Seattle Arena Talk - Update in #898 Hansen talks private financing

[gstommylee]

It's easy to say, revenue generated by the arena will pay for itself. Who is going to front the money until the arena begins generated cash? Or are the architects construction people etc be willing to wait for their money?

Public bonds. Basically Hansen will go to a bank (for example) ask for 120 or 200m loan. City and county signs off on it and the 120 or 200m will count against the city/county debt capacity.

The opposing groups that are against the arena are arguing that the city/county are using general funds/ public taxes to pay for the arena. The use of general fund and new taxes has been a non starter since the first time hansen met with former Seattle mayor mcginn and King county exe Dow.

 

[TheLegend]

Ssshhhhhh... Glendale is nothing at all like SoDo, haven't you heard?

Or Quebec City....

Or Edmonton......

Or possibly Calgary......

And the hits keep on rolling....

Public bonds. Basically Hansen will go to a bank (for example) ask for 120 or 200m loan. City and county signs off on it and the 120 or 200m will count against the city/county debt capacity.

The opposing groups that are against the arena are arguing that the city/county are using general funds/ public taxes to pay for the arena. The use of general fund and new taxes has been a non starter since the first time hansen met with former Seattle mayor mcginn and King county exe Dow.

Tommy....

No matter how you try to spin this thing. In the end the city is putting up the debt risk.

 

[gstommylee]

Tommy....

No matter how you try to spin this thing. In the end the city is putting up the debt risk.

Your missing the entire point. Debt risk is not a public subsidy.

City of Seattle and King county will not agree to the arena if it required new taxes or general fund money.

200m of dept capacity is nothing. It barely impacts the city and county. Both have very strong credit rating.

 

[brewski420]

This story is relevant only to those of us in Seattle as part of the long drawn out way of getting things done here. This means absolutely nothing to current relocation, expansion or any story as it pertains to the NHL or even the NBA for that matter. For those from outside the area feeling the need to state the obvious or poo-poo the story feeling threatened in some way, don't worry nothing to see here. Just another step in the very long process of even beginning to think the possibility of new arena in Seattle is possible.

 

[tony d]

I'd rather Seattle get the NHL team than Las Vegas.

 

[GuelphStormer]

Your missing the entire point. Debt risk is not a public subsidy.

City of Seattle and King county will not agree to the arena if it required new taxes or general fund money.

200m of dept capacity is nothing. It barely impacts the city and county. Both have very strong credit rating.

i think you need to take an intro Economics course.

Legend is right.

 

[The Feckless Puck]

Your missing the entire point. Debt risk is not a public subsidy.

I've noticed that cities that get involved in sports arenas and franchises search long and hard for ways to make subsidies not sound like subsidies.

But they're subsidies.

 

[gstommylee]

I do not need to take an economic class.

I know the difference between public financing and public funds.

City of Seattle and King county are not subsidizing the public tax payers in order to pay for the arena.

Do not compare Sodo arena plan with any other arena project.

I'll say this goverment within Washington state are the most pickiest when it comes to requests of public funds. Trust me there is no arena plan if Hansen was requesting 200m of public funds and the tax payers are on the hook to pay for it.

I'll say 1 more thing

Goverment does not own public bonds. Its basically a loan to an entity in which the entity will pay back said loan with interest.

All the arena plan is as i stated eariler.

hansen will go to a bank (bond issuer) ask for between 120 and 200m depending on if we get NBA or both NBA and NHL (same time)

City of Seattle and King county will co-sign it so hansen will get a lower interest rate.

Arena revenue + rent from NBA and NHL teams etc will go to the bond issuer to pay off the loan

The only time Public bonds being used for a project would be considers a subsidy if said project doesn't have its own revenue source and thus city would have to create a funding package (new taxes or raising of taxes)

Example Seattle's seawall is using public bonds but City of Seattle had to create a funding source to pay it off.

So public tax payers are being subsidized to pay off the Seawall.

 

[kdb209]

I do not need to take an economic class.

I know the difference between public financing and public funds.

City of Seattle and King county are not subsidizing the public tax payers in order to pay for the arena.

Do not compare Sodo arena plan with any other arena project.

I'll say this goverment within Washington state are the most pickiest when it comes to requests of public funds. Trust me there is no arena plan if Hansen was requesting 200m of public funds and the tax payers are on the hook to pay for it.

I'll say 1 more thing

Goverment does not own public bonds. Its basically a loan to an entity in which the entity will pay back said loan with interest.

All the arena plan is as i stated eariler.

hansen will go to a bank (bond issuer) ask for between 120 and 200m depending on if we get NBA or both NBA and NHL (same time)

City of Seattle and King county will co-sign it so hansen will get a lower interest rate.

Arena revenue + rent from NBA and NHL teams etc will go to the bond issuer to pay off the loan

The only time Public bonds being used for a project would be considers a subsidy if said project doesn't have its own revenue source and thus city would have to create a funding package (new taxes or raising of taxes)

Example Seattle's seawall is using public bonds but City of Seattle had to create a funding source to pay it off.

So public tax payers are being subsidized to pay off the Seawall.

The way public financing generally works is that the bonds are issued by some local municipal agency - not a 3rd party bank.

The Glendale arena was financed by a mix of taxable and tax-exempt municipal bonds issued by the Glendale MPC (Municipal Property Corporation).

Municipal Bonds (especially the tax free ones) can generally be sold at a lower cost/interest rate than any third party financing.

 

[gstommylee]

The way public financing generally works is that the bonds are issued by some local municipal agency - not a 3rd party bank.

The Glendale arena was financed by a mix of taxable and tax-exempt municipal bonds issued by the Glendale MPC (Municipal Property Corporation).

Municipal Bonds (especially the tax free ones) can generally be sold at a lower cost/interest rate than any third party financing.

I was using banks as an example to get the general idea out.

My point still is using Municipal bonds doesn't mean the city is subsidzing the arena. Its just how the bonds are being paid back will decide if its a subsidy or not.

The only reason why the opposing group are calling it a public subsidy cause they do not want the arena and are trying to generate enough public opinion against it to kill it.

 

[gstommylee]

Update from Chris Daniels

http://www.king5.com/story/news/loc...recommendation/76638984/?utm_source=hootsuite

Seattle City Councilman Tom Rasmussen, who chairs the transportation committee which will review the street vacation, said Tuesday the Council was limited by time to review the proposal this month. However, it will be put on the Calendar, to be introduced, next Monday, by way of procedure.

This is good.

 

[GuelphStormer]

I was using banks as an example to get the general idea out.

My point still is using Municipal bonds doesn't mean the city is subsidzing the arena. Its just how the bonds are being paid back will decide if its a subsidy or not.

The only reason why the opposing group are calling it a public subsidy cause they do not want the arena and are trying to generate enough public opinion against it to kill it.

ugh ... the plan (like every other plan of this same sort) ASSUMES that the $200M (plus the interest payable on those bonds, say another $50 to $100M?) will completely and fully flow back to the city by way of newly generated revenue streams like sales tax, ticket surcharges, etc.

that is one hell of a big assumption that has simply not been borne out by the empirical evidence already provided by similarly financed arenas around north america. as a municipal, state or federal decision-maker, it would be a much more prudent assumption that not all of that $250M to $300M will be generated and returned. and yes, that shortfall IS A SUBSIDY.

unless Hansen is willing to contractually guarantee those revenues stream, the county is taking a huge risk financing the project. and if Hansen was willing to guarantee them, then why doesn't he just pay for the whole thing himself, accept that risk, and own the arena?

 

[powerstuck]

hansen will go to a bank (bond issuer) ask for between 120 and 200m depending on if we get NBA or both NBA and NHL (same time)

Wait...do you mean Hansen will have to wait to have a team packed up and loaded on trucks before going to bank ?

Sorry, but if that is the case, it sucks to be a NBA/NHL fan in Seattle, you guys won't get any of the teams.

There is so many opportunities in both leagues to go places where there are already brand new buildings awaiting users. I believe if Seattle starts shoveling, at least one and more likely both leagues will come, but as long as the plan is still ''Once we get the team, we will go to the bank, take money and begin building''...i'm sorry I don't see it happening.

 

[brewski420]

ugh ... the plan (like every other plan of this same sort) ASSUMES that the $200M (plus the interest payable on those bonds, say another $50 to $100M?) will completely and fully flow back to the city by way of newly generated revenue streams like sales tax, ticket surcharges, etc.

that is one hell of a big assumption that has simply not been borne out by the empirical evidence already provided by similarly financed arenas around north america. as a municipal, state or federal decision-maker, it would be a much more prudent assumption that not all of that $250M to $300M will be generated and returned. and yes, that shortfall IS A SUBSIDY.

unless Hansen is willing to contractually guarantee those revenues stream, the county is taking a huge risk financing the project. and if Hansen was willing to guarantee them, then why doesn't he just pay for the whole thing himself, accept that risk, and own the arena?

Ugh!! There is risk no matter how an arena is financed, whether it is fully private or subsidized in part by the public, it just comes down to the degree of risk in the project. That is the same for any new arena in any city as it pertains to professional sports. The risks are obviously known by all parties and an MOU was reached based on those risks in the case of Seattle. Whether there will ever be a building is far from being a reality, which you obviously know, but continue to beat up a subject we here in Seattle are well aware of. Every time a little bit of the story changes we like to discuss it but not rehash old arguments from outside Seattle (at least for me is very tiresome and distracts from our discussion) that feel some sort of threat from a building that does not exist and will not for the foreseeable future.

Is the MOU viewed as the best option for the NHL, as has been stated numerous times from those of us in Seattle, no it is not. Would a privately funded arena be best, of course. But at an expansion fee of $500m I see absolutely no reason for any private investor or the city to get involved in such a risky investment. The NHL should look to those places that can and are more willing/able to take that risk. I believe that there are only two of them.

 

[brewski420]

Wait...do you mean Hansen will have to wait to have a team packed up and loaded on trucks before going to bank ?

Sorry, but if that is the case, it sucks to be a NBA/NHL fan in Seattle, you guys won't get any of the teams.

There is so many opportunities in both leagues to go places where there are already brand new buildings awaiting users. I believe if Seattle starts shoveling, at least one and more likely both leagues will come, but as long as the plan is still ''Once we get the team, we will go to the bank, take money and begin building''...i'm sorry I don't see it happening.

Many opportunities that want to pay the fee??? Only two as a matter of fact as it relates to the NHL. What you believe about if we build it they will come does not mean **** to many of us here in Seattle. We don't need the NBA/NHL, would like to have them, but not at the current sticker price. And it does not suck to be an NHL fan just because we don't have a team. I will still be a fan.

 

[GuelphStormer]

Ugh!! There is risk no matter how an arena is financed, whether it is fully private or subsidized in part by the public, it just comes down to the degree of risk in the project. That is the same for any new arena in any city as it pertains to professional sports. The risks are obviously known by all parties and an MOU was reached based on those risks in the case of Seattle. Whether there will ever be a building is far from being a reality, which you obviously know, but continue to beat up a subject we here in Seattle are well aware of. Every time a little bit of the story changes we like to discuss it but not rehash old arguments from outside Seattle (at least for me is very tiresome and distracts from our discussion) that feel some sort of threat from a building that does not exist and will not for the foreseeable future.

Is the MOU viewed as the best option for the NHL, as has been stated numerous times from those of us in Seattle, no it is not. Would a privately funded arena be best, of course. But at an expansion fee of $500m I see absolutely no reason for any private investor or the city to get involved in such a risky investment. The NHL should look to those places that can and are more willing/able to take that risk. I believe that there are only two of them.

definitive statements like "the arena is not subsidized" surely suggest that some of your fellow Seattleites here don't seem to comprehend that, or more importantly, the specific mechanisms involved in determining who bears that risk.

 

[MNNumbers]

Tommy,

Could you please post a link to the MOU?

Many here seem to be wondering what the terms are for the repayment of the bonds.

I know that SCC is more confident in the funding returns of an NBA team, hence the requirement for more cash if there ever is an NHL first option.

I think it would help the present discussion if the terms were posted.

Thanks.

 

[j1012]

Tommy,

Could you please post a link to the MOU?

Many here seem to be wondering what the terms are for the repayment of the bonds.

I know that SCC is more confident in the funding returns of an NBA team, hence the requirement for more cash if there ever is an NHL first option.

I think it would help the present discussion if the terms were posted.

Thanks.

I think this is it:

http://www.seattle.gov/council/attachments/2012arena/20121008mou.pdf

 

[brewski420]

definitive statements like "the arena is not subsidized" surely suggest that some of your fellow Seattleites here don't seem to comprehend that, or more importantly, the specific mechanisms involved in determining who bears that risk.

Just like stating that there will be a shortfall is the prudent assumption just shows that biases in the definition of a subsidy is in the eye of the beholder.

 

[superdeluxe]

Cautiously I am optimistic That this final vote will help convince Coleman come up with a viable NHL First MOU.

Very Exciting couple of weeks, as December 7th is Seattle Metropolitan day, celebrating 100 years of the Seattle Mets. That to go along with the Stanley cup and throwback Met jersey night at the Showare center.

 

[superdeluxe]

ugh ... the plan (like every other plan of this same sort) ASSUMES that the $200M (plus the interest payable on those bonds, say another $50 to $100M?) will completely and fully flow back to the city by way of newly generated revenue streams like sales tax, ticket surcharges, etc.

Any Private/Public partnership on the scale of this will have some risk. You have to look at how much Hansen and his group can mitigate that risk vs reward for the city, and I think he has done well in regards to that.

 

[Jumptheshark]

looked in to it

he just twisted things around to make them look different when they werent

 

[Dolemite]

This story is relevant only to those of us in Seattle as part of the long drawn out way of getting things done here. This means absolutely nothing to current relocation, expansion or any story as it pertains to the NHL or even the NBA for that matter. For those from outside the area feeling the need to state the obvious or poo-poo the story feeling threatened in some way, don't worry nothing to see here. Just another step in the very long process of even beginning to think the possibility of new arena in Seattle is possible.

As current or former residents of Seattle (like myself) know how efficient the City/County/State governments are.


Sorry couldn't keep myself from laughing over that last sentence.

 

[brewski420]

As current or former residents of Seattle (like myself) know how efficient the City/County/State governments are.


Sorry couldn't keep myself from laughing over that last sentence.

Yeah, If people knew what you know, there would be no interest in these arena developments outside those of us here. Seattle should not be seen as any threat to any other cities expansion or relocation desires. I am waiting for them to decide Bertha isn't ever going to move again, close the small hole up and start the fix the viaduct mess all over again.

 

[Dolemite]

Yeah, If people knew what you know, there would be no interest in these arena developments outside those of us here. Seattle should not be seen as any threat to any other cities expansion or relocation desires. I am waiting for them to decide Bertha isn't ever going to move again, close the small hole up and start the fix the viaduct mess all over again.

Don't get me started on the Viaduct. Especially since it 1) sits on a huge fault line (with Safeco Field and the Clink) and that the waterfront is made of silt that will fall into the Sound if an earthquake over 7 happens.