BY Art Thiel 05:48PM 12/11/2018

Thiel: As costs rise, arena builders make a switch

Citing no agreement on a maximum guaranteed price, the Oak View Group building the Seattle Center arena has replaced the project’s general contractor.

The Arena at Seattle Center has a new general contractor. / Oak View Group

Vexed by skyrocketing costs, the builders of the Seattle Center Arena switched horses Tuesday. The $800 million-plus project by Los Angeles-based Oak View Group has a new general contractor, Minneapolis-based Mortensen, replacing the joint venture Skanska-Hunt, which was described as willing to “step away.”

The switch came amid reports of friction over the price escalation in a project that OVG CEO Tim Leiweke called “the most complicated” in his considerable history as sports-venue developer.

Apparently the change came about when Skanska-Hunt and OVG, whose winning bid was announced July 31, could not agree on a guaranteed maximum price contract, a document common for large projects.

OVG’s original estimate of the cost in 2017 was $600 million. At the time of a partnership agreement with the city, the cost was $650 million. Now the estimates are north of $800 million, not including a separate expense for the training facility at Northgate Mall, estimated at $70 million.

Also new Tuesday was hire of a premier New York architecture firm, Rockwell Group, to design the arena’s suite and club levels.

All of the funding for the project is from private OVG sources and bank loans. City taxpayers are not at risk.

Also an issue was the two-headed operation, a joint venture of global construction company Skanska and AECOM Hunt, according to OVG senior construction executive Ken Johnsen.

“Skanska Hunt needed (the guaranteed price) earlier than when we wanted,” said Johnson in a phone interview. “And any time you have a joint venture, there tends to be a second step in the process. A one-stop shop is a big help for quick decisions, and we have that with Mortensen, which has an an extremely strong office in Kirkland.

“Looking at Skanska-Hunt’s construction priorities elsewhere, both sides came to a mutual conclusion about this. We’re parting with Skanska-Hunt on good terms.”

Ken Johnsen

Johnsen, who said he anticipated no litigation between OVG and Skansa-Hunt, said Mortensen, which has done more than $4 billion worth of projects in the Northwest over 34 years, had done five months of pre-construction assessments on the arena plans in 2017 and put in a bid to be the project’s original general contractor.

The familiarity with the project and the area, Johnsen said, has resulted in almost no slowdown during the transition.

“Mortensen is accepting the project as is,” he said. “We’re looking forward to a good transition, with the drawings almost 100 percent done. The building will be built to the high standards that were set out.”

Kevin McCain, executive vice president and general manager of Skanska’s building operations in Seattle, said in a statement:

“Our Skanska Hunt joint venture is proud to have provided valuable pre-construction services for the new Seattle Center Arena. Given the market challenges and shift in timing, it did not make sense for our joint venture to move forward to the next phase of the project, so we recently came to a mutually agreed upon decision to end our joint venture’s involvement with the arena project. We are excited about the NHL coming to Seattle and we will provide full support to Oak View Group during this transition.”

In 2016, Skanska-Hunt was fired from the $1.44 billion Washington State Convention Center expansion project and was paid $7.8 million to walk away.

The arena project had a setback when the NHL, after accepting Seattle’s $650 million fee for an expansion franchise last week, pushed back the arena opening from October 2020 to October 2021. That actually is only a small delay, since the revised plan calls for opening by spring of 2021 to accommodate the Seattle Storm season. It also would be open for top-end music concerts, a far more lucrative revenue stream per event than sports dates.

Johnsen, hired by OVG Nov. 1, is a well-regarded construction industry figure and Seattle native, having helped direct the construction of Safeco Field, as well as renovation projects for King Street Station, Pike Place Market and the Seattle seawall. He understood the NHL’s caution.

“We agreed with them about taking the pressure off dropping the puck in 2020,” he said. “You only get a chance to open a building once.

“But we want to keep at the pace we set for the original opening.”


YourThoughts

  • Husky73

    For decades I have heard complaints about public projects and their overruns. “Run it like a business!” is the mantra. The private sector manages such projects far better than wasteful and clueless politicians and government. Uh huh.

    • art thiel

      They’re all big boys. They knew what they were in for.

    • rosetta_stoned

      Let’s compare this project with the Highway 99 tunnel in a few years.

  • jafabian

    Interesting that this announcement comes about right after the NHL makes their vote allowing Seattle into the league.

  • 1coolguy

    It still is in a HORRIBLE location for anyone who does not live on Queen Anne or downtown. The City has its hand washed of a property that was not in its best interests to operate, so that was a good decision for the City’s finances. BUT, for the vast majority of fans, the SODO site, located together with the Safe and the Clink, on the light rail line and at the confluence of two treeways, is by FAR the best site.
    When I go to the Seahawk and M’s games, I always take the light rail from the UW station – $3.50 and I leave the driving to light rail – it’s a wonderful experience – no traffic jams, no parking headaches AND it is much faster. As a prior Sonic season ticket holder, having dealt with traffic then, I won’t even consider driving to the Key in today’s worse traffic.
    So the City government “wins” while the City’s residents, as well as the surrounding communities’ residents, lose. What a shame. Forever.

    • art thiel

      No doubt the Sodo location is better.

      But the Seattle Center is a department of the city that depends on some retail revs. When someone waved a potential solutions, the city leaped.

      • DAWG

        Art, what’s the deal ? I thought this new arena at Seattle Center was a 100 year solution according to Sally Bagshaw ? You mean to say this is merely an impulsive decision to fix an immediate need ? What ? No ? !

    • Tim Duncan

      everyone in the world knew the sodo location was far better except i guess politicians as glad as i am to see an N.H.L Team ill probably never go at that location as i would have gone several times at sodo

    • Kirkland

      And don’t forget the influence of the Port in this decision.

      That said, there will be light rail to the Seattle Center, it’ll be a stop on the planned extension to Ballard. Thing is, that’s a decade or two away, and where to put the station near Key Arena is problematic (one station may require tunneling under the arena). See the Uptown route option maps here: https://seattletransitblog.com/2018/09/17/link-plans-part-2-uptown-south-lake-union-downtown-and-sodo/

  • StephenBody

    Curious: does this break or tie all previous records for quickest financing crisis for an American arena? They broke ground, what, two days ago and now they’re already over-run?

    What a gaggle of geese. As 1coolguy says below, this whole enterprise is based on nothing but A) the City Council’s ravening need to be right about Key Arena, and, B) their desire not to cooperate with Chris Hansen, as though he was the bad guy. The fact is, this city council is the worst and most clueless and most eaten up with causes and agendae in my 28 year memory of Seattle and the least knowledgeable about civic planning. They plan to shoehorn this arena into a place where it clearly is set up to fail and zeros like that Trump puppet, Sawant, neither know nor care about doing this job properly. They seem to feel that transportation in and out of Lower QA will magically work itself out, if they just wish hard enough and continue to evade the questions. Meanwhile, a city planner pal of mine said candidly, “What nobody wants to admit is that there is no possible way to solve the access problem. Anything that would work costs too much and would disrupt the downtown core for a couple of years. They seem to be waiting for a Fairy Godmother or something.”

    A confederacy of dunces, minus all of John Kennedy Toole’s humor and prose.

    • Husky73

      Three years from now, the new arena will be open to fireworks and fanfare. The gnashing of teeth will be forgotten just as it was for Century Link and Safeco. Folks were marvel at the architecture and will be lined up to buy their Totems (?) gear. Golden Guyle Fielder will drop the first puck and 18,000 fans will be happy.

      • StephenBody

        THERE. IS. NOWHERE. TO. ADD. ROADWAY. TO. BRING. PEOPLE. IN. I know SF’s story quite well. Neither of those arenas is wedged into an area anything like Queen Anne. At AT&T, there was and is that barrier of broad public access and older buildings that could be razed to allow for the stadium. There was quick access to TWO interstates. King Street was adequate to the development of traffic access. NOTHING – not ONE aspect of the area around Key Arena is that sort of disposable, displaceable property. Elliott Avenue is the closest sizeable roadway and that is a traffic nightmare in any regular rush hour, as is the entire downtown core. And when does travel to the weekday games happen? Rush Hour! And how’s regular traffic on weekends? HEAVY. That’s why, after THREE votes in favor of it, there is not one millimeter more monorail – because right of ways in Seattle are almost impossible to negotiate.

        For Chase in SF, the area at 3rd and 16th had ONE primary landowner with whom to negotiate: UCSF, which proved to be amenable (with a little arm-twisting) to selling off the large tract of waterfront space where the arena will go. King Street and 280 provide access for large traffic volumes and I-80/CA 101 is less than a half mile west. Terry Francois Boulevard will be widened and a bunch of older buildings in the immediate area will be razed for parking and pedestrian access. Neither location in SF is ANYTHING like the nightmare that Queen Anne is. As I mentioned above, a city planner told me that there is NO possible way to increase access to the Seattle Center site without disruption of the entire northern downtown area, for MORE than a year and a half, and MORE money than the arena will cost. His hunch is that the city council is betting that the public will be swept away with enthusiasm for the new team(s) and new arena and say, “Well, we have this new facility, so we HAVE TO lay out money to get people to it.” But even the construction of a subway system into the area – by far the most feasible option – would cause MASSIVE surface disruption to the businesses and NEIGHBORHOODS on LQA and upper downtown and would certainly rally vast public opposition, especially from those who dig in their heels on the mere idea of the city paying ANYTHING to get an arena built and consider sports teams and facilities needless frivility. “Citizens for More Important Things” ringing any bells for ya?

        IN short, the city council is praying desperately that people will say things like

        ” Three years from now, the new Seattle arena will be open to fireworks and fanfare. The slings, arrows and gnashing of teeth will be forgotten just as it was for AT&T, Chase, Century Link and Safeco (T-Mobile?). Folks will marvel at the architecture (“Oh, look at how they incorporated the Coliseum’s roof!”) and they will be lined up to buy their Totems (?) gear….”

        They’re counting on fans like you to get caught up in the fever of the NHL and the (remotely possible) NBA (cue celestial chorus) and forget the bedrock realities of how the issue of people actually trying to get in and out of their prissy little vest-pocket site is going to happen. What they’re REALLY thinking, when all the rhetoric is stripped away, is “Hey, if these sheep want to attend hockey games and NBA games, they can damned well put up with it taking two to three hours to get in and out from anywhere farther away than Eastlake, Capital Hill, or Ballard and three to four hours each way to get there from Issaquah or Redmond or Tacoma or Kitsap. They wanted this stadium, so they can STFU and do what it takes to attend. And besides, if they do balk, we can always shriek at them for being bad citizens and tell ’em the teams will go away of they don’t show up and pony up.”

        These idiots had a site and a person who was willing to pay to have it developed. They had a place with access to interstate highways and major surface streets. None of that suited them. Their egos and the ineconomy of having an arena that they built stupidly in the first place and then renovated on the cheap, stupidly, got glossed over as though it wasn’t a problem. The NBA REJECTED – THREE TIMES – both Key Arena and any plan to expand the building AND the area in which it’s located. They said the building and its location were not suitable for NBA basketball. And yet, in EVERY council meeting on bringing hockey or basketball to Seattle, somebody on the council continued to whine, “Well, what about KEY ARENA? Can’t we use thaaaaat? Whats wrong with thaaat?”, in a sort of Rain Man chant, until they found somebody greedy and cynical enough to agree to develop it.

        YEAH, there WILL be a puck drop at the new arena in three years. Hey, I bought seat licenses because I love hockey and have been watching the NHL since I was twelve and living in Chicago and worshiping the Blackhawks. I would LOVELOVELOVE to be able to go to games and wear the colors and be a fan. But, having watched hockey in Chicago and DC and SF and St, Louis and NYC (both teams) and Atlanta and Dallas and Phoenix and Philly, I can tell you from first-hand experience, there is NO arena in the entire NHL that is anything like as hemmed in as the new Key will be and NONE that has completely non-negotiable neighborhoods where nothing can be torn down and swept aside to accommodate access. And after a period when people DO endure that five, six hour ordeal to get in and out of Queen Anne, what will eventually happen is that the arena management and the city will have to hope and pray (and probably do some right special begging) to get enough rich folks who live in downtown and its immediate neighborhoods to make up the VAST numbers who give up on attending because it’s just too damned much trouble. And that has quite likely been their plan all along, unless the council is even more stupid than I think: a hugely expensive tree house for the rich and the powerful to go and dally, after their long days of movin ‘n’ shakin’, where only the occasional garbage person is around to spoil their view.

      • art thiel

        Hey, there, Mr. Sunshine. The area in SF you mentioned was under- and unused industrial land, not an urban village. Big difference.

        • Husky73

          No, not really. There is a university there, there is residential and mixed uses all around the China Basin area.

          • StephenBody

            And there are TWO freeways within a half mile and UCSF, with a tiny bit of persuasion, was on board with Chase Center within a couple of months of the proposal. Francois Boulevard is being widened, which requires no massive negotiation of right-of-way and there is basically enoiugh empty la

          • DAWG
          • Husky73

            StephenBody….My points were: 1. We will adapt and 2. We shall survive. It’s not lollipops and unicorns. It’s Darwin.

          • DAWG

            No choice now but to make the best of it; yet the NBA does not have to accept the arena nor does the NHL team if the location proves too problematic. And, the probability of the Seattle Center location being too ambitious has all the likelihood of being fulfilled.

          • StephenBody

            This “discussion” with you has become tedious. You’re making no sort of point at all and just being a lackey for the Oak View/Leaf/Whatever Group’s slacker handling of THE most important issue of this project. Your comparison with SF doesn’t hold water and your attempts at blithe dismissal failed. Find another target for your “witticisms” or get blocked.

          • Husky73

            The top of this page says, “Join the discussion.” You are not and have not been “a target.” I have not been unkind or mean spirited. I made two points that were neither tedious nor blithe: NHL fans will adapt as they have in San Francisco with the Giants and will with
            the Warriors; and Seattle will survive another large Seattle Center development.

          • StephenBody

            You tried to be glib and condescending. And you chose me to make your weak little, uninformed arguments to. It’s done now. Think whatever you like. OF COURSE Seattle will “survive” another large Seattle Center development. You make it sound like I’m suggesting that the city will crack loose from Western Washington and slide into Puget Sound. Hyperbole, that time honored refuge of people with no real point to make. That statement alone shows how dismissive you are and how little you grasp the subject.

            And your comparison with SF makes no sense at all. You think because some people in SF got upset and raised objections to their arenas that it was for the same reasons that we’re speaking out here? That’s the most clueless part of it all. You said your piece and very little of it made any sense apart from pie-in-the-sky platitudes…and we’ll see how those work out for all of us in the long run. Enough. I can easily just block you from commenting to me. Is that what it’s going to take?

          • Husky73

            Pax.

          • StephenBody

            “…that were neither tedious nor blithe (casual and cheerful indifference?” You actually had to google the word “blithe”? Jesus…

          • Husky73

            Blithe is not a word in my vocabulary. Glib, condescending, dismissive, hyperbole, tedious, lackey, slacker and witticisms are. “Wow, you are a genius” (Penny) “I googled it.” (Leonard)

          • StephenBody

            Now you know a new word! Glad I could help.

          • Husky73

            Thank you. Next time you play Scrabble try meldrop.

          • StephenBody

            I’m sixty-six years old and grew up in the Allegheney Mountains. My grandmother used meldrop her entire life. It was one of my first words. I’d run in and point at my nose and go, “Meldrop!” and she’d hand me a tissue. There are really not very many English words I just don’t know at all. I’m a writer and have been for 48 years. They’re my tools.

          • Husky73

            67 here…and Sea Tac.

        • DAWG
        • 1coolguy

          Husky73 – Please quit writing, as you are just digging deeper and deeper. As Art correctly states, there is ZERO similarity between the SF and Seattle locations. Ugh….And to think you went to UW.

          • Husky73

            The two areas are not exactly congruent, but there are, indeed, similarities. One similarity being that there was a vocal segment of the public who predicted that catastrophe awaited the Giants ballpark and now the Warriors arena. Vociferous opponents rallied for other locations away from the downtown and the waterfront. However, both developments went forward. Neither catastrophe has or will materialize. In the next three years I expect a tremendous amount of planning will go into auto access, alternate transportation, and parking for the new Seattle arena, just as it did for the Giants and Warriors. Yes, I graduated from the UW.

    • art thiel

      So I gather you’re not believing in the Monorail solution?

    • 1coolguy

      Trump puppet Sawant??? She is the ANTITHESIS of everything Trump stands for.
      I suggest you do some reading – a Socialist has nothing what-so-ever to do with a capitalist. Of course, Sawant the Socialist, is making $125k a year and is married to a long-time Microsoft guy, who makes what, $200k+ and stock dividends? Sawant has all her lefty followers faked out, bigtime.

      • StephenBody

        I was ridiculing Sawant. I AM a Socialist and have been since college, in the 70s. But the comparison to Trump is apt, at least in the overbearing way both assert their views in defiance of reality. Sawant’s only agenda is to shove her name into the upper circles of American leftist politics. She wants to be a Star, plain and simple and only simps see her as any sort of hero.

      • Husky73

        The “antithesis of everything Trump stands for” would be the rule of law, the understanding of the Constitution, empathy, the disregard for despots (Putin, Kim and Xi), humility, absence of vanity, kindness, civility, true to one’s spouse, personal integrity and honesty (absent 3,000 Pinocchios).

        • 1coolguy

          True to one’s spouse – Bill Clinton is the poster boy for this subject. At least Trump’s affairs, as much as they are not acceptable, were CONSENSUAL between two mature ADULTS. Please, don’t even go there.

          • Husky73

            I found it interesting that Trump is just as vile as Bill Clinton.

    • rosetta_stoned

      Kashama Sawant as a Trump puppet.
      Man, I learn something new each day. Appreciated.

      • StephenBody

        She doesn’t know she’s a Trump puppet and would be horrified if anyone suggested it but she plays right into the hands of him and his ilk every day she sits on that council. She thinks she’s a valiant crusader against the tides of patriarchy and nationalism and All Things Right but what she has become is a model that the Conservatives can hold up like as a visual aid and say, “See? Look how radical and out of touch the radical Left is!” She’s as rigid and doctrinaire in her thinking as Trump is in his. They’re at least spiritual cousins in that their views are SO far out of the common attitudes that what they perceive as stirring the pot is actually alienating those who hear them. I’m about as far Left as it’s possible for an American to be and I have not mellowed much at all in my old age and she makes me want to seal her up in an oil drum and set her adrift in the Straits of Juan de Fuca. I called her a Trump puppet as an ironic expression of my complete disdain for her and her asinine “ideas”…which is really only ONE idea: promote Kshama Sawant to national prominence, by ANY means necessary.

  • Kirkland

    A hockey-loving friend made this prediction: The SoDo arena will be built, and in 10-15 years the hockey team will move there. He knows a policeman whose beat is Lower Queen Anne, and said policeman says traffic is bad there now, so what will it be like with 41 games?

    This prediction sounds reasonable. If the Key Arena site encounters more roadblocks (pun very much intended), it’ll be even more reasonable.

    • Husky73

      People have been coming to the SW Queen Anne neighborhood since 1962. They did it for 41 years with the Sonics, and for thousands of other events. Folks will find a way and adapt.

      • art thiel

        There are a lot more people and buildings since ’62, but no one has added more land. The area is limited by hills, water and highways. Capacity is finite.

      • 1coolguy

        You obviously were not a Sonics season ticket holder, as I was. In order for my wife and me to get to the games on time, we had to leave home in north Seattle no later that 5:15 to get to the game. This of course meant leaving work early, and putting up with the traffic aggravation. And then finding a place to park! Well, MOST of those surface lots are now GONE, as they are now apartments, so I cannot even imagine what it will be like now that SLU is built up.
        So once Payton retired, I quit my tickets, as between watching a poor team at that time and dealing with the ever-worsening traffic, it was an easy decision.
        So Husky73, when this new arena opens, go to a few weekday games and get back to us on how traffic was.

        • Husky73

          1coolguy….I’ll go to a game or two. I live 4 miles from Canada. I’ll drive down early in the day, check into the Westin, and then take a cab or Uber back and forth to the game, leaving the next morning. Perhaps my game tickets will be more than all of the above?

    • art thiel

      I am eager to see how we live with, and get around, tunnel tolls, to get through the heart of the city.

    • DAWG
  • MarkS

    One wonders how this will affect ticket prices. NHL tickets are pretty spendy as it is.

    • art thiel

      NHL is more gate-dependent than other leagues because of weaker TV contracts. Start saving now.

  • DAWG

    WOOF ! This was to be expected. In fact, why wasn’t Mortensen signed origionally
    having already completed the Warrior arena with Clark Construction. Hmmm ? Go
    figure. No big surprise here. And, further evidence of how much money was left on
    the table by the City. The net income after all expenses including tax must be enormous.
    NBA stranded at this BEACHED WHALE of an arena is hard for me to believe. Yes,
    there are much better options than the Seattle Center location. It is not in the long
    term interests of the City, it’s citizens nor the NBA to have over 200 plus WORLD CLASS events at this location. Don’t see it. MONORAIL !

  • DAWG

    The long term future for World Class NBA / NHL is down in SoDo.
    City did leap at a short term solution at Seattle Center that will only
    show diminishing and fading returns as the years march on. Transportation
    is the pivotal and most important problem for which there is no long term
    solution . . . given the deeply demanding future growth in NoDo. Good
    short term solution to move off the City’s demanding agenda but certainly
    not a quality long term answer.