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June 7, 2012 at 12:03 PM

Conlin: some arena financing details “do not quite live up to the hype”

Seattle City Council member Richard Conlin missed Wednesday’s committee meeting to  review the financing proposal for a new $490 million arena in Sodo with up to $200 million in public bonds. But Conlin quickly weighed in on one of the takeaways from the hearing: that taxpayers will have to make up what the arena owners won’t pay in property taxes.

In a blog post Wednesday afternoon, Conlin said some of the previously announced details of the arena deal “do not quite live up to the hype.”

Conlin then takes on the challenge of explaining Washington tax law, noting that once the city and county purchase the completed arena, it will be removed from the tax rolls, but its value (minus the land) gets added to the city’s total assessed valuation and slightly increases the amount every property owner will have to pay. The city estimates that amount to be about $2 to $3 per year per homeowner.

Conlin goes on to say that “the city’s financial analysts explained to me that it is deliberately structured in this way to allow the city to sell about $15 million of the bonds with the very secure backing of a guaranteed property tax revenue stream. And then to ensure that these property taxes are not paid by the team owners.”

City deputy budget director Hall Walker made the point at the Council hearing Wednesday that the arena owners still would pay some taxes — on fixtures within the arena such as the scoreboard and big-screen televisions — and though he didn’t have an estimate of what those taxes might be, he said it was “not insignificant.” He said the arena also would generate new sales tax revenue, a portion of which will be returned to the city and county.

Conlin concludes that the hit to city taxpayers, though small, “disturbs me.”  Hedge-fund manager Chris Hansen, who is proposing the deal, and Mayor Mike McGinn, have said it involves no new taxes and is “self-financing.” Conlin says that if the arena remained privately owned, the annual property taxes of about $1 million per year “would go to the city’s general fund to support police, fire, human services and other city programs.”

Comments | Topics: Chris Hansen, Mike McGinn, NBA

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