Q&A: Stadium tax proposal
The proposed permanent extension of taxes that flow to Seattle's professional sports stadiums has generated a strong reader response. Read the story.
Seattle Times reporters Jim Brunner and Bob Young answered your questions about the proposal during a live Q&A. Thanks to all who participated!
Have the Sonics abandoned their hopes for a brand new facility on the waterfront? Is this a compromise?
— BJ, Seattle
J. B.: Terry McLaughlin, the executive vice-president of the Sonics, said that plan is pretty much off the table for now. The Sonics are concentrating on trying to make this expansion of KeyArena work.
After we boil it all down, isn't this whole proposal a cynical attempt to get taxpayers to subsidize their expenses? — Pat DeBurgh, Yelm, Wash.
B. Y.: No doubt some people will see it that way.
But others may buy the arguments of political leaders that the current KeyArena lease deal isn't working financially for the city or the Sonics. Therefore, the Sonics' proposal would actually get those who pay hotel-motel, car rental, restaurant and sales taxes in King County to essentially subsidize the Sonics and the city of Seattle, which owns KeyArena.
Where would the tax increase come from, if approved? — D. Smith, Seattle
B. Y.: The ideas proposed by the Sonics would call for state lawmakers to extend several taxes now used to pay construction debt on Safeco and Qwest Fields and the Kingdome.
These taxes, collected only in King County, include:
2 percent hotel-motel tax for Kingdome and Qwest Field debt (with a portion of that earmarked for arts)
.017 percent sales tax for Safeco; .016 percent sales tax for Qwest
2 percent car rental tax for Safeco; 1 percent car rental tax for Qwest
.5 percent restaurant food and beverage tax for Safeco
Mr. Harper of Kirkland raised an excellent question. Please tell me how making the concourse wider is going to benefit ticket prices for the average fan since the improvements seem to all about adding more concessions, better club seats and more ring side seats. — Hal Longan, Yelm, Wash.
B. Y.: No one has contended, to my knowledge, that a wider concourse would lead to lower ticket prices.
Nor does it appear the renovation would create more court-side sides.
I read an article that the city should let the Sonics buy Key Arena and then get all revenue - taking the public out of the equation - how would this impact the city's finances? — Jonathan, Seattle
J. B.: I believe you are referring to Danny Westneat's column, which appeared last week.
This is an intriguing idea but I have not seen any figures yet on how it would pencil out for the city. Seattle officials and Sonics executives both have said they are interested in possibly changing the city's deal with the Sonics so that the team would get the revenue from KeyArena and also be responsible for managing it and keeping up with maintenance.
The Sonics now split much of their revenue from the arena with the city. Under this new idea, the city might still own the underlying land, but the Sonics would basically run KeyArena. (Please note: this is all in the early stages, and we don't know what the final deal will look like.)
Whatever the future arrangement might be, it wouldn't change the fact that the Sonics still want the public to pay for the proposed $180 million expansion of the arena.
Who specifically in city government is backing this idea? Follow up question: How exactly do you think this tax extension will benefit the common man trying to make a living in Seattle/King County who is not a sports fan and as an artist is not seeing the money being used to support the arts (i.e., the very popular Seattle Fringe Theater Festival closing it's doors this past year etc.)? — Lance Hayes, Seattle
B. Y.: Mayor Greg Nickels is supporting the idea of rededicating some taxes used to build Safeco and Qwest Fields to a renovation of KeyArena. Nickels hasn't yet endorsed the broader proposal of extending the taxes indefinitely to pay for future improvements at KeyArena, Safeco and Qwest Fields.
The Sonics say they do not yet have a sponsor for their proposal in the state legislature.
The Seattle City Council has not yet taken a stand. But one of the most vocal opponents of public financing deals for Safeco and Qwest -- Nick Licata -- was elected to the council in 1997 so you can probably expect skepticism if not outright opposition from Licata.
The common Seattleite might benefit from these proposals because a profitable KeyArena would save Seattle Center ($9.4 million deficit at last count) and the city's budget from losses. This, in turn, should free up money the city could spend on, including possibly the arts.
Can you give us a reason that Seattle voters should vote in any more future tax increases, regardless of what it is for, if the lawmakers in this city are just going to do what they want anyway? — Kramer, Seattle
J. B.: We hear constantly from people who say they voted against the Mariner ball park funding but politicians "built it anyway." Technically, voters rejected a particular funding plan for the ball park, but then lawmakers came up with an alternate funding package that didn't go to a public vote. Voters did okay the funding package for the football stadium.
As far as the current plan goes - it is expected to go before the state legislature. We're not sure there will be a public vote on it. We'll keep you informed on that.
Are you THE Kramer?
Studies I have read (conducted by the State of Illinois, and the Univ. of Wisconsin) indicate there is no net revenue benefit for localities associated with sports franchises. Surprisingly, I don't even see the Sonics making this argument anymore. How can the public become better informed on the real issues surrounding stadium financing? — Mike Weisman, Seattle
B. Y.: Given the recent history of controversy surrounding our local sports facilities I would expect a very robust debate on these proposals. It appears this debate will first occur in Olympia with state lawmakers in the next several months. At that point, the Sonics will probably need to make persuasive economic arguments. We'll probably also see some politicians calling attention to studies that question the economic benefits of professional sports franchises and publicly-financed arena and stadium deals.
If the Sonics have already prepared these arguments they have not made them public. We're told that The Times broke the story before the Sonics were really ready to go public with their proposals, so they are still working on their lobbying and public-relations campaign.
If these fields are named after corporate entities, then why don't the namesake corporate entities pay for the upkeep of the fields? — Daniel, Seattle
B. Y.: The corporations do pay for upkeep to some degree. For example, as part of the naming rights deal for Qwest Field, the Denver-based telecommunications company pays about $2 million a year (for 15 years) which is dedicated for stadium major maintenance and modernization.
I'm bothered by the details of the Key Arena expansion. It sounds like they mainly benefit those who can afford either the new club seats or the courtside seats. That's a select wealthy few. How do we middle-class fans benefit? The proposal won't add enough seats for KeyArena to be able to host an NBA All-Star game or an NCAA Final Four, nor would it allow us to pursue an NHL team at some point in the future. If we're going to pour hundreds of millions of tax dollars into the arena, those should be requirements for the project. — Brian Harper, Kirkland
According to Sonics executives, average (or as you put it "middle-class") fans would benefit from the KeyArena expansion and renovation.
Here's how: The expansion would make the arena concourse much wider. This would allow for more concessions, which, in theory, would make lines shorter so that fans would miss less action when going for food and drink. The wider concourse would also allow fans to move around the arena faster. This might also save them from mssing action.
In addition, by expanding the arena and retiring the arena's $60 million debt, Sonics' executives say the team could be profitable and city-owned KeyArena would not continue to be a drain on the city's budget, as it has been in recent years. The Arena has lost millions of dollars in recent years, which translates to fewer city services.
Finally, Sonics' officials say expanding the arena and making the team profitable would allow the team's local owners to remain in control of the NBA franchise. That's the best way, they say, of insuring that the team stays in Seattle.
What percentage of the "stadium taxes" goes to arts? — Ted Rempel, Bow, Wash.
Here's how the hotel-motel tax is distributed to arts and culture programs in King County:
Last year, the tax generated about $14.2 million, according to the state Department of Revenue.
The first $5.3 million goes to King County and is used for Kingdome debt and youth sports. Of the remainder, 30 percent -- about $2.6 million last year -- also goes to Kingdome debt and youth sports.
70 percent of the remainder (about $6.2 million last year) flows to 4Culture, King County's arts and culture authority, to support local programs.
Under existing law, this formula remains in place through the year 2012. From Jan. 1, 2013 through Dec. 31, 2015, 100 percent of the revenues go to King County for Kingdome debt. From Jan. 1, 2016 through Dec. 31, 2020 all of the hotel-motel tax goes to Qwest Field debt.
The Sonics -- and potentially the Mariners and Seahakws -- are at this point competing with arts advocates for hotel-motel tax revenues after the year 2020.
KeyArena may need it, but why do we need to set aside money for renovating two BRAND new stadiums? — Michael Wilson, Issaquah
We've not been told of any pressing immediate needs for repairs to Safeco and Qwest. However, the notion the Sonics have floated would set aside revenue for further down the road - like after 2020 when all of the current stadium debt is retired. At that point, the teams may desire to make renovations to the stadiums.
The Seahawks stressed they have no plans for the money at this point. A Seahawks executive we spoke to pointed out the team gets about $2 million a year now from the naming rights to Qwest Field - money that is specifically set aside for major maintenance and modernization.
Will this tax be brought before the voters, or decided by legislators or councils? How much money are we talking about over the next, say, 30 years? — Andy Brucia, Seattle
The Sonics say they intend to ask permission from the state legislature to extend the taxes. The legislature can always send issues to voters. If new bonds are issued for KeyArena, the Seattle City Council or King County Council might also get involved, depending on which government issues the bonds.
As far as the total amount of money, that's hard to know since taxes fluctuate and we don't know exactly which taxes the Sonics will wind up asking for. The current King County taxes used to pay off the Qwest Field, Safeco and Kingdome debt generated about $50 million last year.
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