.” There will likely be renewed talk of a new arena in the suburbs, though the leading candidate there, in Tukwila, still lacks anyone to actually pay for it.

In any case, if this is indeed the end of the SoDo arena saga, it’s a darn weird one. It certainly didn’t help Hansen’s case that he was no closer to getting an NBA team than when he started this whole quixotic battle years ago — “If you let me build an arena I’ll bring the Sonics back someday maybe I can’t say when” was never the best rallying cry — but still, you can count the number of sports venue projects that got right up to the finish line before being voted down by a single vote on … actually, this is the first I can think of. Whoever’s writing reality’s plot twists, you need to make them more believable, even if it is sweeps month.

NBA commissioner: No Seattle expansion team in immediate future

Seattle isn’t getting an NBA expansion team anytime soon, you guys:

“Whether or not the arena in Seattle is shovel ready is not a factor that we are considering in terms of whether or not we expand at this point,’’ Silver told The Seattle Times during the Associated Press Sports Editors commissioners meetings in Manhattan…

“We’re going through a collective-bargaining cycle right now, it’s no secret,’’ Silver said. “So, certainly, it’s not something that we would be thinking about as we’re focusing on ensuring that we’re going to have labor peace for the foreseeable future.

“I think that after we complete the extension of our collective-bargaining agreement, I think that would be the natural time, at least, for owners to consider whether or not they would like to expand. … Right now, we are not hearing it coming from within the league. We are hearing from some groups outside the league. But from within the league, there’s no strong push to expand at the moment.’’

Since Chris Hansen’s MOU for a new Seattle arena expires in November 2017, this means in the next year and a half we’re either going to see: 1) a big push by Hansen to try to get another team to relocate (your guess is as good as mine who he’d target, since there aren’t a ton of ready candidates looking to move), 2) a big push by Hansen to get the MOU extended, or 3) both of the above. Getting a team was always going to be the hardest part of Hansen’s Sonics 2.0 plan — yes, even harder than figuring out how to make his arena turn a profit — and it looks like that road isn’t getting any easier anytime soon.

Seattle ducked considering Key Arena reno option because rewriting is too damn hard

For anyone interested in the nitty-gritty of how the Seattle city council ended up issuing an environmental impact statement that said Key Arena couldn’t be renovated to modern NBA/NHL standards while it had another report in hand saying that it could, a report this morning by the Seattle Times’ Geoff Baker has all the nitty that your gritty could ever need:

Six weeks before the city of Seattle’s release last May of an environmental study on the proposed Sodo District arena, the woman preparing it received a telephone call.

The man phoning URS Corp. Vice President Katy Chaney was Ryan Sickman, a project manager with AECOM preparing a different report for the City Council on Key­Arena’s future. Public records released to The Seattle Times indicate Sickman and Chaney discussed how their reports differed on whether KeyArena could be modified for NBA and NHL use without demolishing its unique roof…

“Let me know if you have suggestions on whether to, and how to, revise either the EIS text or the response so that we don’t appear inconsistent between the two documents,’’ [Chaney] emailed Sickman on March 25, 2015.

Sickman two weeks later suggested a 221-word revision stating: “There are now studies in front of the city that show how the KeyArena could be reconfigured and redesigned within the building’s existing structure to accommodate both NBA and NHL franchises based upon the now accepted Sacramento Kings design model for NBA seating distribution.’’…

After the suggested changes bounced around privately between Seattle city staffers and politicians, the AECOM report’s scheduled early May rollout was postponed.

Nick Licata, who was on the council at the time, previously said, “There’s a lot of ways of not holding back information but not amplifying it. I wouldn’t say [the AECOM report] was purposely held back, but I don’t think there was much attention given to it.” That sounds about right from this latest timeline: Right as the council was about to issue a report finally moving ahead with Chris Hansen’s proposed SoDo project, the possibility of renovating Key was raised, and everybody more or less went, Oh, jeez, we can’t handle going back and looking at more options. Let’s just pretend we never saw it.

Baker also provides some detail on what happened in that “bounced around” period, drawn from city emails, particularly those of then-city policy analyst Sara Belz:

AECOM project lead [David] Stone by then was still tweaking his own delayed report and asked Belz on May 15 about mentioning the EIS — given extensive media coverage of its release and continued NHL possibilities in Seattle.

Belz took three days to reply, saying she’d checked with colleagues and “we don’t think you need to devote space in your report to the EIS or NHL stuff. Our thought is just that it might create confusion regarding the scope of your contract and analysis.’’

Again, this is way short of “coverup,” but still certainly doing their best to pretend that the two reports didn’t say dramatically different things, because nobody likes to do rewrites. The interesting bit now will be to see whether there are any repercussions, either for the city officials involved or for the SoDo project itself, especially with the council set to give final approval and opponents turning up the heat to try to block it. If last year was seen as too late to make changes based on new options, it seems impossible that the council would pursue it this year, but stranger things have happened. I think.

Sonics fans, Port of Seattle advocates yell at each other some more, film at 11

The Seattle city council held its public hearing on the closure of a street to make way for Chris Hansen’s proposed sports arena, and it went exactly as you’d expect:

Most of the crowd sported green and yellow Sonics gear, while others carried NHL hockey signs. A small group associated with the Port of Seattle, who oppose the deal, held signs saying, “Save Sodo.”

The dockworker union folks claimed an arena will hurt the viability of the port, Sonics fans replied nuh-uh it won’t, and a fun time was had by all. There are two more hearings scheduled on April 5 and 19 before the council votes, so to save everybody time just bookmark this post and re-read it again then, okay? Thanks.

Washington state legislators call for timeout on Seattle arena plans

So this could be a bit of a stumbling block for Chris Hanson’s proposed Seattle arena:

With a public hearing scheduled for Tuesday to determine the proposed two-block vacation of Occidental Avenue south of Safeco Field, 36 members of the state legislature drafted a letter urging the Seattle City Council to vote down the plan.

The letter said the area in question “represents the crossroads of international trade, manufacturing and transportation interests that together form a key economic engine for our state,” arguing that “adding additional pressure to getting goods in and out of Seattle could have devastating effects.”

This pretty much echoes the concerns that the Port of Seattle has had — apparently that $40 million fund for better roads for its trucks didn’t assuage everyone’s fears. State lawmakers don’t have any actual decision-making power over vacating streets, but with this the last big hurdle before Hansen can build his arena — that and getting an actual team, mind you, which is the biggest hurdle of all, but we won’t talk about that for the moment — everyone involved is bringing whatever pressure to bear that they can.

More tomorrow after the hearing, if anything interesting happens. No decisions are expected, but there should be lots of shouting.