KeyArena bids have over $200M in public money, SODO arena group says

As bids continue for KeyArena's renovation, proposals are beginning to ask for taxpayer money to help pay the bill.

Both KeyArena bids offers contain significant requests for more than $200 million in taxpayer money, according to a new analysis released by SODO arena investors.

The report came just as the City was about to hold an open house on the two KeyArena bids proposed by the Seattle Partners and Oak View Group.

Chris Hansen's investment group published the numbers online in a side-by-side comparison of it's SODO bid and the two others at Seattle Center. Hansen's group has offered to privately finance a new arena in SODO in exchange for an admission tax waiver and the ability to buy a one-block stretch of Occidental Avenue.

Seattle Partners does not deny the request for public bonding.

"It wasn't taken lightly; we knew what the request was," Alex Vouvalides, of the Seattle Partners said Thursday morning. "We knew the perception publicly of asking for city bonds would not be initially received favorably."  

But he says the bonds would be paid back by revenue from the building and debt backed by the two partners, AEG and Hudson Pacific Properties.

"The takeaway was you couldn't get it done in a structure that would result in a financial surplus for the city," he added.  

Vouvalides says the financial structure of the bid would give $144 million in a surplus to the city over the life of the 35-year deal, and that the bonding only asks for about 2 percent of the overall bonding capacity.

Seattle had asked for two fully privately financed offers in it's request for proposals on KeyArena.

Hansen's group says both require significant subsidies, including $47 million in upfront taxes and fee waivers for the Seattle Partners, in addition to parking, sponsorships, and premium seating. The SODO group also alleges the terms of the deal would push the arena date out five to seven years and "mean there is no adequate facility in the city or immediate vicinity for a team to play in in the interim."

Hansen's group also says Seattle Partners would be seeking exclusivity language that would allow them to have a monopoly on the business for decades to come and a facility fee which could be a burden on the Seattle Storm, Rat City Rollergirls, and Seattle University, who all play there.

Vouvalides talked about those issues prior to the release of the paper.

"We believe the city can support one viable arena, not multiple venues," Vouvalides said, hence the ask for the exclusivity arrangement and the ticket surcharge as a way to make the financing work.

Both he and Hansen's group say the Oak View deal has too many financial contingencies. 

"Ours is the only bid that will enable us to build an arena without the contingencies and teams," he said. "They're asking for a bunch of subsidies on the tax side."

The SODO group believes "the OVG proposal could entrail even larger public subsidies than the SP proposal," and that Oak View's request for parking revenues is just the start.

"In total we believe the present value of these subsidies is also in excess of $200 million and potentially even higher than those request by SP," the SODO group's analysis said.  

Tim Leiweke of Oak View has said his group has financial backing from the Madison Square Garden Company and Goldman Sachs. Oak View's plan involves digging 15 feet down to expand the existing footprint and gut the current interior. It's a $564 million plan.

Wally Walker, who is part of the SODO team, told Sports Radio 950 KJR on Wednesday that his group was just trying to get the questions about both proposals out in the open.  

"It looks like the city may be on the hook for those cost overruns," Walker said about the bids and his group's offer in SODO. "It's not even close. It's almost laughable, the difference, the tax money generated from the privately financed SODO arena would pay for all kind of good things for the city, for the state, and whatever they want to do with KeyArena."  

Walker also said he believed there was room in the city for a "more modest sized concert venue" at Seattle Center and a sports arena in SODO.

There are still plenty of other questions, that will be discussed about both bids in the weeks ahead, transportation and preservation of the roof among them.  

Vouvalides' group is looking to preserve and extend the existing roof line and says their transportation plan, which includes $5 million in funding, is aimed at making the arena "less car-centric."

There is a public meeting on the issue Thursday night, and the mayor is expected to make a recommendation on the best plan by the end of June or early July.

© 2017 KING-TV


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