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King County Delays Decision on Safeco Field Funding

Seattle Mariners

King County officials opted Wednesday to delay a potential vote on a proposal to allocate $180 million in lodging tax revenue toward future improvements to Safeco Field, the home of the Seattle Mariners

The Mariners’ lease for Safeco Field is set to expire after the 2018 season. In May, the team announced the terms of a 25-year lease extension with the Washington State Major League Baseball Stadium Public Facilities District (PFD), with two three-year options that could extend the team’s stay through 2049. It also called for future Safeco Field upgrades. The two sides commissioned a study by Populous, which found that $385 million over 25 years will be needed for capital improvements to ballpark infrastructure. Additionally, another $160 million is expected to cover upgrades beyond any infrastructure enhancements. Over the course of their new lease agreement, the Mariners would be expected to pay $250 million toward ballpark maintenance, plus $120 million toward a capital expenditure fund.

To cover some of the funding for future ballpark improvements, King County executive Dow Constantine proposed directing 12 percent of hotel/motel tax revenues to the PFD, with roughly $180 million over time going toward Safeco Field. However, that proposal has proven controversial thus far, as some county officials have called for a greater share of those funds to go toward affordable housing. It was expected that a vote could take place during a Committee of the Whole meeting on Wednesday, but officials will now look to make a decision on September 5. More from Seattle Weekly:

However, the proposal has also garnered significant opposition from housing advocates (they packed an initial July 30 council hearing on the legislation), who point to the homelessness crisis as reason to prioritize housing investments. As a result, one of the plan’s original sponsors, Councilmember Jeanne Kohl-Welles, dropped her support for the ordinance and proposed an amendment to slash the investment in Safeco Field to $25 million and boost the affordable housing spending by $184 million.

At the Aug. 29 council’s Committee of the Whole meeting on the proposal, the council didn’t vote on the ordinance as a whole or Councilmember Kohl-Welles’ amendment. Instead, they grilled representatives from the Public Facilities District (the entity that manages Safeco Field and negotiated the new lease terms with the Mariners) on details of the lease and the financing plan.

Both Councilmembers [Dave] Upthegrove and Rod Dembowski (the chair of the committee), asked the panel of assembled representatives of the PFD how the annual rent rate in the new lease terms—which starts at $1.5 million per year and increases with inflation—was negotiated (Dembowski called the amount “a little light”). “Why wasn’t that a goal of the lease negotiations to charge enough to cover the cost of upkeep and maintenance?” Upthegrove asked.

Dan Barrett, Executive Vice President of CAA ICON (a consulting firm) who served as the lead lease negotiator for the PFD, said that the rent was one factor in addition to the contributions that Mariners will make to Safeco maintenance, and that the PFD has identified funding sources other than rent to finance the expenses. “It’s very difficult to compare a stadium lease with a traditional stadium lease. They’re just very different,” he told the council. “We’ve identified enough funding sources to cover a substantial portion of those expenses.”

There have been no threats from the Mariners to leave Seattle if this funding is not approved, but it could change the course of lease negotiations. Should King County pass on the proposal, the team and the PFD will likely have to sign a shorter extension and go back to the drawing board in their long-term lease negotiations.

In the short run, the Mariners also have an expiring ballpark naming-rights agreement with Safeco Insurance. The Mariners and Safeco announced in 2017 that the original 20-year agreement, which expires after this season, will not be renewed. To this point, the Mariners have not secured a new naming-rights partner, with the uncertainty surrounding the lease appearing to complicate the team’s search. More from the Seattle Times:

Also at the meeting, Mariners legal counsel Fred Rivera said the team has yet to find a new naming-rights partner for the ballpark after the existing deal with Safeco Insurance expires at the end of this year. Safeco announced this past year it would not extend the naming rights, a key revenue source for the team.

“At this time we have nothing to sell,” Rivera said, noting the team had no guaranteed lease after the end of the year.

He said one option is for the team to keep the Safeco Field name next year anyway, even without Safeco’s sponsorship, similar to how KeyArena kept its name after the naming rights deal with Key Bank ended earlier this decade.

Under state law, at least 37.5% of lodging tax funds are to go affordable housing, with at least the same portion going toward arts programs, leaving the rest available for tourism promotion (which is where the Safeco Field funding would come from). Some King County officials, however, contend that the county could spend more than the minimum required for affordable housing by diverting funds away from tourism. Historically, lodging tax revenue has been a key funding source for professional sports facilities in King County and is currently being used to pay off construction debt from CenturyLink Field–home to the NFL’s Seahawks and MLS’s Sounders. However, the last of that debt is slated to be paid off in 2020, freeing up $36 million per year for other expenditures starting in 2021.

RELATED STORIES: Councilmember Withdraws Support of Safeco Field Funding BillSafeco Field Lease Extension Could Be Scrapped Without Lodging Tax Funds; King County Official Balks at Safeco Field ProposalMariners Sign 25-Year Lease Extension for Safeco Field, Through 2049

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