The Seattle City Council will hire an independent consultant to examine the proposed offer from Oak View Group of Los Angeles to remodel KeyArena into a music-first venue that will also accommodate pro sports, according to a letter sent Monday from the council to Mayor Ed Murray.
The letter asks that Murray’s office complete by Sept. 12 the negotiation for a memorandum of understanding between the city and OVG, which won the rights with a bid of $564 million that is promised to be from private funds.
“We hope this MOU will establish a framework to resolve the questions and concerns raised during the (request for proposals) process in the final development and lease agreements,” the letter said. “To help us review your proposed legislation and MOU, the Council intends to retain an independent consultant with expertise in developing world-class municipal arenas, especially as it relates to risks associated with the financial terms and conditions, municipal financial protections, and the Oak View Group’s expertise and wherewithal to successfully complete the project.
“This independent review could include whether or not Oak View Group and its investors have the financial standing, creditworthiness, and corporate structure necessary to ensure that it can deliver on its commitments.”
The hire of an outside analyst will be the first independent look by a paid expert at the proposal, which was chosen after Seattle Partners (Anschutz Entertainment Group), citing a lack of transparency and responsiveness by the city, dropped out of the bidding June 3. Murray and other city officials have referred to the current relationship with OVG as a partnership, despite the absence of any agreement beyond the plan to negotiate.
When OVG CEO Tim Leiweke met with the Seattle Times editorial board last week, he was accompanied by Brian Surratt, head of the city’s office of economic development.
Murray, whose term of office will expire Dec. 31 unless he changes his mind about an earlier decision not to seek re-election, has said he wants the council’s response after the Dec. 3 expiration of the MOU between the city and Chris Hansen, who has spent five years seeking to build a sports-first arena in Sodo.
The council letter made no mention of Hansen’s revised proposal, which has been submitted for the council’s consideration. A council vote, not guaranteed, is not likely before September. The existence of Hansen’s new bid is believed to offer some leverage to the city as it negotiates with OVG.
The only outside entity to analyze the bids of OVG and AEG was Uptown Alliance. The community group of residents and businesses in the lower Queen Anne neighborhood represents those most heavily impacted by increased sellout crowds at the revamped Key, which likely would not open before fall of 2021 at the earliest.
In a June 1 letter to Murray, the Alliance said it could not recommend one proposal over another because both lacked clarity and specificity. Of OVG’s bid, it said, “Oak View’s proposal, being arena-focused, (gave) 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.”
As a partial result of the criticism, the council letter listed five bullet points it about which it seeks more information:
City Investments: How municipal taxes generated by activities at KeyArena are used to meet City needs at Seattle Center and in adjacent neighborhoods, specifically public safety, parking and traffic enforcement, and the arena’s long-term capital needs.
Due Diligence: Whether financial protections sufficiently address the potential for cost overruns, bankruptcy, and other unforeseen circumstances; the financial viability of Oak View Group and their principal investors; and the reasonableness of the various financial models and forecasts prepared by Oak View Group.
Operations and Maintenance: Whether the proposal meets high quality, sustainable, day- to-day maintenance, facility management, and operational concerns.
Transportation: How area transportation management addresses neighborhood and city-wide needs, including specific measurable outcomes and performance reviews, innovative mobility strategies, and the impacts on adjacent neighborhoods. The Council will pay close attention to public/community benefits and may host a transportation charrette to give stakeholders an opportunity to influence the project’s transportation management plan.
Equitable Opportunities: How the proposal involves current and future workers at the facility, including employee protections and representation as reflected in a comprehensive labor peace agreement. Council will evaluate the project’s approach to business owners from under represented communities; the City’s Priority Hire policy objectives; and plans to involve small and locally-owned businesses in delivering concession and products and other similar services at KeyArena.
These details are deemed important because the re-done building will remain city-owned on city property, and thus subject to municipal standards of inclusion, openness and scrutiny. In that regard, Key will be unique in the NBA and NHL, where arenas are privately owned. Only six have third-party operators.
The letter said that meeting the Sept. 12 deadline will allow the council to have at least one public meeting on the subject.