Stadium taxes might never expire

Seattle's three major professional-sports franchises could benefit from future tax subsidies as part of a proposal by the Sonics to fund a $180 million expansion of KeyArena.

The proposal being floated would extend indefinitely the life of several temporary taxes now used to pay off the debt for the construction of Seattle's publicly owned football and baseball stadiums.

Instead of expiring by 2020, as originally conceived, some or all of the taxes would remain in place to raise money for future renovations to Qwest Field and Safeco Field, as well as KeyArena, according to Sonics officials and others briefed on the plans.

Sonics officials previously had disclosed plans to ask the state Legislature for funding to expand KeyArena. They now acknowledge that the legislation would go further, essentially establishing a permanent sports-stadium tax.

The idea has drawn sharp criticism from at least one City Council member, who fears that arts groups that rely on the same source of revenue could lose out.

Q&A with reporters The proposed permanent extension of taxes that flow to Seattle's professional sports stadiums has generated a strong reader response. Reporters Jim Brunner and Bob Young answered your questions on the Stadium tax proposal during a lunchtime Q&A today. Read what they said.

But Terry McLaughlin, executive vice president of the Sonics, said of the proposal: "We've approached it as being a better idea, that it is more comprehensive than a single building or a single franchise."

McLaughlin said the management of the Mariners and Seahawks were briefed on the proposal and seemed supportive. "It's in their interests as well," he said.

But spokeswomen for the baseball and football teams were noncommittal yesterday.

"What we really want to do is look at the specifics before we are able to take any kind of position," said Rebecca Hale, spokeswoman for the Mariners.

Martha Fuller, chief financial officer for the Seahawks, which have played at Qwest Field since 2002, said the team is interested in the Sonics' idea but hasn't seen enough details to formally support it.

"We're just wrapping up our third season here. We certainly have no immediate needs [for additional public subsidies]. But who knows what the state of sports facilities might be in 15 years, what fans might demand, or what the technology is at that point," Fuller said.

Asking the Legislature to extend the taxes for all three sports facilities may prove controversial, the Sonics' McLaughlin acknowledged.

One critic of previous stadium deals was immediately skeptical when told of the Sonics' proposal yesterday. "Oh my God, that's worse than I thought," said Seattle City Councilman Nick Licata, who helped lead the opposition to taxpayer funding for the football and baseball stadiums.

Licata said he wants to ensure that arts groups, which have received some of the same tax money, don't get cut out by the sports teams.

McLaughlin said the tax idea emerged in brainstorming sessions with Gerry Johnson and Jay Reich, both partners with the law firm Preston, Gates and Ellis, who have played roles in recent public-private partnerships, including the construction of Safeco and Qwest fields.

Seattle stadium funding The Sonics want to ask state lawmakers to extend several taxes currently dedicated to paying off the debt from Safeco Field, Qwest Field and the Kingdome, which was demolished in 2000. The taxes, collected only in King County, are set to expire at various times through 2020. The taxes include: • Hotel/motel tax: A 2 percent tax on hotel- and motel-room rentals goes to pay for Kingdome debt, and to arts and cultural organizations. When the Kingdome debt is retired, the money will pay for the debt on Qwest Field. Last year, the tax raised $14.2 million. • Sales tax: A .017 percent sales tax is dedicated to paying off the Safeco Field debt. A separate .016 percent sales tax pays for the debt on Qwest Field. The taxes raised a combined $12.9 million last year. • Restaurant food/beverage tax: A 0.5 percent tax on restaurant meals and drinks is devoted to paying the Safeco Field debt. It generated $16.6 million last year. • Car-rental tax: A 2 percent tax on automobile rentals goes to the Safeco Field debt; 1 percent goes to Qwest Field. The taxes generated $7 million last year. Sources: state Department of Revenue and King County

Both have been hired by the Sonics to work on the KeyArena plan. Johnson declined to comment yesterday, and Reich could not be reached.

The Sonics' proposed expansion of KeyArena would nearly double the size of the facility to widen concourses, add space for restaurants and concessions and provide more parking and new team offices.

The expansion, which would take up to three years to complete, would be staged so the Sonics could continue to play all home games at KeyArena. But the Seattle Storm, the professional women's basketball team owned by the Sonics, likely would have to move for a season.

The last arena renovation was completed in 1995 and paid for with $74 million in public bonds. In a deal with the city of Seattle, the Sonics agreed to help pay the bonds off by giving the city a hefty slice of revenue from luxury suites and all the income from naming rights to the arena.

The Sonics now say the market has changed and the team has not been able to fill its suites, due in part to the competition from the new baseball and football stadiums. Sonics officials say the team has lost $50 million over the past five years.

The Sonics' losses, in turn, have been dragging down the finances of the city-owned Seattle Center, which has run up a budget deficit of $9.4 million.

About $60 million in debt remains from the 1995 renovation of KeyArena. The Sonics and Seattle Mayor Greg Nickels are backing the proposal to extend several taxes to retire that debt, as well as pay for an expansion.

The city hopes bonds can be sold to provide cash up front for the expansion. The bonds would be paid off later by the taxes.

However, Nickels has not endorsed the broader idea of extending taxes to the other two sports arenas. "It's really too early to know what will fly with the Legislature," said Nickels' spokeswoman, Marianne Bichsel. "The Sonics are taking the lead on this. What we have agreed to do is to go to Olympia with them to explore different possibilities to do that."

Altogether, the taxes used to finance the construction of the stadiums and pay off the remaining debt from the Kingdome raised more than $50 million last year, according to the state Department of Revenue.

They include a hotel/motel tax, sales tax, a tax on restaurant meals and drinks, and a car-rental tax. All are levied only in King County. (A portion of the hotel/motel tax is also devoted to arts organizations.)

Licata said he isn't sure the Sonics are wise to link KeyArena to the controversial football and baseball stadiums.

"I think they take on baggage because there is lingering public animosity to how those [stadium] decisions came down," Licata said.

Safeco Field, which opened in 1999, was built with taxpayer money despite voters' rejection of a tax increase to pay for the stadium four years earlier.

Public financing for Qwest Field, which opened in 2002 as Seahawks Stadium, was narrowly approved by voters in 1997 despite critics who objected to taxpayer subsidies for the Seahawks and their owner, billionaire Paul Allen.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com