Sodo arena: wrong location, bad plan, no public funds
If the Sodo arena plan is such a great idea, let well-heeled private investors prosper.
Seattle Times Editorial
HEDGE funds and hedge-fund managers exist to neutralize risk. Their own. The instinct is alive and well in the proposed Sodo sports-and-entertainment arena that relies on public funds and public risk.
The glittering offer should be turned down with a resolute "no thanks." San Francisco hedge-fund manager Chris Hansen represents himself and private investors, not the city or its taxpayers.
If the emotionally appealing plan to return professional basketball to Seattle, and maybe lure a National Hockey League team, is such a sure thing, then finance it all privately. Take any public money, credit or risk out of the investment equation.
Even private financing cannot make up for a basic flaw in the proposal: a fundamentally bad location near the Port of Seattle and the city's industrial area. The threat to the region's economy is getting noticed:
"Adding an additional venue in the Sodo area, in our judgment, could seriously jeopardize freight mobility, pedestrian safety and overall vehicular access given it is already a very congested and challenging area for transportation movement," wrote Dan O'Neal, chairman of the Washington State Transportation Commission, in a letter to Mayor Mike McGinn.
Mitigating traffic impacts never comes up. Many elements of the proposal are, well, hedged.
Why these deep-pocketed investors need any public participation is a mystery, beyond a plan to be quickly reimbursed for their land acquisition, repay the annual debt service on bonds with taxes generated by local businesses and to shift ownership and tax liabilities to the city.
If the exposure for government general funds and overall taxpayer risk is small, as argued, then why bother? Complexity is not a friend of the taxpayer.
The arena deal looks more and more like the centerpiece for other contemplated real-estate investments in Sodo — investments with the serious and real potential to damage Port of Seattle operations, and existing industrial jobs.
McGinn has a curious hierarchy for public business. Raising money for the basics — a seawall to protect the city, and elemental library service — go before the voters. Selling bonds to raise $200 million for a luxurious amenity will not.
The talk turns particularly esoteric about returns on investment. So, let's see, the city will make how much of a return on the bonds it sells and the jumble of tax revenues that will go to pay debt service?
Other questions do not get enough attention, such as the region's capacity to support more professional sports. The competition for scarce dollars means winners and losers for attendance and luxury suites among the sports franchises and their facilities. Someone is going to lose, and the trickle-down name at the end of the list is taxpayer. Everyone else will have hedged their bets.
Hansen and his well-heeled cohorts are pointing the city toward owning and accepting responsibility for two arenas. Remember KeyArena, which the NBA abandoned for more glitz?
Too good to be true. No free lunch. Aphorisms survive for a reason.
The community would be pleased to have Hansen and associates privately invest in the region's future. Take a look around. Step aside, Mayor McGinn.