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Originally published Tuesday, November 19, 2013 at 9:37 PM

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Sodo arena plan filled with subsidies, foes say

Opponents of the proposed Sodo arena say an economic analysis shows that taxpayers would subsidize the new sports facilities to the tune of $731 million, violating Initiative 91 which requires the city to make a profit on an investment in a sports facility.


Seattle Times staff reporter

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Seattle taxpayers would subsidize the proposed new sports arena in Sodo to the tune of $731 million over 32 years, according to a financial analysis commissioned by an opponent group.

The group, Sonics Without Subsidies, threatened to sue if Mayor-elect Ed Murray and the Seattle City Council don’t revise the agreement with investor Chris Hansen to build the arena.

“There’s a grab bag of hidden subsidies in this deal with Chris Hansen. Every one of them is a special tax break that the normal person is not allowed to get,” attorney Cleveland Stockmeyer said at a news conference at a downtown law firm. “If they don’t change the deal, we will be back in court.”

The financial analysis, by Bellevue economist Adrien Gamache, concluded that Hansen wouldn’t pay any property taxes over the 32-year life of the agreement because the arena would be owned by the city.

Other taxes generated by the arena, including business-and-occupation and sales taxes, would go to pay off the debt service on the public construction bonds, and not into the Seattle or King County general funds to pay for parks, police, schools or other government services.

City Council President Sally Clark said she hadn’t had a chance to read the new financial analysis.

A spokesman for Murray said that once he takes office in January, he would review the agreement with Hansen to ensure taxpayers weren’t on the hook for liabilities or unforeseen costs.

Stockmeyer was joined at the news conference by several Seattle residents on whose behalf he sued the city earlier this year, claiming the arena deal violated Seattle Initiative 91, which requires that any public investment in a sports facility return a profit.

A judge dismissed the I-91 lawsuit in April, saying Hansen hadn’t yet bought a team and that the city and King County hadn’t finalized the agreement. The plaintiffs didn’t have a detailed financial analysis of the deal at the time but estimated in court that it would cost taxpayers hundreds of millions.

Funding for the lawsuit and the financial analysis came, in part, from the United Transportation Union, which represents workers at several railroads with facilities in Sodo.

The agreement with Hansen and his investment group was approved unanimously by the Metropolitan King County Council and by a 7-2 vote of the Seattle City Council. One of the two no votes, Councilmember Richard Conlin, lost a re-election bid to Kshama Sawant, but she is likely to be sympathetic to the I-91 proponents’ arguments. The other no vote was cast by Councilmember Nick Licata, who easily won re-election.

A spokesman for Hansen declined to comment.

At the news conference, Stockmeyer characterized the arena deal as “tax shirking by billionaires for their own profit.”

The city and county councils ordered an economic-impact study to be part of the environmental review of the 18,000-seat arena. That study didn’t look at the financing plan, but rather at the broad economic impact generated by events at the arena.

It concluded that the net economic benefit would be as much as $236 million annually to the city and about $50 million to the county. It also found that the taxes and rent Hansen was required to pay the city to meet debt service on the construction bonds would be covered by the anticipated arena revenues.

The study, by ProForma Advisors of Los Angeles, also concluded that the loss in revenues to the Port of Seattle because of traffic congestion around the arena would be minimal — just $230,000 per year. The study did note that the Port is facing increasing competition from other Pacific ports and that increased trucking costs or reduced reliability could hurt business.

The final environmental-impact statement on the arena is expected to be released in March, according to the Seattle Department of Planning and Development.

Lynn Thompson: lthompson@seattletimes.com or 206-464-8305.



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