City Hall

Council Approves Sonics Arena; Licata and Conlin Vote No, Port Raises Concerns

By Erica C. Barnett September 24, 2012

The city council just voted 6-2 to put its official stamp of approval on San Francisco hedge fund manager Chris Hansen's arena proposal, which would use up to $145 million in public funds (plus $80 million more if Hansen secures an NHL team as well as an NBA franchise) to build a new basketball arena on land Hansen owns in SoDo (land the city would buy back from Hansen).

The latest version of the deal, which a committee made up of all nine council members approved September 13, includes a $40 million fund to pay for transportation improvements around the arena site---an effort to placate the Port of Seattle, which has argued all along that arena traffic would be detrimental to freight mobility in and out of its facilities in the Duwamish industrial area. It also includes a personal guaranty from Hansen; a fund to pay for either improvements to KeyArena or, more likely, to fund the Seattle Storm's move to the new arena; additional cash reserve guarantees if arena revenues fall short; and a guarantee from Hansen that his personal wealth will never fall below $300 million.

The two dissenting votes came from council members Nick Licata and Richard Conlin, who both said that although the deal was greatly improved, they still weren't convinced that the city needs to spend public dollars on a sports arena.

"The question before the council is not whether we think having an NBA team is a good thing, but whether it is necessary or appropriate to invest public money in a new arena," Conlin said. "We simply do not have the financial information that would tell us whether a city investment is necessary." Conlin also noted that the agreement would effectively doom KeyArena by most likely taking away its biggest tenant, the Seattle Storm. "We will have to figure out the future of KeyArena, which, in 2011, made $310,000 [in profits] and now will face a city-funded competitor for major shows and possibly lose its primary sports tenant."

Licata---careful to avoid suggesting that sports teams don't contribute any "cultural value" to cities---added that unlike other publicly financed cultural facilities like McCaw Hall, an NBA arena isn't inherently invested in the city; in fact, the NBA wants cities to compete with each other for arenas like the one the city now plans to fund.

"The new arena would be controlled by a private corporation .. whose existence is predicated on making profits for their owners," Licata said. "The problem is that privately owned or controlled sports facilities need huge public subsidies, without providing measurable public benefits. ... This is not about liking or not liking sports; it's about what is best for public welfare in the long term."

Council member Tim Burgess, an early arena skeptic, said he was convinced by Hansen's personal guaranty and by the $40 million SoDo transportation fund. "When have we ever done anything significant in Seattle that did not involve any risk?" Burgess said. "[Hansen] has demonstrated throughout this process that he wants to do the right thing, so we're going to hold him accountable for that."

After the vote, the Seattle Port Commission sent around a letter from commission president Gael Tarleton  letter reiterating that the Port does not have any "uncommitted dollars" to pay for new transportation projects (the city has said it assumes the Port will kick in some money of its own on top of the $40 million), and said that mitigation for the arena development "should be the responsibility wholly of the developer."
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