The amended agreement requires Chris Hansen's investment group, ArenaCo, to double its security reserve — from $15 million to $30 million — if finances do not perform as expected, and makes the city first in line to be paid by that reserve.
Does the new deal better protect taxpayers?
The amended agreement requires Chris Hansen’s investment group, ArenaCo, to double its security reserve — from $15 million to $30 million — if finances do not perform as expected, and makes the city first in line to be paid by that reserve.
It also makes Hansen (or another future principal investor in ArenaCo) personally guarantee five years of debt service as a last resort, and requires him to maintain a net worth of more than $300 million.
That provides an “absolute final backstop to prevent the general fund from ever being involved in paying the debt,” said Seattle City Council President Sally Clark.
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However, the city’s bond investment would rise from $120 million to $145 million, still to be repaid by ArenaCo from tax revenues from the arena.
How much will Seattle, King County and the Port of Seattle put into the Sodo road fund, and what would it pay for?
The $40 million initial investment is the city and county’s share. “We’ll ask the Port to match it,” Councilmember Tim Burgess said. But there’s no obligation, and he acknowledged the Port “came back with a number that is much lower.”
The city’s plan is to use the money to seek matching state and federal funds to complete a list of to-be-named projects. That likely wouldn’t include the Lander Street overpass, which has a price tag of about $170 million, but Burgess said it could pay for other projects that will have a greater impact on freight mobility. The first step would be an analysis of which projects should come first.
Will this make the Port of Seattle happy?
It’s fair to say the Port remains skeptical. Officials don’t know how much money the proposed transportation fund will ultimately have or whether it will be enough to ease already challenging traffic in Sodo.
The Port’s initial comments Tuesday sounded a lot like their concerns when the original agreement was reached: The Sodo location would put at risk $3 billion in annual revenues and 33,000 maritime jobs.
But by the end of the day, some Port commissioners were sounding more optimistic, with both Gael Tarleton and John Creighton saying they were encouraged by the addition of the fund and an environmental review to analyze alternate sites and detail mitigation required to make the Sodo site work, if it is selected.
“I don’t think we ever said ‘absolutely no,’ ” said Creighton. We have said we want to move forward in a way that industrial and nonindustrial (uses) can coexist.”
How does this help KeyArena?
Simply, with $7 million. That’s $5 million in improvements and $2 million to spend deciding on and planning its future and that of Seattle Center.
That future could include running KeyArena as it exists now, or razing it, or anything in between. Council President Clark said, “There are a lot of folks excited to have that conversation” about how best to use the building or property. Burgess said he believes the facility is “probably pretty doomed.”
Both agreed that the Sonics playing there for two or three years while a new arena is built would provide some time for making that decision while the building has a major tenant.
Hansen has offered to have his people manage KeyArena for a time, but the city hasn’t yet decided whether that’s a good idea.
Are there any hurdles left that might kill the deal?
The city and county won’t fund construction bonds or give Hansen the go-ahead to start building until completion of an environmental-impact study, which would take about a year.
Burgess explained is this way: “The (memorandum of understanding) is a binding agreement to do a process, not build an arena.” That means that if the city studies Sodo, Seattle Center and other locations outside Seattle and decides the negative impact on Sodo is too great, it can pull out of the deal and Hansen would be free to move on.
In the meantime, city and county approval of the revised deal would give Hansen the go ahead to begin shopping for an NBA team.
Of course, the City Council and Metropolitan King County Council still must vote on the amended agreement. But sources say there are at least six votes lined up for Seattle. And the County Council already approved the previous version, and, “We’ve made the deal better,” Burgess said.
What happens after the bonds are paid off in 30 years? Does the city own another potentially obsolete arena?
No. Under the revised deal, the city can require Hansen to purchase the arena and land for $200 million.
Alternately, ArenaCo can decide it wants to purchase the land and the facility for no less than $200 million, but then it must build a new arena on the site.
If ArenaCo does not extend the 30-year lease or exercise its purchase option, it will have to demolish the arena and leave the city owning the land, which presumably will have appreciated in value.
Staff reporters Lynn Thompson and Drew DeSilver contributed to this report.