The Seattle City Council today said the city must get a share of the projected arena tax revenue as well as as additional financial guarantees before it can agree to build a new arena in Sodo.
A letter to arena investor Chris Hansen this morning said a majority of council members don’t think the proposed arena deal represents “an appropriate balance of public and private benefits, nor [does it] sufficiently protect the City from the financial risks inherent in the arena’s financing”
“In order to move forward, we will need to arrive at a more equitable arrangement,” it says.
The letter comes as the King County Council is poised to vote this afternoon on a memorandum of understanding to build the $490 million arena in Sodo with $200 million in public financing. The county council is expected to approve the agreement, which would commit the county to up to $80 million in funding.
The Seattle City Council letter to Hansen says members “appreciate your willingness to significantly invest in our city and, like you, we look forward to the return of the SuperSonics.”
At a lunchtime news conference, council members said they were confident that a compromise would be struck with Hansen, perhaps within the week.
“We’re saying we want to get to yes. I think we can work out these details,” said Councilmember Tim Burgess.
The letter continues that construction of an arena could be a catalyst for improvements to the stadium district, but that it also should provide “further protections of our vital maritime and industrial job sectors.”
Specifically, the City Council questions the current deal, which provides that 100 percent of the taxes generated by the arena go to pay off the city and county bonds. The letter said that’s not an appropriate balance between private and public benefit, “particularly not when the project will create impacts that Seattle taxpayers will be forced to address with other public resources.”
The letter says the city must be in a first lien position with respect to other creditors. The current MOU said that position will be negotiated when private financing is sought and critics have said banks are unlikely to allow the city to hold first place, but that a shared first place might be possible.
The city also is asking that the written agreement include the amount of equity Hansen and his investment group put into arena construction and team operations. It also asks for independent verification of financial performance targets.
The letter concludes, “If these issues can be resolved, we are prepared to quickly move forward a legislative package that is more financially balanced and strengthens protections for the City and its residents.” It is signed by eight council members; Bruce Harrell did not sign.