I believe that Seattle residents should have the opportunity to vote on whether our local elections should receive public financing.

Councilmembers are beginning efforts to explore a public financing system for Seattle. If this effort moves forward, the Council will place this decision on either the primary or general election ballot in 2013.

BACKGROUND, 1979-2009

Seattle had partial public financing of election campaigns in 1979 and 1981, and from 1987-1991. In 1992, state Initiative 134 passed, prohibiting public financing. In 2008 the State legislature passed a law allowing local jurisdictions to establish programs to publicly finance campaigns, if approved by a public vote, and the funding is derived from local sources only.

The City Council responded by passing Resolution 31061, which set up a Campaign Public Financing Advisory Committee that recommended publicly financing Seattle election campaigns; they recommended that the City Council place a measure on the November 2009 ballot for a public financing program, to go into effect for the 2011 election, with an estimated annual cost between $2.3 and $3.2 million. However the Great Recession began and City revenues plummeted, so the Council held off the vote indefinitely.

2013 UPDATE

With the local and national economies improving and added attention being drawn to the need for election reform highlighted by the Citizens United decision, citizens have requested the Council to revisit this issue. Other major cities such as New York, Los Angeles, San Francisco and Miami already have public financing of municipal elections.

Last October I talked with Council President Clark and suggested that it may be time to revisit this issue, particularly since she had been a lead supporter in the past. We then kicked off a discussion of the public financing of elections in Seattle with a statement in support of exploring public financing of election campaigns in Seattle.

In December, we were joined by Councilmembers O’Brien and Rasmussen in sending a letter to the Seattle Ethics and Elections Commission asking them to recommend a public financing model that meets the goals of increasing electoral competitiveness, reducing financial barriers to entry for candidates, and increasing the role and emphasis of small donors in the electoral process. Recommendations were requested by March 1, for consideration of a potential ballot measure in either the primary or general election in the fall of 2013.

As part of the request, we asked that they review the 2008 report of the Campaign Finance Advisory Committee; examine new case law and changes to existing programs in other cities since 2008; explore new research on the effectiveness of public financing in meeting the goals; review local election data since 2008, and also consider potential budget implications.

SEATTLE CAMPAIGN CONTRIBUTIONS, 2001-2011

The case for or against public spending on helping finance local elections comes down to weighing its cost versus its benefit. While the cost is easier to measure than the benefit, there is an underlying sense that legislative bodies like a local council can most wisely spend the public’s money when they take into account the broadest range of concerns, rather than relying on a small cluster of interests.

There clearly has been a trend in Seattle of the growing concentration of more campaign money being collected from fewer donors. The 2011 Seattle Ethics and Elections report notes that from 2001 to 2011, the average donation in City Council races rose from $115 to $223. During the same period, the percentage of contributions under $100 decreased from 63% to 32% of total contributions.

THE BIG PICTURE

Democracies are based on a one-person one-vote principle; each person has the same influence in deciding who represents our public’s needs. But candidates, while attentive to soliciting individual voters, spend a good deal of their time soliciting donations. It is more time-efficient to collect one $700 donation (Seattle’s contribution limit per person) than say thirty-five $20 dollar donations. That means a candidate is spending an inordinate amount of time talking to a small constellation of voters, defined primarily by their ability or willingness to make large contributions.

The effect of that trend is difficult to measure, but it calls into question who elected officials are taking into consideration once they get into office. Who are they more likely to be talking to about issues and asking for donations? Generally less than 2% of those voting in any Council race make a contribution of any size; there is already a built in bias. It is only magnified when you consider that a clear majority of individual donations are collected in any local race from less than 20% of those making contributions. In the 2009 City Council elections, for example, only 8% of contributions were for $600 or more, but this totaled 52% of all money raised by candidates.

In pursuit of electing a City Council government that better reflects the priorities of a one-person one-vote democracy, some public funding of campaigns would increase the role and emphasis of small donors in the electoral process and by extension also broaden the public’s influence on the Council’s decision making. The public should have an opportunity to make that decision on this fall’s ballot.

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The City Council voted 6-2 yesterday (Conlin and Licata voting no; Rasmussen absent) in favor of a revised Memorandum of Understanding for a basketball and hockey arena in SODO.  Below are the remarks I made explaining my vote.

THANK YOU TO COUNCILMEMBERS

I’d like to begin by thanking the leadership of Councilmember Burgess in markedly improving the proposal that was originally presented to us, and thank Council President Clark and Councilmember O’Brien for their involvement in negotiations.

SIGNIFICANT CONCESSIONS

The Council received a number of significant concessions from investor Chris Hansen, three of the most important being:

1. A full SEPA review will be completed before any Transaction Documents are signed. That means the City will take into consideration alternative sites, traffic congestion, and freight mobility.

2. A Personal Financial Guarantee in case of the corporation not meeting its financial obligations on time.

3. Financially contributing to the creation of a SODO Transportation Infrastructure Fund, should tax revenues not generate adequate funds.

In addition, it is important to note that separate from the city’s negotiations, the labor unions that will be serving at the arena are very pleased with the 30 year agreement they have reached with Hansen.

HOW DOES IT MEASURE UP TO OTHER DEALS?

So how does this proposal measure up to other deals?

Academic studies reveal that of the 17 new or updated arenas built since 1999, 7 have received a 100% public subsidy, while five received 30% or less.  With two professional sport teams secured, we are seeing a proposal at about 41% public funding, which is better than most, although not the top one. If it’s just a basketball franchise the public percentage drops to 24%, but the risk of financial failure also increases.

PUBLIC VOTE

I talked to one of other co-founders of Citizens for More Important Things, who believes this is a decent proposal. Another one believes if it is so good; put it to a public vote. That suggestion was raised by King County Councilmember Pete von Reichbauer, and was rejected by the King County Council, and arena supporters, although the generally pro-business Seattle Times did support a public vote.

However, a public vote would not be a certain victory for either side. Usually the pro side significantly outspends the naysayers, so a vote would not assure public funding.  Some proposals have passed based on a 100% of public funding, such as in Oklahoma City.

SUBSIDIZING OTHER CULTURAL FACILITIES

Supporters of this proposal say the city has subsidized the construction of other cultural venues, why not this one? They have a point.

The top three cultural facilities, the Seattle Art Museum (SAM), Benaroya Hall and McCaw Hall, have a total annual attendance that is about 90% of what the new Arena’s attendance is projected to be with both basketball and hockey. However, if the new arena has only basketball these 3 institutions’ attendance would be 170% greater than the new arena’s. The total City financial assistance for these three came to $84 million, with SAM receiving no cash support. And some of this assistance is being repaid.

The new arena, on the other hand, will be getting anywhere from 40% to a 140% more city financial assistance, depending on whether one or two professional teams locate there. The arena’s tax revenue is expected to pay it off. And if not, then the investors promise to make up the difference. The complexity of this MOU, and the transaction agreements to follow, limit the city’s financial risk if the unthinkable happens—and the Titanic sinks.

PRIVATE INVESTMENT MODEL

However, I believe the most significant difference between these other cultural facilities and any professional sports facility, is that the financial model for professional sport franchises make cities compete with each other for hosting one, hiking up the value of professional teams as cities have rushed to pick up large portions of their capital and operating costs. Unfortunately, teams have become commodities to be bought and sold, with their fans treated as shabbily as panhandlers.  It’s a system that is unthinkable for symphonies, operas, ballets or any other major cultural provider in an urban setting. Do they threaten to leave for a new city that offers them better accommodations? They are local institutions that have real roots in the community.

The real difference between these other cultural institutions and the new arena is their corporate status – non-profit vs. for-profit. The administration and operation of those other institutions is open to public scrutiny, with the city having representation on their boards. The new arena will be controlled by a private corporation whose existence aside from providing sports entertainment is predicated on making a profit for their owners, and as we have seen  selling the team when their profits sink.

The problem is that privately owned or controlled professional sport facilities need huge public subsidies without providing clearly measurable economic benefits. This of course ignores the enjoyment that many local citizens derive from having a home team.

WHAT SOME CITIZENS SEE

What some citizens see is that those who have a lot of money are using public resources to make even more money. They see someone purchase private land and in a couple of years get the city to buy it from him for double the price he purchased it for.  It strikes them as wrong.

When they see the city abandoning a major public facility, e.g. the Key Arena, without a plan on how to recoup its financial contribution to the Seattle Center, they see that as a mistake. Keep in mind that the Key Arena, despite the existence of the Qwest Exhibition Hall that some said would put it out of business, made $300,000 last year and provides an additional $1 million in parking revenue generated by the 110 events it hosts every year. It is difficult to see the current proposal as anything other than a blow to the welfare of the Seattle Center and a death knell to the Key Arena, which we have plowed $100 million in tax dollars into. I predict there will be a public vote for a revitalized Seattle Center.

They see siting the new arena adjacent to our largest industrial zone and our maritime industry, as risking our city’s overall economic growth. Hundreds of millions of taxpayer dollars have been invested in keeping Seattle one of the leading ports on the West Coast. Some have argued that the land in SODO might be better used for higher profit enterprises, like the arena. Nevertheless, I believe that is a short-term strategy, based on a year-end book evaluation by investors, not by city planners who must look out at least a decade or two down the road. A perceived quick economic boost is not the same as long-term strategy for sustaining living wage jobs in manufacturing and the maritime industry.

WHAT THIS VOTE IS ABOUT

This vote is not about liking or not liking sports; it should be about what is best for the public welfare in the long term. Many good people care about the future of this city and believe that this city is big enough to host another professional sports team.

They hear from those who truly miss the Sonics and the joy that they brought to their lives. Seattle should be a place that people can enjoy in many different ways. I hear them as well, and I am satisfied that the majority of the Council has heard them.

But I also hear those citizens who want the City to concentrate its resources on protecting what we currently have in place, the Key Arena and the Seattle Center, the maritime and manufacturing industries. They want public funds used for closing the gap that has grown between the 1% and the rest of us, not for subsidizing private companies even if they provide a great cultural experience. Instead, the marketplace should determine, by the number and wealth of their supporters, a company’s financial success.

In summary, I believe this proposal is a good one; it meets a high bar for public accountability. It is a rather solid tree in a forest of not such sturdy timber. However, I concur with those who focus on the unhealthy state of the forest and not on any particular tree. Their voice says enough of this; please address our other needs first and foremost. I hear them, and I will be casting a no vote.

Aside from my philosophical belief that government should generally avoid the use of public resources to augment private investments, my practical concerns with this proposal, as with other similar proposals in the past, has been to minimize the risk of a financial loss to Seattle’s budget, which could affect our ability to provide other services to our citizens.

THIS CAN HAPPEN IN 3 WAYS

First, if the public debt incurred to finance this project is not covered by the Arena’s revenue stream; this could be triggered either by bankruptcy or the team moving.

Second, if the general business climate is negatively impacted, and thus less revenue to the city as a whole. This would be most evident if the Port, manufacturing and freight mobility are constrained in doing business and providing jobs.

Third, if the city is burdened with additional costs for maintaining the Seattle Center due to the elimination of operation of Key Arena as a profitable venue.

Let me go further in describing how each has been addressed in the MOU.

THE FIRST WAY – REVENUE FALTERS

With regards to the possibility of bankruptcy, the personal financial guarantee of Chris Hansen is groundbreaking and perhaps unique. In checking with Neil DeMause of the Field of Schemes website, and economist Roger Noll of Stanford University, both of whom are experts in stadium funding, neither have heard of any owner providing such a guarantee.

We need to make sure that financial guarantees cover both the basketball and hockey teams. In the last 40 years no NBA team has gone bankrupt; however, over half of all professional sport team bankruptcies have involved hockey teams. I want to make sure we are covered for that possibility as well and it appears that the final version of the MOU took that possibility into account by rolling it into the obligation of the Parent Company that will have responsibility over the entire operation.

We have to prepare for all events. We cannot count on the past as fixed guide to the future. There is always a first time; for instance, our own Seattle Pilots in 1970 were the first major league team to file for bankruptcy.

With regards to the team moving, I believe we have strong guarantees in place with a requirement for a 30-year non-relocation agreement, which past lease agreements with the Sonics did not include. The duration of the agreement coincides with the length of bond payments; a 5-year discrepancy between the duration of bond payments and the lease for the Sonics at Key Arena was problematic. The Mariners have a similar requirement, though it is not strictly non-relocation; they are required to play games at Safeco Field. The arena MOU includes this requirement as well.

THE SECOND WAY – OTHER BUSINESSES ARE HURT

This issue comes down to location. In essence, will our manufacturing, maritime and warehouse businesses be restrained from growing and providing jobs for our citizens and income to our public treasury? The creation of the SODO Transportation Fund is an innovative and hopefully an effective tool in addressing this concern. It will allow—and to be most effective will need—other governments to contribute, including  state and regional funds, King County, and hopefully the Port of Seattle—although the Port notes it doesn’t have uncommitted transportation funds, given its planned $300 million contribution for the viaduct replacement.

The $40 million Transportation Fund must be used as an effective tool in sustaining SODO as a manufacturing and maritime zone, if Seattle is to remain a profitable and vibrant port for world trade. Currently the Port of Seattle is in negotiations with the Korean shipping company Hanjin, which accounts for 1/3 of the Port’s maritime operations. From my reading of the MOU, even with the Transportation Fund, there is still a need for strong assurances that the new arena will not hinder the Port’s ability to do business, and that our truck routes through SODO will not become more congested. I will be talking to those representing working and operating manufacturing businesses in SODO to seek out what options could be pursued.

And we should note that we must also consider the impact to the Mariners operations. The public has invested over $300 million in their facility; we do not want our investment endangered.

THE THIRD WAY – KEY ARENA BECOMES A BURDEN TO THE CITY

I struggle with how we can justify making public investments in one private facility while appearing to be prepared to abandon another public one. No one has come up with a proposal that will save the Key Arena as a facility for either sports or entertainment. And while including it in the SEPA process is admirable, is there anyone that believes it will be chosen as the best location for a new arena? And if it was, who would renovate or build a new one there? Chris Hansen, who is the only player in town, will not do so. Even the MOU recognizes this when it opens the door for the City and County to pursue Hansen’s project if there are no other bidders for building an arena elsewhere.

This is the city’s most immediate problem. By steering five million of the seven million in the Key Arena fund away from the Key Arena to the new arena, to accommodate the women’s professional basketball team, the Storm, we have essentially sentenced Key Arena to be demolished. The city, using public funding, must decide what will replace it. Something must be in that location that can provide more pedestrian activity in the Seattle Center than what has been provided in the past by the Key Arena, and something that can support itself financially and hopefully contribute to the Seattle Center’s financial bottom line.

Of the three ways that Seattle has a negative financial exposure, this one appears to be the one least addressed in the MOU. It is difficult to see how the Seattle Center will gain from this new basketball arena; it is much easier to see how it will suffer. And, that could negatively impact our general budget. Seattle Center’s welfare must be taken into account in a manner that goes beyond this MOU.

SUMMARY

Aside from my concern with how the new arena may negatively impact our general fund, I believe that the public deserved more time to assess its strengths and weaknesses. And I too wished to dig deeper into this document that was only completed 48 hours before the Committee vote. For that reason, I abstained on the vote and had asked our Council President Sally Clark to delay the final council vote until Monday Sept. 24^th, which she did with the concurrence of the Committee Chair Tim Burgess.

During the first week of December 2011, I wrote Urban Politics # 316 saying that I, like Seattle Times columnist Danny Westneat, was outraged that people had to pay bills of $800 to get their cars back from Seattle towing companies. State law doesn’t limit what towing companies can charge to impound cars off private property, so I decided to see if the City could set a limit.

I and other Councilmembers asked the City Attorney’s Office if they believed Seattle could place limits on what towing companies charge. They indicated that Seattle should be able to regulate tow company rates from private property (the city contracts for tows off city streets after soliciting bids, thereby setting rates).

An interdepartmental team began work on this, involving Fleets and Administrative Services, and staff from the Mayor and Council.

STATE LEGISLATIVE SESSION

The state legislature began meeting at the start of 2012, and regulation of what towing companies can charge for impounds off private property was on the agenda. The first draft of a bill was introduced on January 12, so Seattle’s efforts shifted to the state legislature.

 Bills proposed in the House and Senate originally would have preempted Seattle or other cities from setting local limits, and set limits higher than Seattle wanted. The House passed a bill introduced and amended by Representative Pollet that set a cap, but allowed cities to set a lower cap. The Senate bill would have preempted any local regulation, but didn’t come up for a floor vote.

The state legislature then met in two special sessions in April, but took no further action on the bill.

OUTREACH TO TOWING INDUSTRY

This cleared the way for Seattle to take up consideration of a bill. However, the State retains the ability to preempt any local law, so it is important to proceed with care. Seattle’s lobbying in the state legislature emphasized that for any Seattle law, there would be outreach to the towing industry to seek their input. It’s thus important to establish a clear record of seeking collaboration with the industry.

Mayor McGinn sent a letter to towing industry groups recently seeking their collaboration and meetings are scheduled to begin next week that I plan to monitor or attend. Earlier requests for information during the state session didn’t receive a response from towing companies, making it difficult to determine a reasonable fee.

Frustrated in trying to move legislation forward, I let the Mayor know that if he could not reach an agreement by the beginning of July with the towing industry, I intend to introduce legislation regulating the industry. I hope the towing industry will participate, and assist in developing a reasonable consumer protection law. Most companies don’t charge the kind of excessive rates that have received so much publicity; a towing regulatory law would reign in the bad actors.

I will look forward to finally seeing legislation introduced in July that can provide reasonable towing fees in Seattle.

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Back in 2008, I wrote about an arts education bill (UP #264) I was pursuing in our state legislature. The bill would have redirected lottery proceeds dedicated to paying baseball stadium bonds to a state-wide School Arts Program once the bonds were retired. The Washington State Arts Commission would have created a School Arts Program Committee and a competitive grant process to support arts-infused curriculum, programs, and projects in public schools. Unfortunately, over the three years it came up for a vote, it failed to pass.

Some of you may be wondering why I pursued that bill and why the Obama Administration is spending $14 million to inject the arts into education. For one, the arts are designated as a core subject area in Washington State schools, yet funding for arts instruction lags far behind that of other core subjects.

Our state’s schools may have made arts a core subject in part due to research such as a 1998 finding by Shirley Brice Heath of Stanford University, the Carnegie Foundation for the Advancement of Teaching and Americans for the Arts. It found among other things that young people who regularly participate in the arts are four times more likely to be recognized for academic achievement.

But, I don’t believe test scores alone can determine a student’s success in life. “Stringent standardized testing requirements have forced schools and teachers to obsess over test scores at the cost of teaching critical thinking and creativity. The very nature of standardized testing is that new ideas are punished,” says Diane Ravitch in the Studio 360 article. She’s the author of The Life and Death of the Great American School System and served in the Department of Education in both the George H.W. Bush and Bill Clinton administrations.

She adds “If we have a generation of kids who can’t think for themselves, our whole country is in trouble. Nations that have the highest test scores have the lowest creativity scores. The more we raise our test scores, the more we sacrifice creativity.”

The solution, Ravitch believes, is not more federal dollars. Support needs to come from local and state government, which must consider music and visual arts as valuable as reading and math, that the arts are just as important in schools as are basic subjects — that art actually is a basic subject.

We are fortunate that in Seattle schools, the arts are a basic subject. However, among the applicants for Families and Education Levy (FEL) 2012-2013 funding, no arts educators qualified. The City’s Office for Education (OFE) has now pledged to reach out to those who didn’t qualify through a series of workshops intended to produce qualifying applicants for 2013-2014 funding.

OFE will  hold four workshops: a full day on Monday, June 25^th; a half day on Tuesday, June 26^th; a full day on Wednesday, August 1^st; and a half day on Thursday, August 2^nd. For the June 26^th & August 2^nd workshops, OFE staff will meet with any arts education group requesting a one-on-one consultation. The workshops will present the Seattle School District’s general educational data and describe how FEL uses that data. School District staff will also be on hand to answer questions and to provide one-on-one instruction. Details on the workshops have yet to be published, so keep an eye on OFE’s web site for information on the location and times.

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By Seattle City Councilmember Nick Licata

SOCIAL MEDIA AND URBAN POLITICS

I wonder how many of you remember receiving my first e-newsletter, Urban Politics (UP) #01, back in 1996? It addressed transferring the Freeway Park garage to the Washington State Convention and Trade Center. In 1996, one would start their modem, wait 30 seconds to log on, check email, perhaps spend a few minutes chatting with an AOL buddy. One could browse, but there was no YouTube, Huffington Post or Wikipedia. There was no FaceBook, Twitter or Google Search to browse to. There was no such thing as a blog.

16 years later, I still email UP to my subscribers. In a world of 140 character limits and shortening attention spans, UP continues to provide readers a more in-depth analysis on timely public policy issues than other mediums tend to offer.

I have recently expanded UP to include social media, such as Facebook, Twitter and my City Council blog. As a compliment to my more comprehensive UP emails, I now post short informational items and announcements to my City Council UP blog, to Facebook and to Twitter. Each has a specific function.

My UP blog allows for photos, embedded videos and web links leading to additional information and resources related to the topic of the entry. In order to keep in touch with my blog, one needs to subscribe via an RSS feed (really simple syndication. see below). RSS feeds send notifications to a subscriber’s web browser. When one clicks on the notification, it redirects the browser to the source of the feed, in this case my blog. Facebook requires a free membership for access and reaches a much broader audience than does my blog. There, I post both links to my blog as well as short informational items and announcements. Twitter serves a similar function as does Facebook, although it only allows for 140-character-or-less posts, offering abbreviated links to posts exceeding that number.

Some of my recent UP blog postings that may interest you address the anti-poverty initiative called ONE, the City’s Transit Master Plan, trends in King County health inequities and a recent Film Forum film screening at one of my committee meetings.

While I will continue to email UP newsletters, I invite you to consider subscribing to my UP blog, liking me on Facebook and following me on Twitter. That way, you won’t miss postings there that I don’t address in the email version of UP. Instructions on how to do so are below.

Thanks!

COUNCIL MEMBERS & MAYOR’S EMAIL ADDRESSES

Sally.Bagshaw@seattle.gov

Tim.Burgess@seattle.gov

Sally.Clark@seattle.gov

Richard.Conlin@seattle.gov

Jean.Godden@seattle.gov

Bruce.Harrell@seattle.gov

Nick.Licata@seattle.gov

Mike.OBrien@seattle.gov

Tom.Rasmussen@seattle.gov

Citizens are directed to the following website to complete a form to send an email to the Mayor’s Office. http://www.cityofseattle.net/mayor/citizen_response.htm

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By City Councilmember Nick Licata
with Newell Aldrich, legislative assistant

ARENA REVIEW PANEL LOOKS INTO FUNDING A BASKETBALL AND HOCKEY ARENA

This past Wednesday, April 4^th, the Arena Review Panel, a citizen group referred appointed by Mayor McGinn and County Executive Constantine, released their final report. The panel examined an agreement that would be between the City, County and the investor Chris Hansen to fund a new sports arena for a professional basketball and hockey team. The Panel was asked to adhere to three principles: 1) existing General Fund resources are protected; 2) the City and County should be significantly protected from any financial risks; and 3) the partnership should result in an investment to the community and region.

While the media correctly caught the gist of the Panel’s conclusion that that “the proposal is favorable, has promise, and generally consistent with the principles set forth by the Mayor and County Executive,” the Panel also found that there are many “important issues to be worked through to ensure these principles are met and to address other issues of importance to the community.” They recommended that the City “begin the processes that are required to address the multitude of issues at play…”

I’ll focus here on some of their recommendations for issues to be addressed, since that’s the work that local government and elected officials will be charged with examining. You can view the report, and other materials, at http://seattle.gov/arena/.

The report states that prior to any public contribution, all land use processes must be complete; NBA and NHL teams secured, with 30-year non-relocation agreements; private investors must establish a security reserve, and disclosure of members of the investor group, and due diligence to ensure their financial wherewithal.

EXISTING GENERAL FUND RESOURCES

The Panel noted that public investment would involve the use of General Obligation bonds, and the pledge of General Fund resources and the full faith and credit of taxpayers to fund the City and County portion of the debt issued for the project. The proposal places the burden on cost overruns during construction, and operating shortfalls, on the investor group. The panel found the intent of the proposal was to provide protections for the City and County General Fund, and raised the following issues:

General Obligations: because repayment of public bonds would ultimately be a liability against the City and County’s general funds, financial protections are important. I believe that this should be the highest priority for the City Council.

Unknown Costs: there may be additional operations costs, such as police and fire, as well as additional capital costs, such as traffic and transportation improvements; it will be important to be clear about specific funding sources and expectations about costs. I believe that these on-going costs can best be covered in a tightly written operations agreement with the team owners.

Substitution: some existing tax dollars could go toward this project (i.e. entertainment spending diverted from current spending to attending events in this venue); they suggest the impact will be small, but should continue to be examined. I believe this is an important issue, particularly if there is a continuous drain on the City’s general fund because it would divert funds away from other more important city responsibilities.

Key Arena: the City will need to evaluate the impact to the Seattle Center finances, and potential General Fund impacts. Key Arena made $100,000 last year, so it currently is keeping its head above water, but if another venue opens in town that serves the same audience the city could end up losing money on it each year.

Debt rating: the City and County should evaluate potential impacts on municipal debt ratings; changes in ratings could impact the cost of borrowing. See the Presentation on Bond Ratings for a better understanding of how the City could be impacted.

PROTECTION FROM FINANCIAL RISK

The panel noted the proposal is in sharp contrast to the arrangement between the City of Seattle and the Sonics. They noted the intent is to shift risk from the City to private investors, and recommended additional scrutiny for what would happen in the case of bankruptcy or default by the investment group.

On this topic the Panel made a number of good suggestions. I will not cover all of them, but a few stood out for me.

+ Ensure investors will not return to City/County for additional public funds in the future, through, for example, a covenant. Since the average life of a professional sports stadium or arena is less than half of the 30 year lease that is being sought, this is a very real concern. Future maintenance, and any arena reconfiguration, must be covered by the investors.

+ Consider whether local market is large enough to support additional teams. Seattle currently has the Mariners and Seahawks, and the Seattle Sounders of MLS draw major-league attendance, averaging 38,000 (the annual total is more than the Seahawks). In addition, UW football draws major-league crowds, and will soon have a revamped Husky Stadium. Two additional franchises may be challenging for the region to sustain. A 2006 City report on KeyArena suggested the area may have been overbuilt with luxury suites. In any case, these issues highlight the need for any agreement to have solid guarantees to protect the public from financial risks.

+ Evaluate strength of ownership group and investor business model, and have a third-party evaluation of the financial strength of the ownership group. This is a very reasonable request and one that the City should be in a better position to evaluate since Hansen said at the press conference on April 5^th that he expects to announce his investment team sometime in June. The Mayor should provide the City Council with ample time to follow up on his panels’ recommendation that their financial strength be reviewed by a third-party.

+ Protecting maritime and Industrial activities from being impacted by traffic congestion was also identified as a concern by the panel. This issue was also raised by the Manufacturing Industrial Council, Port of Seattle and Longshoreman’s union. In response, Hansen indicated he will pay for a $50,000 traffic and parking study of the potential impact of the arena on the surrounding area. The parameters of the study have not been released yet.

+ One new element in the development of the Arena proposal was also introduced yesterday. According to the Seattle Times, Hansen said that the deal could go forward without a hockey team and that it was “highly likely” the arena could be built with only a basketball team; a hockey team could come later. I seem to recall the Mayor saying that the City would not proceed until both NBA and NHL teams were secured (that’s what the Arena Review Panel report indicates). This would be a major change, particularly in how it could affect the business plan for the arena. According to estimated revenues provided to the Council, elimination of the NHL team would cut the projected admission tax revenues expected from the arena by 43%; of course, hopefully one would be found at some point.

+ The Panel’s report does not examine other questions, such as the use of city debt; the Initiative 91 issues I mentioned in an earlier blog post; or questions of the lifespan of arenas. These important issues will hopefully be covered by the City before a decision is made.

It is still too early to have an in-depth, complete evaluation of this proposal. But it is certainly better than any we have seen in the past and it deserves an honest and fair assessment. I hope the City can do one.

By City Councilmember Nick Licata

With Newell Aldrich, Legislative Assistant

Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.

The City Council heard a proposal  today to place a library levy on the August 7, 2012 ballot. The levy would provide $17 million per year for seven years to expand library hours, collections, technology/computers, and maintenance. The levy would begin at the start of 2013, the same time the 2004 Fire Facilities levy ends. The annual cost for the owner of a house with the median assessed value for Seattle of $361,000 would be $52 per year.  Under the proposal, all city libraries would be open on Sundays, and libraries would remain open year-round.

Seattle’s library system has been caught in a budget crunch during the last several years. 95% of the library’s operating budget comes from the City’s General Fund, which makes the library vulnerable to fluctuations in City revenues, which have suffered during the recent economic downturn.

Since 2009 the library budget has been cut by 9%, accounting for inflation. This has resulted in a decrease of 190 operating hours per week, a reduction to the collections budget, cuts in the maintenance and technology budgets, and a week-long closure of the system. The library’s capital maintenance budget is largely funded by Real Estate Excise Tax (REET) revenues, which have declined sharply in recent years with fewer home sales.

At the same time, library usage has increased. Library visits and circulation of materials went up sharply from 2004 to 2009, until operating hours were reduced.

The library faces other long-term pressures beyond declining revenues from the recession.  In 2001 Washington State voters passed I-747, a Tim Eyman initiative that limited property tax increases to 1% per year. The state legislature later adopted it after the State Supreme Court overturned it. The result is that revenues have not kept up with inflation. Adjusted for inflation, operating revenues decreased from 2005 to 2008, before the impact of the economic downturn.

In 1998, Seattle voters passed the $196 million Libraries for All construction bond measure. In 2008, the construction program was completed, expanding service to several Seattle neighborhoods. The expansion, however, required additional operating hours.

The City Budget Office estimates a $5 million operating shortfall for the library system in 2013.

Recognizing the looming shortfall, in November 2010 the Council requested the City Librarian to develop a plan to explore options for library funding, in order to forestall additional cuts. The Seattle Public Library estimates that adjusting to the $5 million shortfall would entail closing 5 branch libraries or closing all branches on Fridays year round, in addition to cutting the collections budget by 50%. In December, 2011 the Council passed Resolution 31345 which set out a timeline for the Library Board to hold three community meetings to hear public input. Public response was large: over 33,000 survey comments were received.

Having libraries open on Sundays was the highest priority listed by the public. In addition, the one-week closure of recent years would stop with this levy. Users could place up to 50 holds, instead of the current 25. $3.8 million would go toward operating hours, $2.5 million to collections, $1.5 million to technology, and $3.7 million to maintenance, in addition to covering the $5 million shortfall to maintain current operations.

A public hearing on the measure will take place on Tuesday, April 3 at 5:30 p.m. in the City Council Chambers on the 2^nd floor of City Hall at 600 4^th Avenue between James and Cherry.

You can review materials from the previous council meetings of the Special Committee on the Library Levy, which met on February 6 and December 12, and watch the meetings on the Seattle Channel for December 12, February 6, and March 23.

By City Councilmember Nick Licata

Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.

Mayor McGinn and County Executive Constantine yesterday announced a proposal for an arena in Seattle’s SODO district that could host teams from the NBA, NHL, and concerts. I received this proposal shortly before the announcement, so I’ll provide some preliminary impressions, first with a brief summary of the proposal, then my own perspective.

The proposal calls for $200 million contribution and cap in public funding, $150 million of which would come from the City of Seattle, and $50 million from King County; $300 million would come from the private sector. City general obligation debt would be used to finance the project. The press release from Mayor McGinn and County Executive Constantine states the proposal is self-funded, from tax revenue that wouldn’t be received without the project.

The City’s contribution would come from tax revenues such as sales tax, property tax, excise tax, business and occupation tax and admissions tax. No specific dollar figures are available yet. These taxes would, along with rent from the private sector, be used to pay the cost of servicing 30-year bonds.  The taxes are referred to “Facility Tax Revenues” in the proposal, i.e. tax revenues received on the site or from the team owners.

The investments are proposed only in the event that Seattle obtains new NBA and NHL teams, and would include a 30-year lease with a non-relocation agreement. The proposal includes a reserve account to be used for capital repairs, and to ensure the Facility is “maintained in first-class condition”, according to a schedule prepared by an independent engineer.

Here’s my perspective and analysis. This is better than previous arena proposals the city has received, with less public funding, no brand-new tax to pay for it, and a significant private sector contribution. Secondly, their intent is to address Initiative 91, approved by Seattle voters in 2006, which requires a return on any investment by Seattle taxpayers in facilities provided for professional sports organizations.

I do have questions that still need to be addressed.

First of all, we don’t yet have a detailed breakdown of figures for the proposed tax sources, so it’s difficult to draw conclusions. I’ll want to see a more thorough analysis of whether the proposal meets the terms of Initiative 91, and examine the claim regarding self-funding. Secondly, I want to ensure city services are not affected. This morning I was at a food bank with 400 people standing in the rain. We must maintain services to those most in need, and cannot sacrifice them.

In addition, we must maintain our obligation to fund critical infrastructure. Seattle has a large volume of necessary construction projects, most notably the waterfront seawall. This project must be funded in the next few years, and will likely require over $300 million, possibly in bonds. I’ve asked city staff how this proposal would affect the City’s debt capacity, policies and construction needs.

Information on the impact of revenue sources will also need to be compiled; 75% of admissions tax currently goes to the arts, for example. I don’t want to see that reduced. Further, ongoing city costs required by any new facility need to be addressed for public safety and infrastructure (agreements with the Seahawks and Mariners exist on this front).

The reserve account for capital maintenance included in the proposal will need to be closely examined. The revenue model for the configuration of NBA arenas changes every decade or two, so we’ll need a clear understanding of what it means to maintain a facility “in first-class condition.”

I will be closely scrutinizing the proposal with other Councilmembers to reach a decision that can work fairly for the city and the owners of any new franchise.

By City Councilmember Nick Licata

Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.

________________________________________________________________

UPDATE

The Committee on the Built Environment (COBE) meeting originally scheduled for 9 am tomorrow, Wednesday, December 14, will now occur at 10:30 am. 

As I mentioned in UP 317, as of Monday night (and this morning) the agenda for tomorrow’s COBE meeting, was not yet available for public review. Our Council rules state that: “All reasonable effort will be made to provide the preliminary agenda online and in hard copy at least two business days prior to the meeting.”  Further, the Open Public Meetings Act requires notice of a Council meeting 24 hours in advance.  The concerns I raised this morning about proper notice identified this legal requirement and now has necessitated a last minute change in the meeting start time.

ROOSEVELTNEIGHBORHOOD REZONE

 MY POSITION

I spent much time reviewing material, reading constituent emails and letters, and attending or watching the Committee on the Built Environment (COBE) meetings concerning the Roosevelt Neighborhood Rezone. Transit-oriented development must accompany light rail stations, like the one that will be operating in the Roosevelt Neighborhood. The question I’ve wrestled with is “Can the Council meet that objective without increasing building heights to 65 feet across from theRoosevelt High School building?” I’ve concluded that it can, and accordingly will move an amendment in tomorrow’s COBE committee meeting to keep the heights at 40 feet.

What is best for the city as well as the Roosevelt neighborhood are inexorably linked.  How the Council strikes a balance between encouraging greater density within our city and retaining a quality of life which promotes a sense of community, safety and pride, is being closely watched by other neighborhoods.

The City solicited and encouraged theRoosevelt neighborhood to present its values and objectives through an extensive neighborhood process. The community’s latest plan increases their overall density beyond what the Mayor and the Department of Planning and Development (DPD) had most recently proposed, IN EXCHANGE for retaining an important cultural feature of their community: maintaining the prominence of the recently remodeled historic Roosevelt High School. The Council is now moving ahead, unless it adopts my amendment, to accept the community’s proposed additional upzones IN ADDITION to also increasing the height of buildings adjacent to the high school. It appears to me that the community did not get the exchange they offered of accepting much greater density than was originally requested by the city, for preserving a notable feature of their neighborhood. 

I believe that the rest of the planned upzone for the Roosevelt neighborhood accommodates the additional number of residents and business development it needs to become a more viable neighborhood. In order not to delay that development I propose that the entire plan move forward including new increased 85 foot heights on three blocks not suggested in the DPD proposal.  My amendment accepts the 40 foot heights recommended in The Sustainable, Livable Roosevelt Plan (SLRP) for the three blocks across from high school building. I believe that is preferred to just removing this area entirely from the plan, since the SLRP template adds community benefits by expanding the pedestrian designation and providing a consistent zone across all three blocks.

CURRENT STATUS, COMMITTEE PROCESS & VOTE

On Monday, December 12, the Council referred an entirely new bill to be discussed and possibly voted on in the Committee on the Built Environment (COBE), on Wednesday, December 14.  As of Monday night, neither the agenda for this meeting, nor the legislation itself is available for public review.  This new bill takes the concessions offered in good faith by SLRP to increase heights to 85 feet on three blocks not recommended in the Executive proposal and it also retains the 65 foot heights on the three high school blocks where SLRP is asking we maintain at 40 foot heights.  Our Council rules state that: “All reasonable effort will be made to provide the preliminary agenda online and in hard copy at least two business days prior to the meeting.” 

To date, COBE has had 4 discussions on legislative rezone options for the Roosevelt Residential UrbanVillage and a public hearing atRoosevelt High School on September 19. At their last meeting on this topic, the committee reviewed architectural drawings – one drawing of a possible 40-foot building and three drawings of 65-foot building scenarios on the three high school block. The drawings illustrated options for development standards that were developed by DPD, but the images were provided by GGLO, an architectural firm hired by and representing a potential developer, RDG. Most of the committee discussion dealt with design elements on these blocks and not with zoning as it applied to the larger neighborhood.

The next COBE meeting to take up the Roosevelt rezone is Wednesday, December 14^th, scheduled for 10:30 am (originally scheduled at 9am). It is likely that there will be a vote on this newClark sponsored bill at this meeting. If so, I will move to amend the legislation to adopt the SLRP zoning for the three blocks immediately north of the Roosevelt High School.  I do not see how I could vote for the entire package if my amendment fails. While I believe the plan as a whole is very good for both the city and this neighborhood, to push ahead with it would ignore an honest and detailed attempt by the community to resolve the conflicts around these blocks.

In order to meet Growth Management Act notice requirements, if the legislation passes out of committee Wednesday it will be held until January 17, which is the Council’s first full business meeting of the Council in the New Year.

BACKGROUND

In conformance with the Countywide Planning Policies, the City of Seattle chose thirty-eight neighborhoods to absorb greater density,Roosevelt among them. So at the heart of the debate on this rezone, is the need to allow for greater density to meet the city’s overall growth goals and to also provide for better utilization of the light rail station, which the neighborhood wanted and solicited.

With this objective in mind, the community initiated and drafted a thoughtful update to their neighborhood plan after a lengthy process and the City Council adopted the update and incorporated it into the Comprehensive Plan in 2006. A subcommittee from the community proposed an upzone to implement the plan but maintained a 40-foot zone around Roosevelt High School to preserve the integrity of the school design and for safety reasons. The Department of Planning and Development (DPD) began its review in 2009, and worked closely with the community and this year made recommendations that were very close to those made by the community members on the subcommittee of the Roosevelt Neighborhood Plan Update Team.

The Mayor then reviewed the April 2011 legislative rezone draft proposed by DPD, and then directed DPD to reconsider their proposal. DPD then changed its position and recommended additional housing units and increased maximum building heights in two locations:  the heart of the Roosevelt business district and the three blocks immediately south of Roosevelt High School.  In the business district, DPD’s revised proposal recommended that the maximum building height be increased from 65 feet to 85 feet.  On the blocks south of the high school, DPD recommended the maximum building height be increased from 40 feet to 65 feet.

SLRP

The Roosevelt community responded to DPD’s proposal with “The Sustainable, Livable Roosevelt Plan” (SLRP), seemingly with one critical objective, as one constituent wrote to me, “to add so much density that density critics would stop complaining as long as it preserved 40’ maximum on the High School blocks. The SLR plan was an alternative to the Mayor’s Plan, not a supplement,” the constituent added; it was not simply adding housing, it was offering it in exchange for something of value to the community.

The SLRP not only exceeds the density goals assigned to the Roosevelt neighborhood, but it expands DPD’s proposal by more than 25% in the number of potential housing units that can be built (766 vs. 607.) The SLRP also adds to the total area and the number of parcels from DPD’s proposal, going from 173 parcels comprising 17.5 acres of land to 193 parcels comprising 20 acres of land. 

THE THREE BLOCKS ACROSS FROM THE HIGH SCHOOL

The debate is whether a 65-foot up-zone provides on the three blocks north of the high school benefits to the community that the lower 40-foot limit could not.  Councilmember Sally Clark, the Chair of COBE, which votes on this legislation before the Full Council does, has noted that new investment – whether private or public – must be done with the best outcomes for people, spaces, and affordability. She has said that the 40-foot proposal for the high school blocks fails the test because it is only with the 65-foot limit that you gain the wider setbacks and rent-restricted apartments for these three blocks.

Community members have asked why the Council couldn’t mandate there be trees and wider setbacks incorporated into a 40 feet construction plan.  The counterargument is that such requirements would restrict development potential beyond what is currently available for this site and hence would likely to result in a court challenge by developers. With regards to obtaining rent-restricted apartments, if those three blocks are rezoned there would be a gain of about 15 such units for a period of 50 years with maximum build-out; rent- restricted means that a one bedroom apartment would rent for about $1,200 a month. Under the SLRP proposed 40 foot heights, in that 3-block area there would not likely be any new rent-restricted units.  However, since the total number of housing units that could be developed under the SLRP proposal for the entire area is greater than the number of units possible under the DPD’s proposed zoning, the SLRP proposal will likely produce more rent-restricted units then the Executive proposal.

A looming reason why the 65-foot zone is more likely to generate benefits is that the current developer, Roosevelt Development Group (RDG), has an option from the majority property owner on these three blocks to develop them. The owner, Hugh Sisley, owns a number of dwellings in the area for some of which DPD has filed 25 cases in Municipal Court to gain compliance with City codes. The cases have included housing code violations, exterior maintenance and junk storage violations.  If the developer cannot build to 65 feet, he believes that his project is not viable and will probably walk away from developing these parcels, perhaps leaving the community these troubled properties until the land ownership changes or another developer presents a different package.

CONSTITUENTS SPEAKING UP

The proposal to increase the height of the proposed buildings across from the high school has generated a number of critical comments from residents. One that I received, pretty much summarizes their attitude: “Given the contentious history of the parcels in question, it appears that the property owners, with the help of the consulting architect, are unduly leveraging the removal of severely neglected and dangerous property if the city will agree to meeting terms that would allow their development proposal.” This came from a resident who is a planner and professor of urban planning. Another resident amplifying a national theme wrote: “It feels as though we are being strong-armed here and that democracy has been spurned.  This smacks of the national problem of the one percent exerting its will over the 99 percent.” 

I have received close to a 100 emails on this issue, and although there are some copied statements, I’m most impressed that almost all of them appear to be individually composed.  Although by a clear ratio of at least 4 to 1, the emails that I’ve received are critical of the 65-foot limit for the 3 blocks abutting the high school, there are those who favor it. One real estate broker wrote, “Let’s face it, the Roosevelt business district is experiencing only a fraction of its potential and that potential will only be realized with a lot more density.” And a resident who is a UW business professor wrote, “There is no need to keep housing scarce in this city. Allowing higher density living is good for the environment and allows more walk-able neighborhoods.” However, I think I was most persuaded by the resident who wrote, “I am very much a believer in increased density as opposed to sprawl. It is important to me that the city grow responsibly and sustainably, to the benefit of both the builders who develop the space and the people who do now and will in the future live here.  This is one of the hallmarks of Seattle – - it’s attention to the character of its neighborhoods.”

COUNCIL MEMBERS & MAYOR’S EMAIL ADDRESSES

Sally.Bagshaw@seattle.gov<mailto:Sally.Bagshaw@seattle.gov>

Tim.Burgess@seattle.gov<mailto:Tim.Burgess@seattle.gov>

Sally.Clark@seattle.gov<mailto:Sally.Clark@seattle.gov>

Richard.Conlin@seattle.gov<mailto:Richard.Conlin@seattle.gov>

Jean.Godden@seattle.gov<mailto:Jean.Godden@seattle.gov>

Bruce.Harrell@seattle.gov<mailto:Bruce.Harrell@seattle.gov>

Nick.Licata@seattle.gov<mailto:Nick.Licata@seattle.gov>

Mike.OBrien@seattle.gov<mailto:Mike.OBrien@seattle.gov>

Tom.Rasmussen@seattle.gov<mailto:Tom.Rasmussen@seattle.gov>

Citizens are directed to the following website to complete a form to send an email to the Mayor’s Office. http://www.cityofseattle.net/mayor/citizen_response.htm

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