On Wednesday, the effort to build an arena to lure an NBA and possibly an NHL team became official.
Chris Hansen, the Seattle native and San Francisco hedgefund manager, along with Seattle Mayor Mike McGinn and King County Executive Dow Constantine, announced the parties had reached a memorandum of understanding regarding a new $490 million arena in the city's Sodo District.
It must be approved by both the King County Council and the Seattle City Council.
The arena would be built mostly to convince the NBA to locate a professional basketball team back in Seattle, which lost its team four years ago when owner Clay Bennett moved the team to Oklahoma City.
One of the agreement's most controversial components is the public financing of part of the construction that would be repaid via rent, increased property taxes and other income generated by the arena
The public investment would be capped at $200 million, although that would be decreased to $120 million if Hansen could secure only an NBA team.
Here are some key points of the proposed deal, according to King County:
- No new taxes are being sought for construction or operations
- The project will be self-financed by using revenue that would not otherwise exist but for the operations of the arena
- Binding nonrelocation agreements for the NBA and NHL teams will be in place covering the full term of any public financing
- A security reserve fund will be established to provide an additional layer of taxpayer protection for the duration of the public debt
- Revenue sufficient to support annual debt service is guaranteed by the investors
- The private investors will be solely responsible for any cost overruns and operating revenue shortfalls over the life of the facility, including funding a capitol improvement fund
- No public funds will be committed until franchise acquisition and all environmental review and permitting processes are completed
- The City and County will be in a first priority payment position from Arena revenues and in the unlikely event of a financial default, will have a security guarantee in the equity of the parent company for the teams and the Arena operator.
“The commitment to invest upward of $800 million of private capital in the arena and purchase of two teams represents a strong vote of confidence in the future of our city and county, especially in this challenging economic climate. It is one of the largest commitments of private capital ever made for a project like this in North America,” McGinn and Constantine wrote in their joint letter about the agreements.
(Click on the media gallery to view the press release, MOU and other documents related to today's announcement)
Of course, the news generated an immediate backlash from commenters and bloggers who are against the plan, whether because they're against public funding of a stadium or still have lingering anger from the Supersonics' departure.
There are also concerns about traffic in the area of the proposed arena, which includes both Qwest and Safeco fields, as well as the Port of Seattle.
So we ask you, Patch users. Given what's been reported, do you think the Seattle City Council and King County Council should approve the proposed agreement for a new arena?