Field of Schemes new post Seattle arena study findings: Somebody needs to do, like, an arena study

The King County council's Arena Proposal Expert Review Panel issued its report on Chris Hansen's Seattle arena plan yesterday, and while there are no bombshells, there are some interesting bits.

First up from the panel is Seattle economic consultant Dick Conway, who starts unpromisingly: "We cannot assess the economic impact of the proposed basketball arena." He then calls the tax impact of a new arena "fairly small," but says that's not a problem because "ultimately no tax dollars, other than those coming from the arena operations, will go into the construction and maintenance of the basketball arena." Also, "Baseball parks, football stadiums, and basketball arenas--like parks--are public goods." If you were still hoping for any actual economic impact analysis from Conway, you can stop now.

University of Washington public finance expert Justin Marlowe then looks at the financing schemes, and notes that Hansen has taken "remarkable steps" to reduce the risk to the public, in particular by ensuring that the combination of tax rebates and rent payments will cover 100% of the city's bond payments, plus any cost overruns. "I have studied public-private partnerships for nearly ten years, and I have not seen this level of security for taxpayers in any other arrangement of this size."

Finally, we get to University of Washington geographer and economist Bill Beyers, who conducted several previous studies of the impact of Seattle sports facilities. And while Beyers doesn't try to conduct a similar study for the Hansen arena plan — beyond noting, "It may be prudent for the Council to require such a study in the MOU prior to commitment of any public financing" — he does raise a bunch of interesting issues:

• In his 2005 study of Key Arena, Beyers found that about 50% of the money spent at the arena was new to the region, and the other half was diverted from elsewhere within the region. (I think he means new to King County, but he isn't entirely clear on this.) Beyers doesn't go into details of how that would affect the various tax streams that would be funneled toward paying of the arena — the ones that Hansen, and Conway, assert are 100% new — but does call for a regional tax revenue study to figure this out.
• Beyers says that it's clear that "this project is a winner for the City of Seattle tax revenue stream, as the admission tax would be a large gain to city revenues." Since it would in part be cannibalized from other spending, though, a more substantial countywide study is needed.
• No analysis has been done of "leakage" from the project — i.e., the "basketball players don't spend most of their money at the local Safeway" problem.
• "Adding both an NBA and NHL franchise would put us with numbers of teams well beyond the
  size our population would expect to have," which could result in an "adverse impact on fan spending" for existing teams. (Conway elaborated during his council testimony that "If we add two more teams, then we become the third worst-saturated city with regard to professional sports.")

Finally, transportation experts Charlie Howard and Doug Macdonald not that since 81% of arenagoers are expected to arrive by car, improvements to highway interchanges and to public transit (to get people out of those cars) will be needed. No cost estimates provided on those.

In short, while the county study provides little in the way of hard numbers, it does shout pretty loud that there are many unanswered questions here that need to be studied further before we can know exactly how good a deal this is for Seattle and for King County. On Wednesday, county councilmember Bob Ferguson said he'd move for a full economic impact study to be completed — at Hansen's expense — once the arena MOU is approved by the city and county councils, and Hansen said he would agree to that condition.

So, we may have some more answers about how the arena numbers work out — eventually, and presuming that the county doesn't let Hansen pick who'll conduct the study just because he's writing the check. The question then will be whether the arena plan will have so much momentum once the MOU is approved that it'll be too late to easily back out if the economic impact numbers don't look good. But at least it'll be better than going into the deal not knowing what we now don't know.

from Field of Schemes http://www.fieldofschemes.com/news/archives/2012/07/5013_seattle_arena_s.html