King County Council Adopts Amended SODO Arena Agreement

Source: King County Council press release.

On Monday, the Metropolitan King County Council gave its approval to an amended memorandum of understanding (MOU) and interlocal agreement (ILA) that will govern King County’s role in a proposed arena in Seattle’s SODO district.

The vote is the first step in the possible return of National Basketball Association to Seattle as well as a potential National Hockey League franchise. 

“The Council, through our Budget Committee, has spent the last two months reviewing every aspect of the MOU and ILA,” said Council Chair Larry Gossett. “After the adopted amendments, the majority of the Council believes this effort by Mr. Hansen to return the NBA to Seattle and attract a National Hockey League team is worth pursuing.” 

“I’m excited by the prospect of bringing back our beloved Seattle SuperSonics. But we can’t legislate on that alone,” said Councilmember Joe McDermott who chairs the Council’s Budget and Fiscal Management Committee. “That’s why we undertook a thorough and careful review of the arena proposal. Our region’s experts in finance, economics and transportation – like Justin Marlowe, Dick Conway and Doug MacDonald – helped us better understand the benefits and risks of this legislation. Our work convinced me this proposal has sufficient protections for the County’s General Fund and taxpayers. So I was happy to vote in favor today.” 

In February, private investor Chris Hansen presented to King County and the city of Seattle a proposal to construct a new arena in Seattle’s Stadium District with the ability to host NBA and NHL teams. After negotiations between Hansen, County Executive Constantine and Mayor McGinn, a proposed agreement was announced in May, outlining King County’s role in the proposed arena project. 

The adopted MOU caps the County’s financial contribution at $80 million if the facility is home to both an NBA and NHL franchise. If only an NBA franchise is located in the arena, the County’s financial contribution tops out at $5 million.  

“It is time to get started. This does not presuppose the final outcome, nor other mid-step votes but this is a great opening salvo,” said Council Vice Chair Jane Hague. 

“This proposal is different from previous sport stadium proposals. We can bring the Sonics home, create jobs and raise our region's quality of life without having to raise new taxes. With no new taxes and vigorous taxpayer protections in place, why would we not rally behind a proposal that results in our region gaining a professional basketball and hockey team?” said Councilmember Julia Patterson. “King County's goal has always been to find a way to make this opportunity work for all - business, government, investors, taxpayers and fans. I believe today's vote signals that commitment. We should move forward with this process knowing there is still work to be done.” 

“Today’s decision opens the door to a process that will involve a number of steps and many additional opportunities for evaluation and public comments,” said Councilmember Kathy Lambert. “The realization of this arena still revolves around the successful acquisition of a team. If an opportunity becomes available, we will be prepared to take advantage of the economic and cultural benefits an arena could contribute to our region. This is an example of public-private partnerships that allow many diverse opportunities and benefits with no new general tax dollars.”

“I appreciate the public feedback we received on both sides of this important issue. One key concern was the impact of this proposal on the local economy, and I am pleased that the Council approved my amendment requiring an independent economic impact analysis to ensure that we study the effect of the arena on jobs and economic activity before we commit public funds,” said Councilmember Bob Ferguson. 

Today’s vote came after Councilmembers heard over two hours of testimony from more than 60 speakers voicing their support and opposition to the plan. This was the second Council meeting in which the public had the opportunity to testify.

On July 19, the County Council joined the Seattle City Council for a special joint meeting to hear public comment on the proposed arena. The Council’s Budget and Fiscal Management Committee held nine meetings on the arena proposal.

The Budget Committee and Council also received an evaluation of the proposal from the independent panel formed by Budget Chair Joe McDermott. The members of the panel, experts in economics, public finance, public-private partnerships, labor, and urban development and transportation provided their analysis of the arena proposal. 

The Council amended and then adopted the MOU and ILA, which outlines the terms of the agreement and what steps must be completed before any county financing can be used for the project. The amended MOU includes provisions for:   

Enhanced Financial Security for the County: The rights of the City and County to secure rent payment from ArenaCo have been significantly strengthened, including additional security provisions enhancing the governments’ ability to obtain payment in priority to other investors and lenders. 

Independent Economic Impact Analysis: An independent economic impact study will be performed examining the impacts that may result from the construction and operation of the proposed arena, including changes in employment, economic activity, and tax revenues. The analysis will also examine the arena’s projected effect on the overall regional economy and its compatibility with regional economic development plans. An independent consultant will conduct the analysis, with all costs paid for by ArenaCo.

Infrastructure: ArenaCo, the company created by Hansen to construct the arena will participate in providing pedestrian access to the facility from the International District Station and Stadium Station light rail stops adjacent to the arena. 

Transparency: The City and County will have the right to review all relevant financial records relating to the ability of ArenaCo and ArenaCo Parent to carry out their financial obligations under the Arena Lease if an exemption from the state Public Records Act is granted. If an exemption is not available, ArenaCo and ArenaCo Parent will be required to provide an alternate means for the City and County to assess the ability of ArenaCo and ArenaCo Parent to carry out their financial obligations. 

Benefit to the Community: ArenaCo will adopt a Community Benefit Agreement with appropriate community organizations and the City and County to provide benefits to the communities that will be affected by the Arena. ArenaCo will be required to communicate with a variety of community organizations, community members and the City and County to identify the appropriate issues to be addressed by the Community Benefit Agreement. 

Team Name: The revised MOU strengthens the provision that ArenaCo must make its best efforts to ensure the NBA franchise that plays in the facility will be named the “Seattle SuperSonics.” It also includes a provision that, once the name is secured, the City will always retain the team name and history. The County Council is the first legislative body to act on the proposal. The Seattle City Council must also adopt the MOU and ILA for the project to proceed. If the City Council makes any changes to the MOU or ILA approved today, the County Council will need to vote on whether to accept those changes.  

“We want to thank all the people who invested so much of their time and energy over the last two months,” said Gossett. “From the Council’s Central Staff, to the members of the independent panel who volunteered their time to review the proposal, to all of the people who took the time to contact us or testify during this process. Your input played a vital role in creating the proposal we accepted today.”