WHEREAS, KeyArena is a City-owned facility that, in addition to professional basketball games, hosts a variety of events throughout the year and is an integral component of the Seattle Center; and

WHEREAS, in 1994, the City issued $73.4 million in long-term general obligation bonds and the Seattle Sonics (the "Sonics") contributed $20 million to pay for an extensive remodel of KeyArena; and

WHEREAS, consultants hired by Seattle Center to analyze the economic impacts of the 1994 remodel projected that the revenues generated from suites, club seats, and naming rights would generate from $23 million to $37 million more than actual revenue received to date; and

WHEREAS, Seattle Center has needed to pay with other revenue sources the difference between the revenues it has received from suites, club seats, and naming rights and payments it owes for the KeyArena remodel, which has amounted to approximately $12.1 million to date; and

WHEREAS, Seattle Center is projecting that these revenue streams will continue to generate insufficient revenues to cover the scheduled debt service in 2005-06 and beyond; and

WHEREAS, to reduce interest costs associated with the debt from the 1994 remodel, the City of Seattle defeased the original bonds on behalf of Seattle Center, using funds from various sources other than KeyArena revenues; and

WHEREAS, Seattle Center is responsible for repaying the City of Seattle for the funds used to defease the KeyArena debt and the remaining annual payments owed, including principal and interest, which is approximately $6.3 million annually through 2010 and $5.9 million annually from 2011-2014; and

WHEREAS, the Sonics contract with the City expires in September 2010, but the City will still be obligated to pay debt service through 2014; and

WHEREAS, before agreeing to request state financing to remodel KeyArena, the Mayor and City Council are interested in exploring and evaluating other tenant and event options for KeyArena that could occur when the Sonics contract expires in 2010;

WHEREAS, the Mayor and City Council believe that decisions as to the future management and operating structure of the KeyArena are properly decisions of the City as the owner of KeyArena; and

WHEREAS, because Seattle Center and KeyArena are regional facilities drawing people from around the State, the Mayor and City Council believe it is appropriate to request state assistance to help repay Seattle Center's outstanding debt stemming from KeyArena since any existing debt not covered by revenues generated by the Sonics must be paid from other revenues of the City; NOW THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE MAYOR CONCURRING THAT:

Section 1. The Mayor and Seattle City Council may support lobbying efforts to secure state financial assistance for the costs the City has incurred from the 1994 remodel of KeyArena.

Section 2. The Mayor and City Council will make a joint decision whether to support efforts to lobby the State Legislature to provide public funding for any future extensive remodel of KeyArena upon the City Council receiving the necessary information to conduct an open and transparent decision-making process in which it can evaluate the pros and cons associated with such action.

Section 3. The Executive shall provide to the Seattle City Council the following information by November 15, 2005:

A. All plans, architectural drawings, and proposals that have been developed since 2003 regarding options for remodeling KeyArena, broken down by major proposed improvement and cost.

B. Any analysis, reports, findings, and conclusions related to the redevelopment or revenue generating abilities of KeyArena that have been prepared over the last five years by private consultants, Seattle Center staff, or Executive staff.

C. Copies of all consultant Scope(s) of Work from the last five years related to KeyArena's redevelopment or revenue generating options

D. Any analysis of the financial and labor implications of proposed H.B. 2209, which was introduced in the Washington State Legislature in early 2005, including impacts that this legislation would have on the City of Seattle's and the Sonics bottom lines.

Section 4. The Executive shall provide to the City Council by December 31, 2005, reasonable and realistic options for operating KeyArena without the Sonics. Each option should include a description of the activity, along with associated costs, projected attendance, revenue, estimated number of events per year and supporting details for the financial assumptions.

Section 5. The Executive shall provide to the Seattle City Council any analysis it undertakes regarding the financial, economic, and labor implications of any proposed state legislation regarding current and future improvements to KeyArena that is introduced in 2006, including impacts such legislation would have on the City of Seattle in the event and prior to the Mayor and Seattle City Council deciding on lobbying the Washington state legislature for obtaining financial support to pay off the outstanding debt on the Key Arena 1995 remodel and/or make competitive improvements to the facility.

Section 6. The Mayor and City Council agree that management of the City-owned KeyArena is a local decision and should not be mandated in any State legislation to finance past or future improvements to the KeyArena.

Section 7: The Mayor and the Council agree that no City resources will be used for lobbying the state legislature for public funding to remodel KeyArena unless and until the Executive and the City Council have arrived at a joint position on the future of KeyArena that indicates such lobbying would be appropriate.

Adopted by the City Council the _____ day of _____________, 2005, and signed by me in open session in authentication of its adoption this _____ day of ________________, 2005. ________________________________________ President __________ of the City Council

THE MAYOR CONCURRING: ____________________________________ Gregory J. Nickels, Mayor

Filed by me this ______ day of _________________, 2005. ________________________________________ City Clerk 10/24/05 (V119

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