New tax for KeyArena? A big maybe

In sending positive signals back to the NBA, the City of Seattle might be jumping the gun on its hopes for a share of the local hotel tax, which could also be needed for an expanded Convention Center.
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Washington State Convention & Trade Center. (Chuck Taylor)

In sending positive signals back to the NBA, the City of Seattle might be jumping the gun on its hopes for a share of the local hotel tax, which could also be needed for an expanded Convention Center.

A recent story in The P-I about new hopes for an NBA team at KeyArena is both more and less than meets the eye. The reported conversation between NBA Commissioner David Stern and would-be owner Steve Ballmer suggests that there's a troubled NBA team in a smaller market that is testing the waters for a new home. But the quoted comments of Deputy Mayor Tim Ceis, chief real estate dealmaker at City Hall, overstate the certainty of the funding for a KeyArena fix-up.

To find the missing $75 million for the $300 million tab for an expanded KeyArena at Seattle Center, the City is now trying to shift money from the hotel tax. An earlier effort, going after the expiring stadium taxes that a whole lot of other suitors want, has been abandoned, sensibly. Ceis says there's no competition for the slice of that tax he wants for the Key, which would take 1 percent of the 7 percent hotel-motel tax the city puts on top of sales tax for the rooms. That money currently is dedicated to operations at the Convention Center.

John Christison, director of the Convention Center, says he's not ready to sign on for this proposal, and Ceis concedes that there's more work to be done on working out such a deal. Part of any such deal is the question of whether the Convention Center is going to build a new facility, likely at the Metro station just north of the Paramount. Studies are under way for this proposal, and in about a month the Center might be able to say if it's going ahead with a plan and if there's enough money left over from its hotel taxes to be generous on KeyArena. Further, Christison notes that the 10 percent of the hotel tax being talked about by the City "is a lot more than we discussed" and would produce well more than the $75 million needed for KeyArena. He also says that the Convention Center "would look at the proposal positively" if it doesn't need all of the tax.

Ceis, in an interview with Crosscut, said he likes the proposed site for a new Convention Center facility using the air rights over the bus station. As for another proposal, combining a new basketball arena with a convention center facility at Seattle Center, replacing Memorial Stadium on the east side, Ceis said the cost got up to $950 million, way too high, and the facility is too far from downtown hotels and the existing Convention Center, which will continue in operation. The third site being studied for a Convention Center expansion is the central waterfront. Ceis also downplayed that site, since there's no appropriate site for a 200,000-300,000 square foot facility.

Expanding the Convention Center, though reported here earlier, remains very much under the radar. It may seem an odd thing to propose, given the way the economy is curtailing business travel and perks, but there are two real economic drivers for the idea. One is the overbuilt hotel market, which always leads to pressure from the hotels to build more convention facilities to lure more hotel users. The other is the collapse of the construction business in Seattle, as credit dries up for new projects and the overbuilt condo market needs time to absorb all the new projects. That invariably leads to demands for new public projects, and a convention center (or a remodeled KeyArena) could provide fairly quick relief.

Ceis and others at the City are also trying to get more money for Seattle Center, perhaps using the KeyArena fan club as bait. Ceis says he would want the hotel tax slice to be broadly dedicated "to any facility at Seattle Center," and that it would apply to a fix-up for KeyArena even if a new NBA team is not found. The Center has a back-up plan, temporarily nixed by the City Council, for turning the Arena into a flexible space for music shows, the Seattle Storm, the Seattle University Redhawks basketball team, exhibitions, and other rentals. All this will make for an interesting session of the Legislature next spring.


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