Policy & Regulations

Seattle City Council Set to Consider Oak View Group’s Key Arena Plan

The proposed MOU with Oak View Group will be up for discussion in the Council's Select Committee on Civic Arenas this week.

By Kevin Schofield November 15, 2017


This article originally ran on SCC Insight.

Thursday morning, the Seattle City Councils Select Committee on Civic Arenas meets to continue its discussion on the proposed MOU with Oak View Group and to have a first round of deliberations on possible amendments to the agreement.

Committee chair Debora Juarez noted today that the councils independent consultant will lead off the meeting with a report. They will then turn to consideration of a number of possible amendments, as detailed in this memo circulated today.

The memo lists fourteen possible amendments, several of which are trivial or fairly unobjectionable agreements on signage, scheduling, communication and programming. Of the more notable ones:

  • – Requiring OVG to reimburse Pottery Northwest for all relocation costs and other financial loss associated with its relocation during construction (they are already required to cover relocation costs);
  • – Requiring OVGs baseline rent payment to begin no later than six months beyond the projected 24-month construction period, unless the delay in opening the building was caused by the city;
  • – Require OVG to increase the number of free Community Event days from 14 to 24;
  • – Require that the 20-year payment period for OVGs charitable contributions to YouthCare apply to all other charitable recipients as well, with at least half of the $20 million charitable fund contribution in cash;
  • – Require the building to meet, at a minimum, a LEED Gold standard, as well as the citys Sustainable Building Policy;
  • Ensure the city has a defined process in the event it receives unsolicited offers to purchase the First Avenue North Garage.

The memo also has a detailed analysis of the projected financial returns for the city and OVG under the terms of the proposed MOU, as confirmed by the councils independent analyst. As structured, OVG assumes nearly all of the financial risks of the project, and in return receives a larger share of any upside revenue returns. Looking across the various potential outcomes of OVGs attempts to land NHL and/or NBA teams, the citys revenues are steady and within a narrow range; however, OVG is highly incented to have the teams as tenants.

While that looks like a great deal for OVG, heres the list of the costs that OVG has signed up to pay under the proposed MOU, on top of assuming 100 percent of the risk for project overruns:

  • – $600 million project costs plus all cost over runs (construction is estimated at $350 million).
  • – $3.5 million to reimburse the City for consultant and outside counsel costs related to the execution and performance of the MOU and the Transaction Documents.
  • – $40 million transportation payment over the 39-year lease term (or $1.026M per year).
  • – $250,000 for a transportation consultant.
  • – ($TBD) Baseline rent, amount yet to be determined, by an accounting firm based on the four-year trailing historical annual average of arena-related revenues for years 2014 through 2017.
  • – $20 million in kind or cash to non-profit organizations (not made directly to the City).
  • – $500,000 for tenant relocation (Pottery Northwest addressed separately)
  • – All costs related to temporary and permanent relocation of Pottery Northwest
  • – Hire and pay for a Community Liaison
  • – 4 rent-free days per year.
  • – Dedicate 1 percent construction costs to the 1% for the Arts program.

As a reminder, the SoDo Arena MOU expires next month, unless Chris Hansen magically lands an NHL or NBA team before then.

Looking for more on the arena debate? We already posted our December cover story, written by Art Thiel, and you can read it here.

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