Saturday, January 23, 2010

Where does the rest of the money go? ...and the remainder of the revenues must be deposited in the affordable housing account

Thursday, January 28th, 2010, 8 am, in the Washington State House Finance Committee HB 2912 is scheduled for public hearing. The current bill title, Modifying local excise taxes in counties that have pledged lodging tax revenues for the payment of bonds prior to June 26, 1975., doesn't really say what is gong on with this bill.

What do the taxes fund now?
Safeco Field, the forgotten rubble that was the King Dome, bits of Qwest Field.

Where do the taxes come from?
You, you dope. Well, mostly King County wide hotel tax, parking taxes at Safeco Field, with a little bit of car rental taxes mixed in.

Why now?
These taxes could start to expire and close at the end of this year or possible during the next legislative session next year. An existing tax can be redirected by majority vote of both legislative houses. If they were to allow those taxes to close then you are looking at the possibility of a 60% majority needed for a new tax. Even if that 60% is knocked back down to 50% (+1), the chances of creating a new tax anytime soon is very unlikely.

There is an oddity in that Safeco Field will not need the taxes it is using right now when the bonds are paid off, but in about 5 years the stadium will turn 20 (I know, feels like yesterday) and the lease with the Mariners will end. I distinctly remember Joe Zarelli saying something about a year ago about not having the Mariners in a "Sonics" type situation in a couple of years. The public has an investment and we need to maintain it.

So, aren't there more important things we should be spending this non-general fund money on between now and the end of the Mariner's lease?
Well, yes, but let's not forget that there are businesses that carry this tax on top of there prices that could put them at a competitive disadvantage, so, there should be a little secondary benefit somewhere along the way.
First let's look at a significant want, and a real need:
On and after the date the debt on the stadium is retired, and through December 31, 2015, one-half of the revenues under this section in a county of one million five hundred thousand or more must be deposited in the arts and cultural account under (d)(i) of this subsection, and the remainder of the revenues must be deposited in the affordable housing account under (d)(ii) of this subsection.
Arts and Cultural accounts are, as you may have guessed, not getting much from the state, county, or city, general funds. Maybe they shouldn't, and maybe this makes more sense as art of a longer term solution.

The affordable housing part is a obvious need. Seattle voters approved an "affordable housing" levy last Fall. Trying to get the rest of King County to step up to that right now is a near impossible task. So, specifically, here is the what is meant by affordable housing.
(ii) At least thirty-seven and one-half percent of the revenues shall be deposited in an affordable housing account for the purposes of distributions to nonprofit organizations or public housing authorities for affordable workforce housing near or at transit stations. For the purposes of this section, "affordable workforce housing" means housing for a single person, family, or unrelated persons living together whose income is at or below one hundred twenty percent of the median income, adjusted for household size, for the county where the housing is located.
(iii) The balance of the revenues must be deposited in a special purposes account under section 8 of this act.
Affordable housing, you can't be serious. . . unless you're Speaker of the House, Frank Chopp.

In addition, LaBorde said, TCC may take advantage of the fact that House Speaker Frank Chopp (D-43) has expressed support for allowing local governments to use their hotel/motel taxes for housing. King County’s hotel/motel tax is currently paying off bonds on Seattle’s downtown stadiums; that money will become available for other purposes in 2016. LaBorde suggested that TCC might support spending some of that money on affordable housing near transit stations—one of the major goals of last year’s transit-oriented communities bill, which would have increased density around light rail stops.
Erica C. Barnett,
at, Things Don’t Look Good for Transit Next Year, 12/04/2009.

Section 8 of the bill is a laundry list of things, such as the eventual repairs to Safeco Field:
NEW SECTION. Sec. 8. A new section is added to chapter 67.28 RCW to read as follows:
(1) Except as provided in subsection (2) of this section, money deposited in a special purposes account under this section may be used only for one or more of the following purposes within the county:
(a) Funding nonprofit organizations providing public health services;
(b) Funding nonprofit organizations providing human service programs;
(c) Funding tourism promotion as defined in RCW 67.28.080;
(d) Funding youth or amateur sports activities or facilities; (e) Funding regional centers; (f) Funding performing arts centers;
(g) Maintaining or improving publicly owned stadiums or arenas as long as improvements can be made without economic harm to existing tenants of those stadiums or arenas; or
(h) Funding community preservation and development authorities created in chapter 43.167 RCW.
(2) Beginning in calendar year 2013, funding must be provided annually in an amount necessary to maintain a stadium constructed by a public facilities district under the authority of RCW 36.100.035.

This legislation lived and died last session as HB 2252, and SB 6116. This time around it has a heavy "affordable housing" element that should provide broader support.
The bill ten sponsors appear to provide a united front, Sponsors: Representatives Quall, Carlyle, O'Brien, Ericks, Dunshee, Sullivan, Blake, Jacks, Hunter, Maxwell

Many hands make light work.

Best of luck to you Ross Hunter.

Have a great day,
Mike Baker

Sent from my iPhone
Visit me here:


Anonymous said...

im assuming when it says improving publicly owned stadiums or arenas this would apply to Key Arena remodel?

Mr Baker said...

Could include KeyArena, eventually the Kent Events Center, if the land swap is completed between the City of Seattle and the school district then maybe memorial stadium (big maybe there). The timing of those would be after some of these other things.
The end of the sales tax looks like it would be for affordable housing, I could be wrong on that, but that would be near term.
I think you could get some Seattle Center supportout of this.

Mr Baker said...

When I looked at one of the finance table attached to one of the other bills it projected out 830 million dollars over 20 years (I think). So, if KeyArena saw anything, it would be less than 10% of this bill.

There is a potential of tens of millions of dollars for affordable housing that could get started now.

Peter said...

i am kind of confused about this bill. it says early in the bill, "Proceeds of the tax
may not be used to subsidize any professional sports team" and later it says the tax could be used to maintain or improve publicly owned stadiums or arenas. wouldn't making improvments to safeco field and keyarena be "subsidizing" the mariners and future sonics?

Mr Baker said...

Not if KeyArena was taxed like Safeco Field, all bonds paid off, interest, and early.

What that language prevents is giving tax money to a team to play here, like the Okies did.

Parking was built for Safeco Field, the parking tax is 10% (I think) and that pays off those bonds. The Mariners end up with parking, paid for by baseball fans, mostly.

Anyway, last I looked these taxes generate over 830 million dollars over 20 years, the amoutn of money KeyArena could see is 10% of that, with all of that repaid in a variety of taxes.
Taxes repaid is a really slow way to transfer a hotel tax into the general fund, over 20 years.

Mr Baker said...

My guess is that affordable housing could see more money that Seattle Center.

Mr Baker said...

I'll go back to this: the bill says for youth athletic fields, but not for schools, so if the city buys (trades for other property) Memorial Stadium stops being part of the school district and becomes a city stadium/athletic field.

What is currently missing from the bill is the carving out of taxes collected in Seattle staying in Seattle (unless I missed it) like SB 6116 eventually had.

Peter said...

so the language dosen't ban renovating keyarena to get a new team, just giving the team money directly from the tax? it also says "improvments must be done without harming existing tenants".
pertaining to the key remodel, how would this effect the storm and seattle u if we had to displace them to get the key ready for an nba team?

Mr Baker said...

Seattle Storm for sure, and I think Seattle U, too, have leases that have the city of Seattle on the hook to pay expenses if they are forced to relocate due to remodel.

For the Storm, that would be like hitting the lottery, they would pretty much get to play some place rent free, for up to two years.

Peter said...

i noticed that they took the language out requiring an 150 million private contribution to the keyarena remodel for the tax to be used. all of the language about keyarena and the nba/ballmer group seems to be gone. is this a potential concern where if they pass it, the state could later claim they didn't give authority to use it for keyarena?

Mr Baker said...

The language was meaningful to the bill up until 12/31/2009.
There is no point now to have the language in this bill.
The deal still stands between Ballmer and the city.

Peter said...

so you don't think the state will try to claim that this bill does not give the county authority for keyarena? if ballmer is still in and this passes, could we begin the process of searching for a new nba team right away?

Mr Baker said...

so you don't think the state will try to claim that this bill does not give the county authority for keyarena?

No, the function of the legislation is to take the state out of the situation, and transfer authority to the county council and citiy councils. The limits on what the funds can be used for are spelled out in the bill.

This is very similar to SB 6116, what is different is that the language for the city to get 30 million dollars from Clay Bennett has been stripped out, but not section 8 that actually funds it.
Another difference, and this is a big one that I have been pushing, is that the funds that do not later go to section 8 are directed at affordable housing.
There is zero money for this in King County, no developer has money to build anything like this in the current economy, there are thousands of construction workers out if work (ironically, they now need affordable housing).
There is also a major component for arts and heritage funding, which draws many tourists. There is very little funding for anything like this in the county general fund, it pays for its self, and draws people to stay in hotels, that helps fund the tax.

if ballmer is still in and this passes, could we begin the process of searching for a new nba team right away?

Almost, the city council would have to authorize bonds to be repaid by event parking, ticket, and event taxes (there are more than enough votes for this, and it does not impact the city's general fund since they have a new revenue stream as the source.
This could take a few months. If they were smart they would push this along with their Seattle Center levy fir the rest of the site.
This would put the entire thing in motion as soon as this summer.
Steve Ballmer would have to secure a team fir relocation. The soonest he could file for relocation is next October, with the league approval for sale and relocation in Spring of 2011.

So, starting right away means that we are looking at 2911 for construction, and maybe 2012 fir a team, at the soonest, just in time for the 50th anniversary of the Wirld's Fair.

In the mean time, there is a few million dollars pooling up in one if these funds that could be used by the county for health and Hunan services.

This bill is a bit of a long shot, it has slightly more support this year, broader support. Last year's House bill 2252 had an affordable housing component but it was tied to another house bill that failed to pass. That language has been removed from this year's bill.

The house bill was passed by the house but was not acceptable to the Senate. This bill is closer to a compromise between both of last year's bills.

I think there will be an amendment to carve out Seattle's funds from the rest if the county. This way you do not have the city and county fighting over what money is spent where.

There are three other bills that are moving through the house that allow all counties in the state access to some excise taxes, similar to this bill. Those bills require votes by a majority after 2014. That is not in this bill, but at least other counties have some help, like King County us getting.

Things are really bad, and this is one of the few funding sources not part of the general fund.

Peter said...

but if we don't something to extend the tax this year, won't it require 2/3 majority or a public vote to create a new tax? wouldn't that effectively mean NO public money could go to safeco, qwest, or keyarena ever? or do we have next year, too?

Mr Baker said...

SB6661 is the companion bill going through the Senate, it has a hearing the same day, 10 am, in the Senate Committee on Economic Development and Trade & Innovation

this is good news. If both bills are the same and both pass to the floor of each house and pass then they are combined, on is the bill passed as law, saving time passing bills from one side of the legislature, to the other for corrections.

Mr Baker said...

A bill would have to pass early next year, and go into law early. It is a risk.

The irony is that the stadium the Griffey built is the same one he is helping to pay off early (not kidding).

Peter said...

"What that language prevents is giving tax money to a team to play here, like the Okies did."

i am not entirely sure what the okies did. did they pay bennett money just to move there? there is no restrictions on just buliding stadiums in this bill, right?

i noticed some of the sponsors of the senate bill were on the commission the state set up a few years ago, noticable hobbs and eide.i'm not sure if murray was on the commission though.

how can we be sure this bill includes keyarena? sorry, i'm just a bit spooked by the language saying the tax "may not be used to subsidze any pro team".

Mr Baker said...

Go look at the other bills, they say the same thing about pro sports teams.

SB 6661 and HB 2912 have the same language. So, that must have been agreed to before filing. That means that in the end, if there are no amendments that do not show up in both bills, then they do not have to be reconciled with each other. This cuts a few weeks out of the flow, and is a good sign.
Senator Curtis King is a Republican representing Yakama, they use one of the taxes, that is why he is one of the co-sponsors.

So far this is much better than last year.
After the vote they will be scheduled for vote in their committees Executive Session.
After that it is on to Rules and Floor scheduling.
If both are the same the combine them in the referenced vote for the law.

Yes, Murray was on the task force a year ago. Eide was co-chair with Ross Hunter.

Peter said...

where is chopp in all this? will affordable housing and maybe husky stadium be enough for him to support it or at least allow a vote? do you think chopp will allow the final bill to include keyarena?

Mr Baker said...

Last year's 2252 was written the way it was, without KeyArena, because that was the only way it would pass through the House. That bill went to the Senate and died. He needs the Senate in order to get this passed into law.

I just do not think you would see this bill look like this unless that was ok with Chopp.

I think this will really come down to the Senate floor vote, if all this gets that far. That is why is helps to hace Curtis King as on of the sponsors of SB6661.

If there is any amendment it would be to isolate Seattle revenue from the rest of the county, this bill would be fine without it.

Peter said...

if you look on, the story doesn't mention keyarena by name, just saying "arenas". do you think that's good for us? if it's too controverisal, do you think the state will remove husky stadium and just pass the future improvments to safeco and qwest and keyarena? if it's the end of the road this year for this tax, they should at least get safeco,qwest and keyarena done in my book.i'm still not all that sure keyarena is included. the language against subsizing pro sports teams really worries me. you said that is just to prevent us doing "what the okies did". i'm not sure what that is.

Mr Baker said...

The Okies get a direct tax payment from the State of Oklahoma, every year, for 10 years. They pay a few million dollars a year just for being there.

This was something this state wanted to avoid 30 years ago.

It is better that KeyArena is not spelled out.

bmac said...

the fact that the Key and Husky stadium not being named in the bill may help it pass, but if it does it doesnt mean King County is going to fund both. I recd an email from Hunter today saying the intent of the bill is for Safeco maintenance and he feels it would be wierd for KC to help fund a city owned arena renovation. plus on a personal note do you really believe the county would reserve 75 million and 150 million to fund the key and Husky stadium in the same year, can you imagine that backlash with all of the other issues we have. I dont see the key happening even if this does pass. I can see Husky stadium being able to dip into it becasue they have as they said have all their ducks in a row and are shovel ready. The Key on the other hand doesnt have anyone fighting for a reno currently.Im not privy how the process works, but we would be back to square 1a, meaning the city council isnt going to seek funds if theres no team and Ballmer isnt going to seek a team without funding. Were right back where we were except at the county level instead of the state level. God i hate politics. With so many other things needed in our county how is KC going to justify earmarking funds to a Key remodel and Husky stadium remodel when there is a "will in Seattle" at every turn.

Peter said...

isn't ross hunter on dow's transition team? seems like a odd thing to say when dow seemed so committed during the campaign.

Mr Baker said...

I'll cross post my ramblings from SC, then see if I can answer so questions.
Oh, Orcutt. Look at last Year’s floor amendments on 2252. He will make the arguments against 2812, but the only thing he really showed was how much support within the committee the bill has. Three different members to different parts of Orcutt’s arguments and defended the bill; the state supported his project a few years back, his draws sales tax money off the general fund, the millionaires are supporting even more basic of the basic services, and scale of how many poor people to the millionaires giving away their money is out of whack in King County.
No matter, last year’s bill actually passed through the committee and the House floor vote.

To Peter’s point; Sharon Santos, a committee member, made a comment about making sure that there is a formula fir keeping the funds in the area in proportion to where they are generated. Again, I do not know if that will fly. I know what Ross Hunter has said many times about this, that the decisions of what to do with taxes should be made at the lowest level. And that is why I said “The problem I anticipate, maybe, is Seattle wanting an amendment to keep the taxes generated in Seattle, in Seattle.”

that is what happened to the Senate Bill last year, the House bill had no funding at all so no such provision was required there.
This cuts both ways, Seattle would like to manage it’s own funds for its projects, the rest of the county does not want Seattle deciding what happens to the money for the entire county.

Either Santos gets the formula (Seattle Hotels, Seattle money) or an amendment that carves out the funds. Either way is ok for us, but I agree with Hunter.

Next up, we need to see the bills go to executive sessions in their respective committees (that is where the committee amends, votes on those amendments, and vote to move the bills forward).

What you should see is a little time to pass between today and Executive Session so any amendment that is likely to get added is added in both bills, both bills are exectly the same when they pass on the floor. There, too, any floor amendments would have to be pretty much the same to avoid having one side hold up the bill and slow it down in processing it (hearings, executive sessions, more votes).

So far, so good.
I’ll post a link to the spreadsheet they were looking at at the beginning of the Finance Committee meeting. You can see the taxes, funds, where they come from and where they would go. At this point the section 8 of the bill would pull in over 500 million.
Mr. Baker Says:
January 28th, 2010 at 9:39 pm e

This spreadsheet is better than last year’s in that they put total columns on the right and bottom. The ? marks on the far right bucket is a few million dollars.

A formula is better for Husky Stadium, a carve out for Seattle is better for less fighting with King County.

Mr. Baker Says:
January 28th, 2010 at 9:47 pm e
BOA will get some upgrade, 20 years out.

The city facility money should be identified in the legislation.

Here is a bigger problem, if Seattle gets an amendment to keep taxes generated in Seattle, staying in Seattle, would there be enough left over after KeyArena for Husky Stadium? That is a state facility, in Seattle, in King County. Carving out just Seattle presents other problems.

I agree with Ross Hunter, amend the bill for Seattle.
I think then Seattle and King County can work things out for Husky stadium.

Wait and see.
that's from SC.
Those people are not interested in the details.

Bmac said...

seems they always say what you want them too.

Mr Baker said...

I predict that King County will split that, bmac, send Seattle its money from its hotels for Seattle Center/KeyArena, and King County east siders become the champions of Husky Stadium.
Those two things are not Seattle's projects, and plenty of people in Seattle refer to UW as the Vatican (a city-state within a city). They would be just as happy to have the county point to that as a jobs creator that does not come out of its general fund, and it involves their county workers to manage.
Yes, I think they would both happen at roughly the same time borrowing against future tax revenue to find jobs now, without tapping general fund money.

Mr Baker said...

If Will in Seattle really mattered as much as he thinks he does the tunnel would not be moving through the mayor right now.

This money will sliced up with capital investment as what the majority of the fund can only be used for. Otherwise both thr county and city would piss away every penny and Safeco would not have money in 10 years for major capital repairs.

They will not issue King County a blank check.

Mr Baker said...

The restuarant folks testified that they want their money to go to promoting tourism directly, they are not the only ones. The hotel folks are not going to roll over and carry a tax without input into where it is spent.

Peter said...

what do you think ross hunter meant by "keyarena would present some weirdness".? it seems if ross was on dow's transition team and he says that, dow might not be as committed as he said during the campaign.

Bmac said...

If we get lucky enough to have Seattle keep seattle money, who decides within seattle to disperse it for Key Arena... the council or the Mayor. I dont trust Mcginn. would he have a say or is it the councils responsibility. I would think the council would be all for reno. and what about the prevoiusly pledged 75million from the city. Is that still in play or does that have to start from ground zero as well???

Peter said...

you would think the hotels and restaurants would want a new tenant at keyarena, especially the queen anne ones. husky stadium would bring less tourists to the area (only 5 games a year), but fixing up the key for a new nba team should be a easy sell to hotel/restaurant people since the arena would be events most of the year.

Bmac said...

i dont know if the hotel/rest community gets a say how its dispersed after the bill passes do they. I thought the city would determine or county if it stays at that level.

Mr Baker said...

The restuarant folks had their lobbyist speak at both hearings yesterday to address that very point, bmac. They know they do not get a say after the fact, and the legislature knows it too. I saw it when reading the bills, and Peter pointed it out too.

Ross Hunter is not going to stray from the theme of the bill, it does not help its passage.

I'll write a new story tomorrow on this.