City councilmember says Seattle arena 'unlikely' to be approved

Seattle City Councilmemeber Richard Conlin doesn't want any public money to be used in the financing of a proposed new sports arena in Sodo, saying "it is unlikely that this proposal will be approved."

In an email to some constituents Tuesday, Conlin said he supports the NBA's return to Seattle but thinks a new arena should be built through only private investment. The email's authenticity has been confirmed by seattlepi.com.

However, in the afternoon, other councilmembers were quick to dispel Conlin's comments as an opinion of the entire City Council.

"I think he may have been just a little premature," Councilmember Jean Godden told seattlepi.com. "My own opinion is that the council is pretty optimistic on bringing the NBA back. Obviously, Conlin does not speak for the entire council."

A representative for Councilmember Bruce Harrell said Conlin's comments are his own and do not reflect Harrell's views of the arena proposal.

"The email reflects Richard's opinion. He is not speaking for the entire Council," City Council spokeswoman Laura Lockard said in an email to seattlepi.com. "There are still multiple meetings ahead and a public hearing to allow Councilmembers to get a full perspective and conduct their due diligence on the proposal."

Conlin's letter comes a week after Chris Hansen, the Seattle-raised investor who wants the city and county to chip in $200 million to help build an arena south of Safeco Field, went before the Seattle and King County councils to answer their questions. An official funding agreement -- drafted after months of work by Hansen, the mayor's office and the county executive's office -- is now before the councils for approval or rejection. 

Here is the full text of Conlin's email (in which he spelled Hansen's name wrong):

Thank you for your message about the proposed arena agreement. When Mr. Hanson made his presentation to the City Council, he indicated that there is not a financial plan that requires public investment in this project. There were also no good reasons given as to why this project should receive public financial support, unlike any other business that would like to locate in Seattle. The City works with businesses to manage transportation, land use, and regulatory issues, but we do not invest public money in businesses.

The Council is working through this issue systematically, with a four part test to reach a decision:

1. Would having an NBA team be a good thing? We agree yes, and applaud the efforts of Mr. Hanson and other investors to find a way to bring back an NBA team.

2. If that requires a new arena, is this the right location? We have some skepticism about both the merits of this location and the impact on Key Arena. We need to continue to review this to understand the impacts and problems of this location, and see if those can be solved by a mitigation plan.

3. Is this an appropriate area for public investment? I have seen no evidence that justifies making a public investment, nor any serious reason why a public investment is necessary for the project to proceed.

4. If a public investment is made, is the public protected as promised? We will continue to review this. It is a complex proposal, and there are many layers that need to be untangled before we are able to come to a conclusion about this. It is not clear that the proposed relocation guarantee, for example, is any stronger than the lease which the Sonics broke when they moved to Oklahoma City. It is not clear whose assets are on the line if the arena becomes insolvent - the arena in Portland (with a team owned by Paul Allen, who certainly has deep pockets) declared bankruptcy, leading to a difficult and challenging financial problem.

On balance, I think it is unlikely that this proposal will be approved. I encourage proponents of a new basketball team to lobby Mr. Hanson to pursue this as a private enterprise with public cooperation but without the complex financial arrangements and public investment that the current proposal appears to rely on.

Councilmember Richard Conlin
Chair, Planning, Land Use, and Sustainability Committee
Seattle City Council
206-684-8805
Follow me on my blog or visit my website for current issues.

The email was first posted via Twitter by @ArenaSeattle, an activist who tweets about Seattle arena news. 

Under the arena agreement, the city and county would contribute $200 million to the arena by way of loan. Hansen's investment group is willing to spend $800 million to help build the arena and acquire an NBA team. The project is dependent on Hansen's getting an NBA franchise.

If the investors nail down an NBA team and an NHL team, the city of Seattle would contribute $120 million and King County would contribute $80 million. If only an NBA team is in the works, the city would still put up $120 million but the county would only add up to $5 million; Hansen's group would make up the remaining $75 million to build the arena.

The public's $200 million investment would be paid back over 30 years by team rent and by taxes on the venue itself, on arena operations, on ticket sales, on arena parking and other sources that wouldn't exist without a new building. No new taxes would be created.

There are several safeguards in the proposal to protect the public investment. The biggest is Hansen's pledge to pay extra rent if taxes don't generate enough revenue for his monthly payment to the city and county.

Surplus tax revenue could go into the city and county's general funds, and Hansen's group would put their extra money into a reserve account for major upgrades to the arena. His group would also be required to set aside $2 million per year for maintainance and incremental upgrades.

Godden said the City Council she sees three main considerations in evaluating the arena proposal. One is whether Sodo is the right place. Another is whether a new arena would cause too much traffic and be too much of a disruption to port commerce. And third, whether Hansen's proposal is indeed a good deal for taxpayers.

She said the council will particularly look at whether the plan squares with Initiative 91, the ballot item Seattle voters passed in 2006 that prohibits the city from using tax dollars to support sports teams unless such investments yield a profit.

"I think the important thing is that we keep an open mind and that we do due diligence," Godden said.

Nick Eaton can be reached at 206-448-8125 or nickeaton@seattlepi.com. Follow him on Twitter at twitter.com/njeaton. Visit seattlepi.com's home page for more Seattle news.