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Urban Politics #214: A Proposal for the Seattle Center, Arts, Arts Education and Tourism

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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.


A Proposal For The Seattle Center, Arts, Arts Education And Tourism

This proposal is a State Legislative financial package that does not subsidize the Seattle Sonics, but does allow them to use the Key Arena in a profitable manner by eliminating the current outstanding debt on that facility. It does not provide the Sonics with, as they have requested, a new facility.

More importantly it provides a comprehensive Program for Long Term Financial Support of the Seattle Center, the Key Arena, King County Programs for Arts & Culture, Seattle/King County Tourism Marketing and providing for Washington State Centers for Arts Education.

The focus of the package is on how to maintain and refurbish the Seattle Center in a manner that would allow the Mayor’s Seattle Center Task Force report that outlined potential changes at Seattle Center and long-term capital needs, to be implemented. And it will also allow the City Council’s Parks, Education, Libraries and Labor Committee chaired by Councilmember Della to evaluate any Sonic’s Key Arena lease in light of this alternative.

The Seattle Sonics have said that to continue playing pro basketball in Seattle, they require a complete rebuilding of Key Arena at a construction cost of $220 million. Of that cost, the Sonics have offered to contribute $18.3 million. This proposal does not require them to make a contribution, but it also does not provide them with the $220 million remodel which would double the size of the facility.

Key Arena is an important facility on the Seattle Center campus. It attracts 1.1 million annual visitors. About 43% of its visitors come from outside King County. Most attend sporting events or concerts.

The spending of Key Arena visitors and businesses created: $350 million in business activity, 3,252 jobs, and provided $102 million in labor income in King County in the year 2005. An estimated 591 people are directly employed by businesses at Key Arena. Most are part-time or seasonal. 206 (35%) have full-time employment.

The Key Arena Economic Impact Assessment from February, 2006 noted that “New money” (money from outside the region) impacts yielded $165 million in business activity, 1,572 jobs, $47 million in labor income, and $6.5 million in tax revenues in 2005.


The Challenge At Key Arena

The City of Seattle, King County and the State of Washington are challenged with a request for significant capital expenditures at Key Arena, to finance improvements to Key Arena that would primarily benefit the Seattle Sonics

While it is important to evaluate options, there is risk in putting all your eggs in one basket:

Seven NBA teams with facilities that began operating in 1995 or later together reported losses of $81 million in the 2004-2005 season.

Two basketball stadiums built since the year 2000 alone accounted for $33.4 million of those losses.

David Stern, NBA Commissioner, testified before the Washington State Senate, Ways & Means Committee, that public officials should not expect stadium facilities to last more than eleven or twelve years.


Accomplishments Of The Proposal

It retires the Key Arena debt, which frees revenues currently used to pay debt. If the package were adopted by the State Legislature in 2007, the debt outstanding in 2008 could be paid off, which is estimated to be approximately $42 million at that time. This would allow the Sonics, should they wish to remain in the Key Arena, to be relieved of their obligation to pay the debt and could make the team profitable, depending on the size of their payroll.

It simultaneously secures financing for long term improvements to Key Arena and for all of Seattle Center. There are many proposals being floated for improving or updating the Seattle Center, but none of them have identified any revenue sources. This financial package does just that. And it works for making the Seattle Center a success with or without the Seattle Sonics.

And just as importantly it provides significant long term financial support for arts & cultural programs with known and quantifiable benefits for Seattle, King County and throughout Washington State.


Package Specifics For The Seattle Center

The Seattle Center would receive the following:

$20 million in immediate capital improvements to Key Arena

$30 million in immediate renovations to Seattle Center

Refinance and retire current Key Arena debt which frees cash flow at Seattle Center for other programmatic support

Approximately $200 million in funding for other critical Seattle Center capital projects over the next thirty years Significant annual operational and programmatic support to Seattle Center and the programs housed there

A Center for Arts Education at Seattle Center, with annual programmatic and capital facilities funding, benefits educational programs and Seattle Center Funding for tourism and visitor marketing programs, which would bring more people to Seattle Center and King County


The Seattle Center Promotes Our Economy

The Seattle Center had over 4,600,000 visitors in 2005, 600,000 (15%) for Seattle Sonics games. 50% of visitors come from outside King County. Most make their trips primarily to attend events at Seattle Center.

Spending by visitors and businesses created: $1.15 billion in business activity, 15,534 jobs, $387 million in labor income in King County. The Seattle Center Economic Assessment, of February 2006, stated that “New money impacts” or spending by visitors from outside the region yielded $597 million in business activity, and $23 million in tax revenues.

An estimated 6,489 people are directly employed by businesses at Seattle Center. 1,860 (32%) have full-time employment


Proposal For Arts, Arts Education And Tourism

The proposal will provide significant ongoing capital and programmatic funding for the arts throughout King County. And it will eliminate the gap in basic funding from 2013 to 2020 currently faced by King County arts & cultural programs. These programs currently have no funding source for those years.

It will fund arts education through Centers for Arts Education programs at Seattle Center and throughout Washington State. And stimulate economic development through designated funding for direct marketing for tourism.

Most importantly it will generate revenue over the next 30 years for capital facilities and programmatic support for Seattle Center, arts & culture throughout Washington State, and direct tourism & visitor marketing


The Economic Impact Of Arts & Tourism
In 2003, 219 arts and heritage organizations, generated 6.3 million event admissions with patrons spending an average of $40 per visit. Arts and tourism overall generated $835 million in business activity in King County creating 23,009 jobs related to the arts and heritage organizations; 14,851 jobs are directly tied to local arts and heritage organizations.

According to the Economic Impact Study of Arts and Cultural Organizations In King County 2003, 16% is estimated as “new money” impacts, which includes spending by visitors from outside King County, and income from sources outside King County


Funding For The Proposal

The funding sources are the revenue streams that are currently being used to pay off the debt on the Kingdome, the Qwest Football Field and the Safeco Baseball Field. Below is a specific description of how each would be handled.

The current county-wide restaurant sales tax, which has generated revenues in excess of original estimates, and is scheduled to pay off Safeco Field bonds early. Eliminate the tax as currently scheduled before 2016, but use the excess revenues up to that date.

It will provide for a regional centers sales tax credit from the State, in the amount of 0.017%, a credit identical to that given King County for Safeco & Qwest fields. This credit recognizes the increased economic activity that would not take place in King County, if those fields or Seattle Center did not exist

It extends the 2% State Shared Hotel/Motel tax after 2020, directing funds to support for the arts, and for Seattle Center; and to economic development through tourism marketing, locally controlled through a committee representing the hotel/motel industry and elected officials

The car rental tax is also extended and the arts endowment set aside requirement is reduced, allowing for greater cash flow to King County Arts programming. Finally an Arts Education Lottery is created when the current Baseball Lottery expires in 2014, to fund arts education in King County by linking public schools with major arts institutions on and off the Seattle Center. Other counties would be eligible to also tap into this funding source to promote arts education programs in their areas as well.


Cost Comparison To The Sonics Proposal

The estimated tax generated for of the above proposal in comparison to the House Bill 3233, which was the Sonics bill in the last State Legislature is shown below.

This Proposal: $337 million in Net Present Value; $1 billion in future dollars over 30 years

House Bill 3233: $525 million in Net Present Value; $1.96 billion in future dollars over 30 years


Correction On Up 213 April 19, 2006,
It erroneously states that Nick is Vice Chair of the Energy & Technology committee. David J. Della is the Vice Chair of that committee, while Nick is a member. Nick is Vice Chair of the Environment, Emergency Management and Utilities committee.

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