Detractors Of A Proposed Arena In Seattle Warn City Council Of Possible Lawsuit
Sponsors of Initiative 91 Thursday warned Seattle City Council members to "expect a lawsuit if they approve the current proposal to build a new sports arena," according to Bob Young of the SEATTLE TIMES. Council members Mark Baerwaldt and Chris Van Dyk said that the proposal "does not meet the initiative's requirement to return a fair value on the city's proposed investment." They said that the city "would have to net" 2.7% a year, or about $3.25M annually, to "satisfy the initiative," which was approved in '06. Arena investor Chris Hansen said that the city's return would be at least 7.4% a year, "and likely more." He said that Baerwaldt and Van Dyk "are not counting the value of the arena property, which the city would own after the 30-year deal is complete, nor are they counting increased tax receipts that would be generated by hotel stays and other spending related to an arena." Hansen added that the “raw value of the arena land” is about $50M today and that value would increase by about 5% a year over the life of the proposed 30-year deal. Young reports City Council analysts "had a different view of Hansen's proposal and I-91" as they said that the city "could argue I-91 does not apply to this deal because it calls for the city to get a fair-value return for its investment." And fair value, according to I-91, "should be computed as the city's 'net cash on cash return.'" Young writes, "Because the city isn't investing cash ... there is no cash investment on which to base return rates" (SEATTLE TIMES, 7/6).