BY Art Thiel 06:30AM 09/19/2017

Thiel: Key remodel a ‘very aggressive’ plan

The $600 million plan to renovate KeyArena seeks to open for the 2020 NHL season, a timeline even the city calls “very aggressive.” Will neighborhood needs get overlooked?

City Council chambers were filled mostly with advocates of the plan to renovate KeyArena. / Matt M. McKnight, Crosscut

Asked if there was anything that would keep the Uptown Alliance from saying yes to the low-risk but high-pressure $600 million private proposal to make KeyArena a world-class entertainment showcase, Deborah Frausto paused, then perked up.

“We haven’t said yes yet,” she said, making her among the few attendees at the Select Committee on Seattle Arenas meeting Monday to at least slide one foot upon the corner of the brake pedal of a project on hyper-drive.

Frausto represents the community group most impacted by the proposed arena changes in a  neighborhood already awash in change. Along with similar organizations representing Belltown and South Lake Union neighborhoods, they are the citizen scrutinizers for a project that so far as been lauded for its transparency.

But as Frausto cautioned, “Transparency isn’t the same thing as engagement.”

Because all three neighborhoods were already immersed in varying degrees of transportation/parking plans to help with problems in the heart of the nation’s fastest growing urban core, they seek time and resources for a long-term, integrated solution. They fear haste and neglect once a deal is signed.

Since the pace for a project that began in January with the city’s request for proposals seems startling to many, Frausto felt it was incumbent upon her to be among the 40 or so to take an allotted one minute Monday in City Council’s packed chambers to clear her throat.

She expressed support for the project in general but advocated for more deliberation. After the meeting was adjourned, she said, “Getting a hockey team is not a reason to not do due diligence.”

Monday was the first chance for in-person, public comments on the presentation to the council last week by the mayor’s office — we hesitate to identify anyone as mayor because the city by November will have had nearly as many mayors as the Mariners have had starting pitchers — of a memorandum of understanding with Oak View Group of Los Angeles (MOU summary here).

The mayor’s office and the private developer have agreed, in the words Monday of Brian Surratt, the executive director of the city’s Office of Economic Development, on a “very aggressive . . . but doable” timetable that begins this month and concludes in September 2020, in time for the opening of the National Hockey League season.

The parties are not waiting for approval of the council, which is mandatory, before spending money and time. Urgency is upon them, because they want to convey ability and sincerity to the NHL.

Their hope is that the council approves the MOU in December, shortly after the Dec. 3 expiration of a five-year-old MOU with developer Chris Hansen, whose arena-rival plan  mandates NBA-first for the Sodo stadium district location.

If Hansen’s last-ditch effort to revive his plan fails — or is simply ignored in the council’s lust for a Seattle Center transformation — approval for OVG’s plan paves the way for the conditional granting of an NHL  franchise.

Two wealthies have agreed to partner with OVG — investment banker David Bonderman, a University of Washington grad, and Hollywood film producer Jerry Bruckheimer. The tandem has been pursuing pro sports ownership for at least a decade and would not blink at a $600 million-plus expansion fee.

The meeting Monday was also the first chance for council members to quiz in public the city staffers who have been consumed by developing the MOU.

Seven of the nine council members were present, missing only Lisa Herbold and council chair Bruce Harrell, who temporarily succeeded as mayor the resigned Ed Murray — until 5 p.m. Monday. That’s when council member Tim Burgess, who is retiring from the council, was sworn in to succeed Harrell and serve out Murray’s term.

Warming up in the bullpen are Jenny Durkan and Cary Moon, one of whom, after the Nov. 7 election, will be the fourth mayor in nine weeks.

Aside from the mayoral mayhem, the council member most interested in the arena’s intense timetable was Mike O’Brien. He asked questions about what Seattle loses if the timeline slips, and whether there’s room in the proposed arena’s schedule for the NBA.

Surratt’s answers were indirect, although city budget director Ben Noble said several arenas around the country operate with two winter sports schedules.

But the NBA is not on the immediate agenda because it has offered no interest in expanding or relocating a team, certainly not in the final three months of Hansen’s MOU. Nor was the NBA on the minds of most of one-minute commenters.

Only three people, including KCPQ-TV sports anchor Aaron Levine, advocated for Hansen’s project over Sodo. The audience was loaded with supporters of the OVG plan — hockey fans, members of unions representing Port of Seattle workers, theater-arts workers and the construction trades, as well as some non-profit organizations that use Seattle Center facilities.

They all see the benefits of a $600 million elixir for the Center and don’t seem worried about the side effects, such as the two-year closure of the building and the dislocation, temporarily for most, of its tenants and events.

But discovery of consequences is the responsibility now of the council and its outside consultants, abetted by the community groups. One small surprise came to light Monday.

A trumpeted part of the OVG offerings that addressed some community worries, a $40 million fund dedicated to help with parking and transportation issues, was not a lump sum available at the front end of the project, where it seemed likely to do the most good.

The $40 million is set to be spread over the 39 years of the proposed lease. Details.

City officials are, however properly thrilled that the MOU says OVG is responsible for all cost overruns, as well as all operations and maintenance.

Those are the same commitments, including the $40 million transportation fund, that Hansen agreed to for his project.

But Hansen’s site is not at the Seattle Center, which every mayor, no matter how many, since its creation for the 1962 World Fair, has been obligated to fund, maintain and improve.

To further clear the path to a decision in favor of the Key remodel, the council will consider a bill to exempt the project from the provisions of I-91.

The initiative, passed into law by Seattle voters in 2007 by a 75 percent plurality, mandated that any pro sports organization leasing city facilities must return to the city an annual profit equivalent to the modest rate of return on a current Treasury bill.

The legislation was, and is, unique in the country, and so outraged then-NBA Commissioner David Stern that he vowed, if it became law, that the Sonics, then owned by Oklahomans eager for a move, would be gone from Seattle and no replacement would happen on his watch. He delivered on his threat.

Stern and NBA owners saw it as government creating a hostile work environment. So the exemption the council will consider says that OVG is not a professional sports organization within the meaning of the law, and that the benefits described in the MOU that accrue to the city are consistent with the principles underlying the law.

Should the council agree to create an exemption, it means the law that helped chase the NBA from town would be de-fanged to help deny the arena project that had the return of the NBA as its primary purpose.

City officials really want this project to happen. To make it work, vigilance is mandatory and time needs to be on the side of the urban village, not the hockey league.  Sports teams, as we have seen, come and go.

 


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YourThoughts

  • MarkS

    “The $40 million is set to be spread over the 39 years of the proposed lease.”

    Traffic solutions? Fugitabotit.

    • Playhouse

      The $40M is in addition to the traffic mitigation that will be identified in the environmental review analysis and mobility plan negotiations. They anticipate that will be upwards of $60M or more to be paid up front during construction.

      • art thiel

        Correct. Over 39 years. See answer below.

    • art thiel

      That $1M a year will buy a lot of flagpersons and orange cones.

  • Jamo57

    “we hesitate to identify anyone as mayor because the city by November will have had nearly as many mayors as the Mariners have had starting pitchers.”

    Outstanding. Another classic Thiel summation in one sentence.

    • art thiel

      Almost too easy, that one.

  • Effzee

    I just heard the last nails get driven into the Hansen plan. I hope he likes owning Seattle real estate that he can’t do anything with.

    • Jamo57

      I’m sure there’s a plan B for some type of development of the property by Hansen at some point. May not be sports related but it will appreciate and make money somehow.

      • Effzee

        He will have to come up with some kind of all-new, evolutionary entertainment or shopping idea. As Art pointed out, the NBA doesn’t need the hassle that is dealing with Seattle. We don’t fit their business model. (Not that I’m a proponent of groveling at the feet of a league whose product is so clearly rigged.) The new Key Arena will be a concert venue with huge contracts, and there’s also Safeco Field, The Paramount, The Moore, Benayroya Hall, etc. There is definitely not a demand for yet another primary concert venue in Seattle.

        • art thiel

          If he’s denied, Hansen will have many options for the land, all profitable. But none will be an arena. He could build housing for the homeless for property-tax forgiveness and become a hero in a more meaningful way.

          • twistandturns

            That would be cool if he created homeless or low income housing but what would his motivation be to be a hero to this current administration? His passion from the beginning was to being a team he enjoyed as a child to Seattle, not to help progressive politics. He will be fine unless city leaders limit what he can develop.

          • art thiel

            Not saying he would do it. But he could. He’s not supporting any administration because they change so fast. He’ll be on his fifth mayor in December.

    • Playhouse

      Hansen will be fine. He can always develop the land into office space, which is the alternate plan he’s presented to the design board and commission. He can also sell the land and make a tidy profit on it.

    • art thiel

      In this market, Hansen will have no problem selling or developing his 12 acres near downtown. Financially, he was smart. Emotionally, he’s likely devastated.

      • Kirkland

        He could build a lot of office towers, which many think would gum up Port traffic far more than an arena hosting mostly night events.

        • LarryLurex70

          Oh, the irony! I do wish him the best, but, his fate was sealed when the Mayor went public with the AEG and OVG proposals.

    • Kirkland

      Still can’t understand why the Hansen group never has a decent showing at these events. Running a hedge fund is demanding, but why can’t he get more people to counter the Port/OVG/etc. at these things?

      • art thiel

        I think Hansen missed a PR chance by never appearing in a public CC meeting. The underdog has to do something different.

        • DAWG

          Hansen’s personality served him well up front. However, in this marathon he never stood a chance against the likes of the Port and Tim Leiweke. Altogether different kitty cats.

  • Jamo57

    Hey Art, what sense to you get as to the level of engagement of the NHL in the background? I agree with you that the NBA is ambivalent towards Seattle and doesn’t really care where this goes.

    The key arena group seems to infer the NHL is just a matter of time and maybe acting as an “arena whisperer” behind the curtain which, if so, reduces my cynicism that the city is being played again.

    • art thiel

      For years, the NHL has wanted to come to Seattle, whose economic growth has only increased its desire. The league has room to expand by one. None of that is behind the curtain. They also want to be the first winter sport in the building, not the second.

      Tim Leiweke has said he has Bonderman and Bruckheimer in his pocket. So that’s public. The only reason for silence by the NHL is that there’s nothing to speak to until the MOU gets signed. And they know enough about the fabled Seattle process to assume nothing until it’s done.

  • Husky73

    Tough to figure where a team will come from. The NHL needs another team in the east, and the top two prospects are certainly in Canada.

    • art thiel

      They have 31 teams, and want 32. So the league expands by one.

      • Husky73

        Quebec City….in Canada, in the east, done deal.

        • LarryLurex70

          The league ignored them during the last expansion cycle that netted Vegas, remember? Quebec City won’t get any closer to expansion than Hamilton will.

      • LarryLurex70

        Hello, Portland!

    • Playhouse

      The NHL has been holding out for Seattle. That has been obvious for the last few years. They don’t wait forever, but the opportunity will exists.

    • LarryLurex70

      Calgary is having serious arena issues as we speak. But, their ownership group TURNED DOWN the City’s plan that would’ve turned over control to a new rink AND all revenue from it. Hard to see them relocating here to a lipstick’d City-owned Key Arena.

  • Love Bullwhips Cracking

    Everyone has known for years that there is a very measurable chance that the NHL is going to have a strike in 2020 and that there may very well either not even be a 2020 season at all or that it will be a very truncated season like 2012-13. Contracts being signed have been taking that into account as well. The money is being front-loaded around the 2020 season.

    • Kirkland

      Yep. Donald Fehr (the same union head in the 1994 baseball shutdown) runs the NHLPA, and Gary Bettman will never back down from a labor fight.

      • art thiel

        Thanks to both of you for the reminder. But the NHL can’t assume the worst-case regarding expansion, which is a longer-term commitment than any CBA. My guess is Bettman knows OVG won’t hit the 2020 target.

  • Kirkland

    Something’s rotten in Denmark. This city is infamous for its overbearing process, yet those in charge seem hellbent to ram this Key Arena thing through. The EIS in SoDo took ages, and they want to complete an EIS for a place with far more traffic, transit and parking challenges in a year? The timing of the public hearing (10:30 a.m.) also did not help a lot of SoDo supporters like me, who simply could not afford to take time off from work to reach City Hall.

    Though I’ve wanted a Seattle NHL team for three decades, I’d rather have something that supports the most amount of people. The Key will be inaccessible to many outside Seattle’s city limits, the infrastructure in a neighborhood that’s refocusing on foot traffic over cars is unhelpful, and Sonics fans are not being taken care of in this deal. Wait and get it right instead of pushing something that looks too much like 1995 and could cost us teams like in 2008.

    And I won’t support any team involving Leiwicke. His brushing off of Murray’s alleged victims in this MOU statement was the final straw. I’ll stick with the Thunderbirds. http://ampthemag.com/the-real/leiweke-explains-seattle-mayor-resignation-means-keyarena-project/

    • art thiel

      The traffic mitigation has yet to be done. Let’s see if the post-tunnel forecast has meaningful insight for conditions in 2020.

      Thanks for the think.

      • DAWG

        50% more Upzone Uptown yet to be built (conservatively). So even if post-tunnel forecast is positive, those gains will no sooner be realized than lost. Rapid development should discount and marginalize such forecasts.

        • art thiel

          Fair point. To me, the most practical alternative in such high-density urban villages with a major entertainment center and no rail transit is is to ban private cars.

          Can’t wait until the people who can afford $250 hockey tickets hear that.

          • DAWG

            Speculative forecasts for Upzoned Uptown traffic and post-tunnel opening are simply that . . . SPECULATION. No more. Performance of Upzoned Uptown fixed road system will fade away as the remaining 50-70% is built out. As predictable as climate change. ICEBERG dead ahead !

      • Husky73

        Have the bus tunnels reduced traffic? How about the light and heavy rail? Is traffic on I-5 better than it was 10 years ago, or worse? 405? 90? 520? The valley freeways? The big dig is just another multi billion dollar boondoggle with minimal to no impact. The KeyArena project is next.

        • DAWG

          I wouldn’t go that far. Point is fix grid road system has only one(1) direction to go in as population increases and 50-70% of Upzoned Uptown is built out . . . automobile friendly roads in Seattle are diminishing and will continue to do so regardless of our efforts. We can open up the tunnel and bring light rail to Seattle Center in 20 years, but this is headed in one direction no matter our best efforts. Our hopes for a better traffic future are only going to fade away.

  • 1coolguy

    Tear the Key down and uild low-income housing there. A MUCH better solution, as getting to the Key was impossible for Sonics games and 10 years ago Seattle was not the total driving and congestion nightmare it has become., So sad Hansen did not rally his supporters as the union did. Where was RUSSELL WILSON??? Where was HANSEN??? They blew a huge opportunity., This council will make decisions based on who is in the immediate audience, as they have no spine nor leadership.

    • art thiel

      Low-income housing in Seattle’s living room? I will definitely attend the CC meeting for that announcement.

      The council isn’t swayed by which side stacks a meeting. They’ve already made up their minds.

  • Ian Jacob

    So disappointed. That’s all I can say. Getting to the key is a night mare and just going to get more nightmarish. Art, did Hansen do something to the council to piss them off? From what I can tell he had some contingency money to help refurbish the Key to make it a more intimate music/ arts venue or something. I really believe there is just not enough of a foot print to make a world class NHL and Basket ball arena. Do you know why are they so resistant to the SODO plan?

    • art thiel

      See answer above.

    • LarryLurex70

      Simple: if SODO gets built it will become THEE preeminent indoor sports and entertainment venue in the entire PNW. And, the City will have a competing circa-1962-aged money pit on its annual/daily agenda.

  • Justin Van Eaton

    The whole process has been so Seattle. Lets kick the guy in the teeth that actually has some roots here and cares about the community. Lets promote the outsider who doesn’t really care about anything Seattle other than his ability to make money off it.
    Murray and the CC have just seemed to be angry with Hansen about something, and I keep thinking at some point we will finally hear what it is or was. Maybe behind the scenes Hansen was impossible to work with. But it sure has felt like there has been an undercurrent of animosity for some time.
    I think the NBA is dead in Seattle. I don’t believe OVG cares anything about it, and I have a hard time seeing an owner paying a couple billion for a team and being a third party tenant in their home arena.

    • art thiel

      It’s really no secret: The mayor and council have been told privately by Leiweke and others that because of his Sacramento dealings and the departure of Ballmer, the NBA doesn’t want Hansen. Nearly everyone who says it won’t say it on the record, but Murray told me, and I’ve written it. Hansen does not believe he’s being blackballed.

      • Rocketeer

        It was obvious that if the NBA wanted Hansen in, he’d have been in years ago. Instead he can join the queue of interested parties who will never get in no matter what. See Ellison, Larry.

        Hansen has also been getting terrible PR advice on this project for years now but doesn’t seem to learn from his mistakes. He uses the same silly shock and awe tactic to grab headlines for a day, then disappears for months on end. That’s not how you build and sustain momentum on a project like this. Kudos to him however for getting the conversation started. Someone had to do it.

  • Steed

    What’s the team name going to be? Thunderbirds or Totems would be cool, but probably not happening.

    SuperSonics is a great name, but that comes from a time when the world was on the way up. Now there are no commercial supersonic aircraft, and the tides of progress are receding. So we need a name to reflect that. Something grim, like “The Cobains” maybe.

    But seriously, what about, “The Rainiers”? Is that copyrighted already? Can you copyright the name of a mountain?

    The arena debate seems to be over, so I’m moving on to the team name issue.

    • LarryLurex70

      Please, God, bring back the Totems.

  • Husky73

    Here’s a very basic question— why is it so important that Seattle get fully involved in the big 4 of major league sports? It seems like unless Seattle re-enters the NBA (which does not want Seattle back) and into the NHL (which will soon be out of room), then somehow the sports and entertainment palette is not full. San Diego has but the Padres– and SD is perhaps the best city in North America. Pittsburgh has no NBA, nor does Cincinnati. They seem to be fine. Kansas City– no NHL or NBA. Portland– only the Trailblazers and Timbers. Why is there such a fury to spend close to a billion dollars (yes, there will be public expenditures) on a new arena with little or no hope of the NHL near term, and the NBA ever? Are not the Huskies, Redhawks, Seahawks, Thunderbirds, Sounders and Mariners (and their venues) enough? Why does this matter so damn much?…by the way, the NBA and the NHL are fairly short trips on I-5.