Seattle attorney Cleveland Stockmeyer was disappointed last Friday when Judge Laura Gene Middaugh of King County Superior Court dismissed his lawsuit against the basketball arena. The case, she said, wasn’t “ripe,” though it would be later.
On the contrary: It is ripe now. The deal with Chris Hansen is clear enough.
The basis of Stockmeyer’s lawsuit was Initiative 91, passed by Seattle voters in 2006. It said the city should be paid “fair value” for what it supplies to for-profit professional sports teams. It defined the fair value of credit as the yield on 30-year Treasury bonds, not counting goodwill, social benefit, unsecured future cash revenue or the cost of borrowing.
Here is the arena deal, simplified. Seattle and King County sell $200 million in bonds and pay the money to Hansen’s group, which puts in the rest. He builds an arena. For 30 years, his group has full use of it and 100 percent of the profits from it. Seattle and King County keep the title deed, which means that on the arena, the state, county, city, transit district, port and public schools collect a real estate tax of zero.
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Seattle’s and King County’s promise to bondholders is backed by the power to tax the people. Hansen’s promise to Seattle and King County to pay rent equal to the payments on the bonds is backed by his company’s ability to operate the stadium. Bondholders have a rock-solid promise; the city and county, somewhat less. Also, an estimated 60 cents of every dollar of Hansen’s “repayment” would come by sales and admissions taxes paid at the arena, which is money local government would own already.
“This is ‘paying the city’ with its own money,” said Stockmeyer.
Return now to Initiative 91. In explaining it, the voter’s pamphlet said it would stop “pro-sports tax subsidies” and require that “the Sonics pay their own way.” The vote in Seattle for this proposition was 74 percent yes.
Is it being followed? You be the judge.
Initiative 91 should not have been necessary. Our state constitution forbids “private or special laws…for assessment or collection of taxes.” It declares that taxes “shall be levied and collected for public purposes only.” And it famously declares, “No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm… .”
The people have never voted to repeal those words, and if put on the ballot, the people would affirm them again. Especially in Seattle. Unfortunately, in King County v. Taxpayers, a 1997 case about the baseball stadium, the Washington Supreme Court said if private investors pay anything for something from the government, there is no gift.
Then-Justice Richard Sanders grumbled in dissent that under his colleagues’ reasoning, the state could swap all its timberlands for a single peppercorn.
The “peppercorn case” was the reason for the signature drive to put I-91 on the ballot.
Like the state constitution, I-91 is officially the law in Seattle. But a law has effect only when the right people agree it is the law, and on what it means. For that, you need a judge who can see a that a dispute is ripe, and will give words the meanings they had when written.
Bruce Ramsey’s column appears regularly on editorial pages of The Times. His email address is email@example.com