For immediate release:  June 21, 1999
For more information:  Barton Potter (360) 902-9033

State Treasurer Requests Seahawks Stadium Tax Reductions

The State Finance Committee has just completed the sale of approximately $100 million in state bonds out of the state’s total $300 million contribution.  The state share was defined in Referendum 48, approved by the voters in 1997.  The stadium is being constructed by the Public Stadium Authority in cooperation with the football team affiliate using state and private money.  “The complex public/private nature of the financing package which involves a variety of tax and other revenues for support has been a challenge for state debt managers,” said Murphy.

Murphy said that his priority throughout development of the financing was maximum use of tax exempt borrowing.  “Tax exempt bonds are what the legislature and the public expected when this project was authorized.”  Murphy said.  “Tax exempt borrowing is the lowest cost source of funds for a publicly funded project.  However, tax exemption also carries significant federal regulatory baggage.  The Internal Revenue Service wants to ensure that private parties are not unduly benefiting from tax exempt financing,” Murphy stated.

Murphy said that a delicate balance had to be devised between public and private revenues.  For the purposes of this financing, the 10% parking tax and the 10% admissions tax authorized in Referendum 48 for King County to levy would not be in existence were it not for the football stadium and its use by the Seattle Seahawks.  Under federal tax laws these revenues are treated as private revenue sources or private payments.  “In order to maintain as high a level of tax exemption as possible on the overall $300 million financing,” said Murphy, “we are requesting that the King County Council pass an ordinance to reduce the parking tax to 1% and the admissions tax to 5.1%.”  The state will be monitoring these and other revenues as long as the state’s bonds are outstanding to ensure the entire package of stadium revenues remain in compliance.

Murphy said,“Maintaining tax exemption is doubly important for reasons other than low borrowing costs.  To the extent the state does not have to pay higher taxable interest rates on this financing, Referendum 48 provides for surplus funds to be spent on youth athletic fields.  In designing the financing package for the football stadium, it’s absolutely vital that we keep faith with what the voters believed they were approving at the June 1997 election.”

Construction has commenced on the stadium project.  The exhibition center and parking structure will be completed first.  The Kingdome will be imploded next year and the new stadium will be completed by 2002.

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