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Originally published July 30, 2012 at 5:21 PM | Page modified July 31, 2012 at 11:37 AM

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City Council wants traffic help from Sodo arena tax

The Seattle City Council on Monday told arena investor Chris Hansen that it wants some of the tax revenue generated by a new arena to be used for improvements to traffic and freight mobility in Sodo.

Seattle Times staff reporters

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Hours before the King County Council approved on Monday a plan for a new sports arena, the Seattle City Council told investor Chris Hansen it wouldn't move forward unless some of the tax revenue is used for improvements to traffic and freight mobility in Sodo.

But the City Council also held out hope that successful negotiations with Hansen could be wrapped up within a week, clearing the way for a majority of council members to approve a deal in August to build a new $490 million arena with $200 million in public financing.

"We're saying today we want to get to yes, and I think we can," Councilmember Tim Burgess said.

Burgess was one of eight council members to sign a counterproposal mailed to Hansen on Monday. Bruce Harrell was the only member who didn't sign. The letter outlines additional financial protections sought by the city and specific commitments to upgrade and protect KeyArena, in addition to some percentage of the tax revenue.

Later in the day — after a four-hour meeting that included two hours of emotional public testimony — the Metropolitan King County Council approved the Memorandum of Understanding (MOU) with Hansen by a 6-3 vote. The MOU is legally binding and sets a framework for a final deal that would be hammered out by the county, city and Hansen.

"I want to personally thank the King County Council for all of their hard work and for taking a big step today to move forward on our proposal," Hansen said in a statement. "There is still much more to be done, but I am looking forward to sitting down with City Council members to figure out how we can make this deal work for everyone."

Citing the low risk to taxpayers in the proposed deal, County Council members said they improved the agreement with amendments that ranged from statements of support for the Seattle Storm to an independent analysis that would look at the impact of the arena on Port of Seattle-related jobs.

Councilmember Bob Ferguson said the analysis — paid for by Hansen — should address the chief questions and criticisms about the arena's potential threat to Port-related industries in the Sodo area.

Ferguson and others also stressed the emotional bonds and benefits of bringing the NBA — and possibly the NHL — back to Seattle. Ferguson noted he had one picture of him with his deceased father on his refrigerator, and it was at the opening of Safeco Field. "Those events really do have the power to bring people together," he said.

Julia Patterson emphasized that the County Council was not taking a final vote. It still would have opportunities to weigh in after the economic analysis and when the broad agreement is translated to more detailed transaction documents.

But the three council members who voted against the agreement — Reagan Dunn, Larry Phillips and Pete von Reichbauer — said they still needed more assurances, particularly about Port jobs. "This is very fast-track, and we still need more numbers," Dunn said.

Noting the agreement approved by the council is binding, von Reichbauer cited a number of problems. He said traffic issues had not been resolved to his satisfaction, and he predicted a slew of lawsuits from industrial concerns. "I think it's going to be a college trust fund for a lot of lawyers," he said afterward.

He also noted that Seattle Mayor Mike McGinn and County Executive Dow Constantine will select the economic analyst, who also must be approved by Hansen. "The two strongest advocates get to pick the consultant," von Reichbauer complained.

Joe McDermott, who led the County Council's review of the proposal, responded that if the study was biased it would hurt the professional reputation of the consultant.

The agreement now must get approval from the City Council, which has been more critical.

The council's Monday letter to Hansen said the current proposal, which would direct 100 percent of tax revenues generated by the new arena to pay off public bonds, does not "represent an appropriate balance of public and private benefits."

The letter notes that, with a share of the tax revenue, the city could leverage more transportation funding from the state and federal governments to build improvements that the city already has identified to protect freight corridors and ease congestion in Sodo.

"Under the MOU, all revenue [from the arena] is tied up paying off bonds for the arena itself," Councilmember Mike O'Brien said. "We know that there will be traffic impacts to the city of Seattle. How can some of this revenue be available for transportation improvements?"

A spokesman for McGinn defended the existing proposal, saying the mayor's staff worked for months to negotiate an MOU with Hansen that would bring a state-of-the-art arena to Seattle and protect taxpayers from risk.

"We respect the council's due diligence, but it would be a mistake to pass up on hundreds of millions of dollars of investment in our city," spokesman Aaron Pickus said. "We think it's a good deal as it stands."

The Port, which has opposed the arena because of potential impacts to its container and trucking operations, said it was encouraged by the City Council's commitment to maritime jobs, but that it still wants a detailed environmental review of the arena project before it is approved.

"We believe the environmental-impact statement should be completed before signing the MOU, so that benefits and impacts of the project can be more completely understood," said Charla Skaggs, spokeswoman for the Port.

The potential transportation impacts of a third sports arena to the city's manufacturing and industrial sector, particularly Port operations, has emerged as the biggest obstacle to approving a new sports arena. The Port, the Manufacturing and Industrial Council and the Seattle Mariners all have opposed building the arena in Sodo.

The Seattle Planning Commission last week reminded city leaders that state, regional and city policies prioritize industrial uses and restrict those that could interfere with industrial and manufacturing operations. It urged caution, and more review, before an agreement to build a new arena is finalized.

Additional protections sought by the city include putting the city in first-lien position with respect to other creditors. The current MOU says the position will be negotiated when arena backers seek private financing. The city also is asking that Hansen and his investment group disclose the amount of equity they will put into arena construction and team operations. It further asks for independent verification of financial performance targets.

"We expect to see the same information that all your other partners and commercial lenders will have before making their investments," the City Council letter says.

Council President Sally Clark said Hansen has been responsive to the city's concerns and has worked with officials over the past several weeks to reach mutually agreeable terms.

"He's been incredibly open and creative in these conversations," Clark said. "I've been really encouraged by his willingness to talk with us."

Lynn Thompson: 206-464-8305

or lthompson@seattletimes.com

On Twitter @lthompsontimes

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