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Issues
Keeping the Sonics in Seattle
March 6, 2008
The Seattle Sonics have been a valued part of our community for forty years, and I hope they’ll stay for at least another forty years. It seems pretty clear that the Clay Bennett ownership group is intent on moving the team to Oklahoma City, but I am excited by recent reports that a group of local businesspeople are interested in either buying the existing team, or perhaps another NBA franchise that might retain the Sonics name and play here in Seattle. If a new ownership group emerges, I think the City should give serious consideration to a public/private partnership for a $300 million renovation of Key Arena.
I have not been a party to the discussions with these potential investors, but I would expect the investors will need a number of potentially difficult and contentious issues to be satisfactorily resolved before the dream of a new local ownership team might be realized. While a commitment to keeping professional basketball in Seattle is no doubt a major motivator for each of these potential investors, it is safe to assume they also need some indication that their financial investment would produce at least a modest return.
The citizens of Seattle also have a vested interest above and beyond simple nostalgia in keeping the Sonics here in Seattle. KeyArena, originally built for the 1962 Worlds Fair, has been the home of the Sonics since the team first hit the basketball court there in 1967. Quite honestly, the continued vitality of KeyArena and the Seattle Center will be much stronger if the Sonics continue to play there.
At the request of previous team owners, the City remodeled KeyArena in 1995. We issued debt for $75 million for this purpose, with the expectation that this would be repaid from revenues generated by the sale of Sonics’ club seats, suite sales, and naming rights. Unfortunately, the plan has not worked, and the City will be left with an unpaid debt of approximately $26 million when the Sonics lease expires in 2010.
The 1995 remodel points to the sad reality that the economics of professional basketball are broken. Team owners across the nation are demanding taxpayer funded state-of-the-art arenas, which are then declared obsolete after about a decade, long before taxpayers have even finished paying them off. Taxpayers are then expected to fund yet another.
Seattle citizens made it clear that they wanted no part of such an arrangement when in 2006 they voted 3-1 in favor of citizen-generated Initiative 91, requiring that the city receive “fair value” cash profit in its dealings with any professional sports franchise.
The reality of KeyArena, however, is that it does need an additional investment if the facility is going to be financially viable in the future, with or without the Sonics. In 2006, the Seattle Center KeyArena Subcommittee issued a report stating, “Even without the Sonics/Storm, the KeyArena will require capital investments of at least $20 million to be a competitive non-major league arena.” They added it would require a capital investment “in the range of $200 million in order to create a competitive and financially successful arena for NBA basketball.” Recent news reports suggest that a potential new local ownership group puts that number closer to $300 million.
During the 2006-2007 season, the Sonics used KeyArena 55 days, nearly a third of the total number of days the facility was in use during the year. The Storm played 20 games there and the T-Birds hockey team played 42 games, with the remainder of rentals being for exhibition games, practices, concerts, ice shows, graduations, and the like. With the possible move of the T-Birds to Kent, the potential loss of the Sonics would mean KeyArena would be empty most days, creating a financially draining white elephant.
This reality leads me to ask if the investment suggested by the KeyArena Subcommittee isn’t in our interest. If the press reports about the local investors are accurate, they are willing to split the cost of the desired renovations. This would appear to be a much more equitable public/private partnership than we’ve heard to date, and one that could well comply with the requirements of I-91.
Citizens and the elected officials they represent will need more detailed information about any such public/private partnership investment in further renovations to KeyArena, but such an arrangement could well be a win/win situation that keeps our team here for another forty years.
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Potential Annexation of North Highline Into the City Limits of Seattle
July 3, 2007
Late last year, the City Council voted 6-3 to designate North Highline as a Potential Annexation Area (PAA). (I voted with the majority.) This is but one of a number of steps which may or may not ultimately result in the addition of this area of approximately 32,400 citizens between West Seattle and Burien into the City of Seattle.
The State Growth Management Act anticipates that all unincorporated areas within a county’s urban growth boundaries, like North Highline, will be annexed by surrounding cities. Both the Cities of Seattle and Burien are exploring the possible annexation of this area. Both cities have committed to allowing the citizens of the unincorporated area to vote on whether they wish to be annexed to either Seattle or Burien, one of the options permitted under state law. (There are currently no plans for the current citizens and voters of Seattle and Burien to be given an opportunity to vote on whether they wish to annex this parcel.)
King County has led the push to have all ten of its remaining unincorporated areas annexed by surrounding cities by 2012. As part of the King County Annexation Initiative, King County has made available a one-time $10 million fund that can be used to help an annexing city address capital and/or operating costs associated with annexation of an unincorporated area. It is my understanding that a considerable share of this money is already committed, so it is not clear what, if anything, might be available from the county to help cover Seattle’s expected financial shortfall.
Last summer the City conducted a preliminary analysis of the financial impact that would result if Seattle was to annex all or a portion of North Highline. The estimates indicate a (shortfall) gap between additional ongoing operating and maintenance costs and revenues of between $4.57 million and $5.89 million in 2006 dollars, as well as estimated one-time costs of $6.5 million. I think these numbers probably need greater refinement. We could well discover that the gap is even greater.
In addition to possible financial assistance from the above mentioned King County Annexation Initiative, Mayor Nickels asked the State Legislature to amend a state sales/use tax law that authorizes a local sales/use tax that is credit against the state’s sales/use with the proceeds used to provide, maintain, and operate municipal services for the annexed area. Depending upon the rate of such a credit, it is estimated that this credit could have generated $5.2 million to $6.5 million. Unfortunately, the State Legislature ignored the Mayor’s request, leaving the City of Seattle with a major revenue shortfall if it moves ahead with annexation.
One hundred years ago, in 1907, the City annexed Ballard, West Seattle, and Southeast Seattle, nearly doubling the land area of Seattle. Other areas have been added to the city since that time. I think most would agree that the city is a better and more vibrant place with the addition of these neighborhoods. The question now is whether a similar annexation of North Highline would ultimately serve the interests of both those who are already citizens of Seattle and those who live in North Highline.
For City of Seattle residents, a question is whether or not North Highline would be a drain on City resources and whether annexation would make it tougher to provide services to existing City residents. As it is, I regularly hear from Seattle citizens who believe we need more police officers, more parks, and more libraries (to mention just a few examples).
On the other hand, the population of North Highline is quite diverse racially and ethnically. Seattle has long had an appealing mix of people which, unfortunately, we may be losing as high real estate costs make it increasingly difficult for people of modest means to live in the city. North Highline has some of the most affordable housing costs in the Puget Sound region, and there is appeal in adding to the ethnic, racial, and economic diversity of our city.
I have yet to make my own decision as to whether North Highline should be annexed, but I am highly skeptical of any annexation that would be a drain on already stretched City revenues. In light of this concern, I would also like to see a more complete financial analysis, including projections of expected revenues and expenditures for the next ten years or so. And I will absolutely oppose annexation until and unless the County indemnifies the City against all liability associated with the existing South Park Bridge, and it is clear that Seattle will not end up being financially responsible for its replacement. It is estimated that repairs to the bridge, which is located in the unincorporated area and Tukwila, will cost $150 million. (As of this writing, $99 million is included for the South Park Bridge in King County’s Regional Transportation Improvement District which will come before voters this coming fall.)
There will be at least one more Council vote before any final action to send the question to voters in North Highline, giving us time to further explore funding opportunities to close any potential gap.
I most definitely welcome your thoughts on this issue, which will continue to play out over the next couple of years.
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Families and Education Levy
Too high a percentage of students in Seattle schools are failing. Mostly children of color and children from low-income families are not performing at grade level and are dropping out of school. Research has proven that early learning, family support and involvement, after-school activities that include educational support, case management, and health services significantly improve a student's chances of success in and out of school.
The 2004 Families and Education Levy, which was passed by more than 60 percent of the voters focused on programs that will improve students' academic, emotional and social success. The levy does not relieve the School District or the State of the responsibility of adequately funding the education of our children, it supplements the preparation of our children by creating the most conducive learning environment. Over the seven-year life of the levy, investments will focus on three outcomes: school readiness, academic achievement, and a reduction in the dropout rate. Investments will contribute to indicators such as family involvement, attendance, discipline rates and immunization rates. On the cities part they have increased funding as shown in the chart below.
New Levy
| 2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
| 2,363,525 |
2,354,559 |
2,400,680 |
2,436,690 |
2,473,240 |
2,510,339 |
2,547,994 |
1,732,763 |
While the city of Seattle has increased their funding of Family Support Workers (FSW) by over $15,000, the other two source of funding has not made a 2006 commitment or dollars. Should they find to match previous year funding, overall staffing and service levels could be hurt. Some of the confusion about funding for this program may come from the fact the District also depends on money from other sources. This will, however, happen independently of the Levy contribution and may not be known until mid-summer.
The City's commitment to the program remains solid, as is my commitment. The highest need schools will receive more intensive Family support and Family Involvement Investment, this is all aimed at improving overall academic performance. While the City of Seattle's role is limited in the education system, I feel it is imperative to do all that I can with what we can to help and make it better. In addition I believe that we must build in accountability and evaluation to measure our success or lack of it.
Finally, I must congratulate and praise our Seattle voters who so solidly and unselfishly agreed to tax themselves to support our students. Thank you.
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