The plan to remodel KeyArena into a world-class concert and sports venue took a hit Sunday when Seattle Partners unexpectedly pulled out of the project, blaming the city of Seattle for “unrealistic” financial expectations and an absence of thoroughness and transparency.
The decision leaves Oak View Group, led by CEO Tim Leiweke, as the lone bidder for the Key. The decision also has to improve chances for Chris Hansen’s group that has sought for five years to build an arena in Sodo.
OVG had been considered the favorite for the Key, partly because it made no request for public bonds to help fund construction, a stipulation in the city’s request for proposals sent out in January.
Seattle Partners, comprised of Anschutz Entertainment Group, which has operated the Key since 2008, and Hudson Pacific Properties, requested $250 million in bonds, saying the deal would provide a surplus to the city of $144 million over the 35-year life of the lease.
In a letter sent to Mayor Ed Murray, the City Council and media outlets at 3 p.m. Sunday, AEG President Bob Newman blasted the city’s handling of the bids, writing:
We fear the City is driving toward an unrealistic financing structure, and we believe the City has failed to conduct a sufficiently thorough, objective and transparent process to properly evaluate the respective strengths and weaknesses of the two proposals and, most significantly, to identify the proposal best positioned to deliver a project consistent with the community’s interests.
At an open house in early May to allow the public to examine the proposals and ask questions, an exuberant Newman said he was “thrilled” with with responses from the public and city government.
Things obviously changed. Newman claimed the city was derelict in its response to SP:
” . . . consistent with a general lack of active engagement through this evaluation process, the City declined to seek improved terms, refusing requests from us and others to call for a best and final offer from both bidders. We have seen little indication of the collaborative and iterative process we were told to expect and is typical of such requests for proposals.”
Newman also reserved a shot for OVG, saying he was highly skeptical its plan could be pulled off:
” . . . We have strong reservations about whether that proposal can be successfully achieved consistent with the City’s best interests. If the City elects to proceed with that remaining proposal, to protect the public interests of Seattle, it is imperative that you closely and diligently monitor the process to ensure that Oak View Group is held accountable for all elements of what it has very publicly promised to the citizens of Seattle.
Besides the OVG pullout, another letter Thursday to Murray and council from a participant group, Uptown Alliance, representing residents and businesses closest to Seattle Center, said both bids were deficient:
“Uptown Alliance found both proposals lacking in different but fundamental ways and cannot favor one submission over another at this time. Examples of weaknesses include Seattle Partners’ proposal suggesting a bonding mechanism that seems politically challenging for this City to accept and a design that does not respect the criteria for this building destined for landmark approval; Oak View’s proposal being arena-focused giving little attention to its integration within Seattle Center and ignoring the community at-large as well as sparse details on the newly formed operating company and its values. Both teams have discussed possible addition/changes to their submission.
The four-page letter, signed by Deborah Frausto of the Alliance, also asked that the rush to a decision be slowed down and more information provided by creation of an addendum to the RFP that would address the group’s concerns.
The original plan called for a decision between the groups to be made by June 30, but city staff has hinted the decision on the winning bid could be done by this week.
The letter says Uptown wants all information before the selection, not after: “We need to be sure that critical issues are addressed before arena redevelopment plans are finalized to know how it will work. This is not about waiting for an EIS and taking the necessary mitigation approach.”
The letter was sent before the SP withdrawal, which did not mention the community group’s push-back.
Leiweke issued a statement after the SP withdrawal, reiterating that his offer is 100 percent privately financed: “Our chief objective is (to) provide the best financial deal for the city, an exemplary public-private partnership, and build Seattle a showcase venue for professional sports, music, and entertainment. While we are still engaged in the RFP process, we have no further comment. We look forward to the Mayor’s decision.”
A spokesperson for Hansen’s group declined to make a statement on SP’s withdrawal. Murray’s office issued a statement:
“We appreciate Seattle Partners’ interest in investing in KeyArena and our ongoing partnership with AEG on major events, such as Bumbershoot. Over the last few months, the City and the Community Advisory Panel have undertaken a careful review of the two proposals to redevelop KeyArena into a world class entertainment facility that will bring the NHL to Seattle and the Sonics back home.
“There are strengths and weaknesses in each proposal and the City fully expects a robust negotiation upon choosing a preferred alternative, to ensure the final plan meets the needs of the surrounding neighborhoods, the city, Seattle Center and those who will use the building for years to come.
“It is unfortunate Seattle Partners chose to pull their proposal. As recently as May 19th, Seattle Partners stated in a mass email: ‘We applaud the City for executing a thoughtful public process. Engaging with teams from the City and the public has strengthened our proposal and crystallized our approach.’ We hope to continue our current relationship with AEG and look forward to addressing our path forward on KeyArena, as well as our commitment to engage the community, in the coming days.”
The original timeline called for Murray to make a decision by June 30 and forward it to the council, which has the option of reviewing a revised plan submitted by Hansen. The council could hear Hansen’s plan in September, which requires the council to permit a vacation of a street to trigger implementation. The council rejected an earlier plan by Hansen in a 5-4 vote 13 months ago, after which Murray began exploring the Key remodel.