August 3, 2017
Evans School researchers analyze Seattle’s competing arena proposals
Researchers at the University of Washington’s Evans School of Public Policy & Governance have released a public finance analysis of two competing proposals to develop an NBA/NHL arena in Seattle.
One entity, The Oak View Group, or OVG, proposes redeveloping the publicly-owned Key Arena, while the other, the Sodo Group, led by investor Chris Hansen, calls for a new, privately-owned sports arena in Seattle’s Sodo District, south of downtown.
Hear Marlowe discuss his research with Foster School professor Jeff Shulman.
The takeaway: Both plans would make use of about the same amount of city tax revenue, the analysis finds, but the Sodo proposal stands to return about three times as much to the city’s General Fund.
In May the Sodo Group commissioned a team led by Justin Marlowe, Evans School professor of public finance and civic engagement, to objectively analyze the public finance dimensions of the two proposals.
Joining Marlowe in the research work were Grant Dailey, Angela Pietschmann and Alex Schoemann, all students in the Evans School’s Master of Public Administration program. Pietschmann and Schoemann also are certified public accountants.
The research had the dual objectives of showing the public finance implications of the proposals — focusing on the city tax money each might generate and where that money would go — and giving civic leaders and the public a tool for studying the details more closely. “To that end, we have made our analytical model available, and we welcome feedback,” the authors write.
The analysis works with estimated ticket prices, concession sales, tax rates, parking patterns and other factors that would drive tax collections. Using a basic set of assumptions applied to both proposals, their model suggests:
- The Sodo Group’s estimated contribution to the City General Fund is about three times that of the Oak View Group. The Sodo proposal would generate an estimated $103 million in new tax revenue for the City General Fund over 35 years, the analysis finds; the OVG proposal would generate about $34 million. Both totals are adjusted for inflation.
- Both plans would redirect, or make use of, about the same amount of tax revenue.
- The Sodo group would contribute approximately $100 million in property taxes to local governments other than the City of Seattle. The OVG group would not pay property taxes because the renovated Key Arena would remain publicly owned.
“So far the debate about the OVG and Sodo proposals has focused on important issues like traffic, sponsorships and scheduling,” said Marlowe. “Our analysis brings an additional perspective to that debate: what these proposals could mean for Seattle’s finances.
“Beyond that, and perhaps more important, we wanted to create a tool to help Seattle’s leaders and the public investigate these public finance issues for themselves. That’s why we’ve made our financial model freely available.”
Recent reporting indicates that Seattle city leaders are leaning more toward renovation of Key Arena.
This analysis, commissioned and paid for by the Sodo Group, was conducted independently with no effort to influence findings or methods. Payment for the project was not contingent on findings.
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This was based on a news release by Kiana Scott, Evans School director of advancement and external relations. For more information, contact Justin Marlowe at 206-221-4161 or jmarlowe@uw.edu, or the research team at arenatax@uw.edu.
Tag(s): Evans School of Public Policy & Governance • Justin Marlowe
