Arena’s draft MOU ready, but Murray resigns

If Seattle Mayor Ed Murray and Oak View Group CEO Tim Leiweke get their way and all goes well, a spectacular makeover of what was KeyArena will debut in October 2020 that will include the city’s National Hockey League team and concerts by world-renowned artists. The 2020 completion date assumes that construction would begin in October 2018.

But all didn’t go well Tuesday. Murray and Leiweke were scheduled to discuss a draft memorandum of understanding at press briefing on Seattle Center grounds, but that was cancelled when the Seattle Times broke a story that Murray’s cousin accused the mayor of sexually abusing him in the 1970s.

The cousin is the fifth man to accuse Murray of child-sex abuse, a scandal that forced him to abandon plans to run for a second term.

Two hours after Murray denied the latest allegation to the Times, he announced his resignation by 5 p.m. Wednesday.

“While the allegations against me are not true, it is important that my personal issues do not affect the ability of our city government to conduct the public’s business,” Murray said in a statement. Seattle City Council member Bruce Harrell, a former University of Washington football player, will assume the mayor’s job and has five days to decide whether to fill out the term.

The immediate impact of the mayor’s resignation on the arena project was unclear, although the MOU has been signed and forwarded to the council, and Murray’s term in any event expires Dec. 31. The council, which has hired independent consultants to review the proposal, has been asked by the mayor’s office for a vote by December.

The mayor and his staff are eager to take advantage of a huge private contribution to restore a 55-year-old civic asset. For a revised estimate of $600 million, supplied by Leiweke’s backers, the city will continue to own the building and land and receive rent of $2.6 million annually while the venue becomes the centerpiece of a transformation of Seattle Center and perhaps its neighborhoods.

The MOU spells out the terms and conditions of a 39-year lease, which includes a pair of eight-year extension clauses triggered if OVG spends at least $168 million in KeyArena capital improvements and acquires NBA and NHL teams.

OVG will assume the risk of cost overruns and the “risk of increased costs due to unknown environmental conditions.” OVG will pay for all operating costs, including day-to-day and long-term maintenance. OVG will reimburse the city should tax revenues at the redeveloped facility fall below current levels ($2.4 million per year). This guarantee applies to admissions, sales, B&O, excise and commercial parking taxes.

Should the project come together, the revamped facility, constructed for the 1962 World’s Fair, will nearly double KeyArena’s size and preserve the building’s historic roofline, as well as meet NBA and NHL standards.

“One of the principles that we had was that the city would never go backwards as far as its ability to maintain the revenues that we receive through operation of Key­Arena going forward,” Brian Surratt, head of the city’s Office of Economic Development, told the Seattle Times. “And that we would be partners, moving forward, in any deal as well.”

Los Angeles-based OVG will also commit $40 million to improve traffic, transportation and parking beyond requirements stemming from an environmental impact review. The city will be guaranteed the revenue it currently receives from KeyArena, including the $2.6 annually in rent, and will share in any new money generated by the facility following renovation.

OVG’s pledge of $40 million toward easing traffic and parking issues would be used to partner with other entities — the city, King County and Port of Seattle — on a “mobility plan” for the entire lower Queen Anne area.

“The mobility plan is going to look at all the existing plans,” Surratt said. “The pedestrian plan, the bike plan, the freight master plan. All of the plans that the city currently has, there will be myriad items and initiatives of which to fund.”

The MOU does not specifically address improvements to the privately owned Monorail, which operates between the Seattle Center and Westlake Center, and has often been cited as one of the possible partial solutions to traffic congestion at Seattle Center.

In addition to construction and transportation costs, OVG will invest $20 million in a community fund, half aimed at combating youth homelessness. Additional money, amount unspecified, would be spent by OVG to relocate existing Seattle Center tenants, including those in the Blue Spruce Building on Thomas Street and Pottery Northwest, to accommodate the expansion and re-construction of the arena.

OVG will also pay for the city’s legal and consultant costs and assume financial commitments for the duration of the WNBA Seattle Storm’s new 10-year lease at KeyArena once it reopens.

The construction, however, will cost the city its hosting opportunity for the March 2019 NCAA men’s basketball tournament’s opening rounds. The city and OVG plan to contact the NCAA and the University of Washington, the acting host, and request that the tournament be relocated.

OVG would control all revenue from the First Avenue parking garage, but would pay the city $650,000 annually to match what the city currently takes in from the garage. For the immediate future, the city will retain financial control of two other nearby garages.

Before the dream comes the reality of pushing the deal through the City Council,  county and state agencies and citizen groups skeptical of the project’s financing, hidden costs and environmental impacts on the already stressed neighborhoods around the Center.

If the Seattle City Council approves the deal sometime before Dec. 31, it likely spells the end of Chris Hansen’s rival project in Sodo, where he has spent six years and $125 million acquiring 12.5 acres of commercial land to support his dream of returning the NBA to Seattle.

Hansen’s five-year MOU with the city and King County expires Dec. 3. Hansen can trigger it only if he acquires an NBA team before the MOU expiration, unlikely since the NBA has stated repeatedly that it has no current plans to expand. Due to the date, the City Council city won’t vote on the KeyArena project until Dec. 4 at the earliest.

The NBA could also come back to the Seattle Center it left in 2008 when the Sonics were sold to Oklahoma City businessmen. But the NHL so wants to be first in the building that Leiweke claims to have secured wealthy partners to own and operate the hockey team in the new building.

Leiweke identified David Bonderman, a billionaire investment banker and a University of Washington graduate, as a potential NHL franchise investor, along with Hollywood producer Jerry Bruckheimer. Leiweke said that Bonderman “has put money into the building” and has met with city council members.

The NBA, with no timetable for expansion and no likely candidate for franchise relocation, is an afterthought for now at Seattle Center.