The Dollar Game: New Stadium Decision Public Would Bear Brunt Of Seahawk Stadium User Fees Estimated To Pay For Only $56 Million Of $327 Million Project

The general public, not team owners or sports fans, would pay most of the cost of a proposed Seahawks stadium and exhibition center.

Voters statewide will decide June 17 whether to spend $327 million in public money on the project. They are faced with deciphering a complex deal that fills a 29-page, single-spaced voter’s pamphlet.

The smallest portion of the money used to pay off the debt would be $56 million in direct user fees borne by sports fans, through 10 percent taxes on tickets and parking at the stadium and exhibition center.

The rest of the financing package devised to pay off the 23-year debt for the project relies on general revenue sources.

The bonds would be paid off primarily though lottery proceeds, a credit against sales taxes on purchases made in King County and an extension of the state sales tax on hotel and motel rooms rented in King County.

The sales tax revenue normally would go into the state general fund to pay for services all state taxpayers benefit from.

Attempts to link financing of the package more directly to sports fans through a tax on sports-logo apparel and novelty items died in the Legislature.

Some independent experts say the proposal places too much burden on the general taxpayer and not enough on fans.

“It’s pretty simple. All you have to do is ask yourself, do most of the benefits accrue to the general populace and only some to the fans? Or is it the other way around?” said Dennis Zimmerman, a public finance specialist at the Congressional Research Service in Washington, D.C.

“What about a tax package that pays for the vacations of a sub-set of people in the Seattle-metropolitan area? That’s essentially what you are doing. You’re subsidizing the leisure activities of other people.”

Stadium backers say the stadium is a benefit to all state residents because it boosts the quality of life and sense of community pride. They also cite economic and public relations benefits from having a major league sports team in town.

Neither side calculated the comparative economic benefit of investing $327 million in state money in something else.

No general tax increases would be imposed to pay for the project, such as a hike in the state sales or property tax. But the proposal includes a clause that allows lawmakers to come back later and hike taxes if the financing plan that goes to the voters doesn’t make enough money to cover the bonds.

The single largest source of money to pay off the bonds comes from the state lottery fund, which would be tapped for $127 million.

Critics say that could cannibalize lottery money that is paid into the general fund for schools.

The financing package does not designate new sports-theme lotteries to be used for the stadium. It only earmarks a certain amount of lottery money to be spent on the project, starting at $6 million a year and increasing by 4 percent every subsequent year.

The next largest source of money is $101 million diverted from the state share of sales taxes paid on the purchase in King County of anything but food.

The money normally would have gone into the general fund, but instead will be plowed into paying off the stadium bond debt.

Backers of the project say the cost of the state sales tax credit is replaced by the economic activity generated by keeping the team in Seattle.

“That’s vapor money. If you don’t have the team, it isn’t there,” said Bob Gogerty, chief strategist for the campaign.

That’s a matter of hot debate.

The rate of the tax credit was based on an independent study completed two years ago that estimated the new money generated by the Seahawks that would be bled from the economy if the team left.

That number was reworked by state budget office staff to estimate the new money generated by the team annually over the 23-year life of the bonds and match that figure to the size of the tax credit.

Critics doubt the numbers, while backers trust them.

Nobody argues that a $27 million tax break on sales taxes normally due on construction of the stadium is a wash. If the stadium wasn’t built, the state general fund wouldn’t have reaped that money anyway.

Called a sales tax deferral in the financing plan, it actually is an exemption.

That’s because when the sales tax on construction is paid by Football Northwest, the money will go toward paying off the stadium debt.

Another $40 million would be raised by extending the state sales tax on hotel and motel rooms rented in King County. The tax extension begins in the year 2016.

In their ads, backers of the stadium frequently argue those taxes are paid “primarily by tourists.”

That’s certainly true. But those visitors aren’t necessarily from out of state, and they aren’t necessarily visiting Seattle to see a game or show at the exhibition center.

Billionaire Paul Allen says he will buy the Seahawks if the stadium proposal is approved.

Allen would put $100 million toward the project’s total $425 million cost, including $50 million from the sale of seat licenses.

In return, voters get a local owner for the team, and an open-air, natural grass football and soccer stadium, and new exhibition facility. Allen also would assume all responsibility for cost overruns on construction.

He also would put $10 million up front into a new fund for youth sports facilities; pay $10 million to local neighborhoods to make up for adverse impacts caused by the facility, and give 20 percent of the net profit from the exhibition center to the state for common school construction.

In addition, Allen would be required to spend $1 million a year promoting the lottery to help boost revenues, and to cover the $4.2 million cost of the statewide election.

The stadium and exhibition facility would be publicly owned. And if the team was sold within 25 years of the date the bonds are issued, the state would get 10 percent of the gross proceeds.

Allen’s company, Football Northwest, would be the master tenant. Allen would assume operation and maintenance responsibilities for the facility as well as legal liability.

He would pay at least $850,000 a year in rent but would receive all revenue from the facility.

That includes money raised by selling the right to name the stadium and exhibition center, which can be worth tens of millions of dollars.

Under the deal, money gained from the sale of the naming rights would have to be spent on capital improvement, modernization, and maintenance of the stadium and exhibition hall.

Allen’s company would pocket money derived from the operation of the stadium and exhibition center, including revenue from subleases, license and concession agreements, money paid for the use of luxury suites, advertising and parking revenue.

A 10 percent tax on parking at the facility would help pay off the stadium debt. After the bonds are paid off, the parking and ticket taxes would remain in effect, but the money raised would be dedicated to repairs and capital improvements to the facility.

Allen’s company also would enjoy fast-track permit review. Financial statements detailing profits and losses at the facility would be exempt from public disclosure laws.

The project also would be exempt from state sales taxes on parking, and from state taxes usually levied on private users of public facilities.

, DataTimes