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"KeyArena Fund" Could be Diverted to New Arena
The $7 million "KeyArena fund" council members announced Monday as part of a new agreement with San Francisco hedge-fund manager Chris Hansen to build a new arena could actually help pay for the new arena instead, according to the language in the agreement.
At their press conference announcing the deal with Hansen Monday, council members said the fund would ensure that KeyArena is viable even after the new arena is built. "This money, taken as part of the tax revenue generated by the project, will help make KeyArena … a place that the tenants deserve," council member Sally Clark said. The money would, council members said, include $5 million for immediate short- and mid-term improvements to KeyArena, plus $2 million to address what to do with the arena in the future.
The city's official materials on the new arena deal also refer to the KeyArena fund as a fund for the arena itself, calling it "an additional $7 million of public funds for Key Arena."
However, the fine print of the deal says otherwise. Specifically, the agreement stipulates that the "first $7 million of incremental KeyArena taxes"---that is, taxes generated at KeyArena assuming Hansen decides to put a new NBA team there while the new arena is under construction--- can be used to pay "for improvements to Key Arena or to fund improvements at the new Arena." [Emphasis mine.]
The agreement goes on to say that if Hansen's ArenaCo negotiates a lease with KeyArena's "anchor tenant," the Seattle Storm, then all the tax dollars in the "KeyArena fund" will go to pay for Hansen's new arena. The agreement thus provides an incentive for Hansen to recruit the Storm to play in his new arena---a $7 million incentive. Or, as one arena opponent put it, "It's a $7 million signing bonus for the Storm." A signing bonus made up entirely of KeyArena tax dollars.
Clark disagrees with that point of view. She says the intent of the language was to acknowledge that "we're introducing doubt for our existing tenants ... and that should come with a commitment on our part" to help them out if the city, through its $150,000 study, decides KeyArena isn't viable.
"All things being equal, KeyArena works well for the Storm. It's a good size for them. They're not looking to move." However, Clark acknowledges that that could change "if we decide we're not going to be in the KeyArena business anymore."
Council member Mike O'Brien says the intent of the KeyArena fund was always to help the Storm, not the arena itself. "The first $5 million is designed to deal with our long-term tenants at KeyArena. That could be used at KeyArena if our long-term tenants want to stay at KeyArena and need some improvements, or, if the long-term tenants reach a mutual agreement [to move to the new arena] then we can use that money to make improvements elsewhere."
O'Brien acknowledges that using taxes from KeyArena to pay for the new arena would technically violate the city's official pledge that the arena will be entirely self-financed. And he says he understands that the council may have oversold the idea that the KeyArena fund would go to KeyArena, the facility, itself, rather than the Storm.
That impression is, understandably, widespread. Deborah Daoust, a spokeswoman for Seattle Center, says she believes "the intent [of the KeyArena fund], at least from watching the press conference, was that it would be something that could help in repurposing KeyArena when the new arena is built. It's a city asset, so there's some need to protect the assets of the city."
When I asked Daoust if the Center was alarmed by the language allowing the city to divert the KeyArena fund into the new arena, she referred me to Mayor Mike McGinn's office.
McGinn's office has not yet returned a call for comment.
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- This Week in Restaurant News: Expansions, Cocktails, and Fried Chicken
- Morning Fizz: Brawl Averted, Money Not Diverted
- 30 Perfect Day Trips
- A Critic’s Guide to Seattle Restaurant Week 2014
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