BY SPNW Staff 12:17PM 04/12/2013

Judge tosses out I-91 lawsuit vs. SoDo arena

Another hurdle was passed by Chris Hansen’s SoDo arena plan when a King County judge dismissed Friday a lawsuit from Initiative 91 advocates aimed at stopping the project. Superior Court Judge Laura Middaugh said that the timing of the lawsuit was premature because there are too many unknowns to the proposed arena deal to rule now. Since the deal is not final, there are no grounds for a violation.

The decision was similar to the dismissal another judge delivered earlier to a suit brought by the longshore union, saying that no environmental rules had been broken yet because the deal was incomplete. The trigger event that leads to the deal’s completion is the acquisition of an NBA team by Hansen, which he is attempting to do by purchasing the Sacramento Kings.

“We agree with Judge Middaugh’s ruling that the 1-91 lawsuit brought against the city and the county is not ripe,” Mayor Mike McGinn said in a statement Friday morning. “The city and county are in the middle of following the decision-making path laid out by the MOU, and not until the end of that path will the councils decide whether to go forward with public financing for the proposal.

“If the councils do choose to go forward to issue bonds, we are confident that the proposed financial structure will result in a final deal for the arena that provides a fair market return that is more than sufficient to meet the intent of 1-91.”

King County Executive Drew Constantine tweeted this morning, “This ruling is yet another in a long line of affirmations that the city and county are doing things right to bring the Sonics home.”

The timing of the dismissal was important for Hansen because the NBA owners are scheduled to vote next Friday on whether to approve Hansen’s offer to buy the Kings and relocate the team to Seattle, or accept a counteroffer from Sacramento investors to buy the team and keep it in the California capital in a new arena. The dismissal removes, for now, the litigation prior to the vote. If the Kings are relocated to Seattle, the suit could be re-filed.

I-91 was passed in the city of Seattle by a 74-26 margin in November 2006, mandating a small profit for the city in any lease agreement with a pro sports team for a city facility such as KeyArena. The law is believed to be unique in the nation, and was a source of great irritation for the NBA, helping grease the skids for the relocation in 2008 of the Sonics to Oklahoma City.

The arena project calls for a lease-purchase loan of $200 million in public bonds to be repaid through arena revenue. I-91 proponents said that violates I-91′s terms.

The plan, the lawsuit says, “lacks fair value” because most of the money used for repayment is unsecured future cash revenue or interest repayment not allowed under the initiative.

“We think there is a massive shortfall in fair value because you can’t count the unsecured future cash,” said Seattle attorney Cleveland Stockmeyer, who filed the suit on behalf of Mark Baerwaldt, a drafter and sponsor of I-91, and three other Seattle residents.

 


YourThoughts

  • jafabian

    Somewhere, David Stern slammed his fist against his desk.

  • Leon Russell

    “The arena project calls for a lease-purchase loan of $200 million in public bonds to be repaid through arena revenue.”

    This is not true. The $200 million in public bonds will be paid almost entirely with TAXES, not “arena revenue.” “Arena revenue” is money from ticket sales, concessions, parking, naming rights, etc. All that arena revenue would go to the private owners of the teams, Ballmer and Hansen, primarily. Only about $1 million per year of that arena revenue would be paid in “rent” which would go to paying off the bonds. All the other revenue to be used to pay off the bonds would be TAXES — mainly sales tax, B&O tax, property tax and ticket tax. All those tax revenues belong to the city of Seattle, not Ballmer or Hansen. So, the $200 million in bonds will be paid of almost entirely with PUBLIC MONEY.

    Just as at a store, the money you pay for a cap belongs to the store, but the sales tax you pay on that hat belongs to the public. If you buy a hat at the team store in an arena, the money you pay for that hat belongs to the team, but the sales tax on that hat belongs to the public. If the sales tax on either hat is spent on a new arena, then that is public money being used to pay for a pro sports arena. The money you spend on the hat is “arena revenue.” The money you pay in sales tax on that hat is NOT “arena revenue” — it is TAX (PUBLIC) REVENUE.

    Can you understand this?

  • Leon Russell

    Today’s ruling did not decide anything. It merely delayed the trial on I-91 compliance until a later date.