Seattle and King County should examine the finances of the people proposing a new sports arena in Seattle's Sodo District, a citizens-advisory panel said Monday night.
The proposal to build a new $490 million sports arena in Seattle has several guarantees to protect taxpayers’ investment.
But who would guarantee the financial strength of the investors and their business plan?
Those were the questions asked by Arena Advisory Panel members on Monday night in their third public meeting.
Chris Hansen, the San Francisco hedge-fund manager who has proposed making a $290 million private investment in a new arena in Sodo, as well as purchasing an NBA team, has said he’s willing to have an independent third party review his finances. Hansen did not attend Monday night’s meeting of the citizens group charged with examining the arena proposal.
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But the other major investors, who have not been identified publicly, should also be vetted by the city and county, said Arena Advisory Panel members.
Under the proposal, Seattle and King County would sell up to $200 million in construction bonds to finance the arena. Hansen’s offer seeks to shield the taxpayers from risk by guaranteeing to cover the city’s annual debt payments on construction bonds, in the event revenues generated by the arena fall short. It also promises to pay for operations and upkeep, as well as to create a reserve fund equal to three years of debt payments.
“The beauty of this proposal is that if there’s a gap in taxes, a gap in lease revenues, the investor has said: ‘We’re going to make you whole.’ How do we make sure that pledge has teeth over 30 years?” asked Maud Daudon, the city’s financial adviser to the arena-advisory panel.
Panel member Greg Smith, a Seattle real-estate developer, said it’s also important to see the investor groups’ agreement with the NBA. Hansen’s proposal has a 30-year non-relocation clause for both an NBA and an NHL team. In the event of a default or bankruptcy, the city and county could take over ownership of the teams.
“The NBA franchise is truly an asset. The non-relocation agreement is the value,” Smith said.
The arena panel has a Friday deadline to conclude deliberations and deliver a recommendation to the city and county councils, but chairwoman Jan Drago said Monday night it would not be able to meet that deadline and would, instead, deliver the report in early April.
The panel listened to a history of KeyArena’s finances since the Sonics departed in 2008, in order to better understand the impact a new arena might have on the city’s existing one. Seattle Center Director Robert Nellams said KeyArena was profitable in 2011 but that it needs better seating and technology if it is to become the premier, smaller venue in the region.
He said a new arena in Seattle is “inevitable.”
“At some point, someone is going to build a new arena, and it’s probably not going to be at Seattle Center. It’s far better for us to embrace it,” Nellams said.
He said he hoped Seattle Center could enter a partnership with the new arena to ensure that KeyArena stays financially viable.
Among those at the meeting were about a half-dozen longshoremen, along with manufacturing leaders, to press concerns about freight mobility in the stadium district.
The city promised improved freight corridors before the Seahawks and Mariners stadiums were approved, but only one of three planned overpasses was built, said Dave Gering, executive director of the Manufacturing Industrial Council of Seattle.
The cost of another span is about $180 million, and Gering questioned who would pay for needed transportation and traffic improvements if the arena is built.
Lynn Thompson: 206-464-8305 or firstname.lastname@example.org. On Twitter @lthompsontimes.