'ISC/NASCAR LEGISLATIVE PROPOSAL' Lieutenant Governor Bra

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Legislative Committee on Economic Development
International Relations Lieutenant Governor Brad
Owen Chair May 31, 2006 Pier 69 Port of
Seattle Headquarters ISC/NASCAR LEGISLATIVE
PROPOSAL
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• Lieutenant Governor Brad Owen
• Washington State

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• Grant Lynch
• Senior Vice President
• Great Western Sports
• John Saunders
• Executive Vice President Chief Operating
  Officer
• International Speedway Corporation

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John Saunders (ISC)

• Why do we want to build a motorsports and
  multi-use recreational facility in the community
  and state
• Thousands of residents want major motorsports in
  the state
• What does our project represent to Kitsap County
  and Washington
• GWS will pay 166 million, petition NASCAR to
  transfer a NEXTEL Cup date (worth over 100
  million), and will pay for cost overruns, all
  upgrades and maintenance
• The facility pays for itself - no new or
  increased taxes
• Facility will be available for community use on
  non-race days
• Project will meet or exceed all local, state and
  federal regulations, and will undergo a rigorous
  environmental impact review
• Two preliminary traffic studies have found
  transportation to be feasible - we'll continue to
  refine the plan to minimize impact to local roads
  on race days
• We are confident that residents and businesses
  will see the value of this facility, as has
  occurred in all the communities in which we
  operate.

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Congressman Adam Smith 9th District U.S.
Representative

• Proposal Good for the State, Good for the Region
• Billions of Dollars of Tourist Spending
• I Support the Proposal and Urge you to Support
  it, also

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Proposed Legislative Package Overview

• Gerry Johnson
• Preston Gates Ellis
• Dick Thompson
• Thompson Consulting

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GWS PROPOSAL OVERVIEW

• Financing Plan Overview Dick Thompson,
  Consultant to ISC/GWS Former Director, Office
  of Financial Management
• Proposal Summary Gerry Johnson, Counsel to
  ISC/GWS Partner, Preston Gates Ellis
  LLP Expert in Public/Private Partnerships
• Available for Questions Panel and Michael
  Hodgins Michael Hodgins, Consultant to
  ISC/GWS Principal, Berk Associates

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FINANCING PLAN OVERVIEW

• Based on Berk Associates Economic Impact Study
  Directed by Michael Hodgins
• Goals of Economic Analysis and Finance Plan
• Meet the highest professional standards
• Use methods and models consistent with those
  usedby the Washington State Department of
  Revenue,the Office of Financial Management
• Use a conservative approach to revenue estimates
• Assume no new state taxes
• Capture revenues from out-of-state visitors
• Never have a negative impact on General Fund
  services such as education, social services and
  criminal justice

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FINANCING PLAN OVERVIEW(continued)

• Does Financing Plan Meet Goals? It Does
• The most comprehensive and professional study of
  its kind
• General Fund new revenue from out-of-state
  visitors always exceeds revenue used for debt
  service
• See pages 5 and 6 of Speedway Financing Proposal
• Includes an analysis of State General Fund costs
  that is new to this kind of work
• 64 Million in costs are identified and recovered
  for the General Fund
• After costs are recouped and debt service paid,
  the General Fund receives new revenue, all from
  out-of-state visitors

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PROPOSED SPEEDWAY LEGISLATION

• Public Speedway Authority
• Public Funding and Facility Financing
• Facility Development and Construction
• Facility Lease and Operation
• Welcome Feedback From MembersLocal Governments

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PUBLIC SPEEDWAY AUTHORITY

• Creation
• Governance
• Powers and Authorities

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PUBLIC FUNDING ANDFACILITY FINANCING

• Sales Tax Credit
• Admissions Tax
• Authority for Public Speedway Authorityto Issue
  Bonds
• Not to Exceed 166 Million
• Not Debt of State of Washington
• No Impact on State Debt Capacity or Credit Rating
• No Bonds Can Be Issued Until Project Permits Have
  Been Granted
• Subject to Usual and Customary Environmental
  Review, Including EIS

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OTHER LOCAL SALES TAX CREDITS
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COMPARISON OF SPEEDWAY BILL TOBASEBALL AND
FOOTBALL STATUTESFUNDING
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DEVELOPMENT OF FACILITY

• Host Community Agreement
• Gives County Second Go/No Go Decision on Project
  in Addition to Permitting
• Business Deal with County to Ensure Project
  Represents Net Financial Benefit to County
• In Discussion Now
• Expect Will Lead to Further Refinement of Tax
  Treatment of Facility
• Facility Development and Construction
• Sales Tax Deferral
• Permitting
• Fully Subject to SEPA, Including EIS
• No Abridgement of County Authority to Approve or
  Not
• No Bonds Until Permitted
• Other

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LEASE AND OPERATION

• Lease
• Term and Rent
• Revenues
• Operations and Maintenance
• Public Use
• Performance Requirements
• Leasehold Excise Tax Exemption

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STATUTORY PERFORMANCE REQUIREMENTS
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WHY GWS PROPOSED SPEEDWAYIS DIFFERENT

• New Economic Activity to State Tourism-Based
• All Public Investment Paid From Tax Revenues
  Generated By Spending By Out-of-State Race Fans
  Alone Pays For Itself
• No New General Taxes
• Not Financed With Debt of State of Washington
• No Impact on State Debt Capacity or Credit Rating

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Review of Economic Impacts

• Office of Financial Management (OFM)
• Dr. Irv Lefberg, Chief of Forecasting
• May 2006

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OFM Fiscal Analysis, Review, and Forecasting
Functions

• Fiscal notes for proposed legislation
• Fiscal impact of ballot measures
• Fiscal impact of other proposed measures
• Impact analysis does not mean support of
  opposition to any proposed measure

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Components of Reviews

• Model
• Methodology
• Data sources
• Main assumptions

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Major Elements

• Ancillary economic effects
• Multipliers
• State only economic impacts
• Impact on state government
• Transportation costs?
• Intangible impacts?

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Questions/Issues

• Fewer participants (-)
• Lower participant spending (-)
• Additional 5,000 Grandstand seats ()
• Reduced visitor spending escalation (-)
• Lowered worker and Child/Minor participant
  spending (-)
• Increased club level premium seats by 1,500n ()
• Reduced occupancy to 98 for major events in all
  years (-)
• Net impact Lowered revenue by over 1 million
  annually
• Lower percentage of fans from out of state
  would have lowered annual revenue by 700,000
  from 8.9 million starting in 2010 to 8.2 million

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Reality Check

• The main measurable economic impacts of
  facilities such as sports stadiums is due to new
  money from out of state attendees.
• Larger percentage of Race Track attendees is
  assumed to be from out of state compared with
  other sports.
• Race Track attendees and participants are
  expected to be in town and spend money in a
  multi-county area for three or four days,
  compared with hours, or half to one day for other
  sports.
• The Race Track event is assumed to be the main
  reason for most or all out of state attendees
  coming to the state.
• Note Intangible Impacts

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• Steve Kelly
• Director of Commerce
• State of Kansas
• Jacki Mieler
• Public Information Officer
• Media Relations Director
• State of Arizona

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Local Elected Officials

• Bremerton Mayor Cary Bozeman
• Pierce County Executive John Ladenburg
• Kitsap County Commissioner Jan Angel

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Cary Bozeman Bremerton Mayor

• Bremertons Economic Revitalization
• Economic Development without the Growth
• Community Use
• I Support the Proposal

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John Ladenburg Pierce County Executive

• Fair Financing
• Benefit to Pierce County
• Legislative Action

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Jan Angel Kitsap County Commissioner

• Process Begins in Olympia
• Benefit to Kitsap County
• Citizen Task Force Conclusions
• Project Impacts
• Support the Proposal

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Statewide Support Groups

• Karl D. Kruger
• Seattle Hotel Lodging Association
• Steve Davis
• Association of General Contractors (AGC)
• Virgil Hamilton
• Washington State Labor Council

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Karl KruegerWashington State Hotel Lodging
Association

• Furthering the Mission
• Increased Guests
• We Support the Proposal

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Steve Davis Associated General Contractors (AGC)

• Statewide Construction Climate
• Public and Private Partnership
• Support of the Proposal

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Virgil HamiltonWashington State Labor Council

• Labor Support
• Performance Record in Kansas and Illinois
• Jobs Created at the Facility
• Jobs Affected Outside the Facility
• Washington State Gas Tax Income
• Kitsap County Benefits

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• Ray McGovern
• Chairperson
• Coalition for Healthy Economic Choices in Kitsap
• Tom Donnely
• Kitsap Citizens for Responsible Planning
• Charlie Burrows
• Tangled Web Group
• Mary Colburn
• Sierra Club

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NASCAR

• Benefit or Burden????

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C.H.E.C.K. Who we are

• Grass roots organization of concerned citizens
  who are opposed to
• the use of taxpayer money to benefit any "for
  profit" sports franchise because of the
  overwhelming burden of debt it places on local
  and state taxpayers and the adverse impact on our
  quality of life and environment.

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Issues That Concern Us

• Cost to Washington State Taxpayers
• Environment
• Transportation and traffic
• Quality of life

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Cost

• ISC is asking taxpayers to co-sign a 166M loan
  in the form of tax free bonds (about ½ of the
  total construction cost).
• Why?
• All profits from track attendance will accrue to
  ISC.
• Why?

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Cost(contd)

• ISC stands to gain millions because of generated
  TV revenue regardless of attendance.
• Wheres our share?
• There is risk to the taxpayer in the interest
  rate projections and the cost of insuring the
  bonds, none of which we know today.

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Cost(contd)

• Regardless of who underwrites the bonds,
  taxpayers ultimately pay.
• The bonds at 5 interest on the 166M produce a
  debt service on the bonds of 8.3M per year.
• Payout on principal and interest over the life of
  the bond _at_ 5 would be in excess of 400M.
• Current interest rates are 5

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Cost(contd)

• ISC proposal to exempt them from paying
  leaseholder tax deprives Kitsap County of at
  least 3.0 Million per year.
• Cost of the infrastructure improvements and
  expansion will far exceed assumed benefits from
  the track.
• WHERE IS THE BENEFIT?

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Environment.

• ISC wants an expedited schedule for permit and
  environmental review and land use rules and
  regulations.
• WHY?
• Surrounding waterways will be subject to storm
  water run off from the track, which will further
  contaminate Hood Canal and Puget Sound.
• ISC is proposing a grass parking lot, which will
  contribute to ground water and aquifer
  contamination.

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Environment.(contd)

• ISC wants project approval before doing an EIS.
  SEPA requires environmental assessment before
  project approval.
• The beauty of Kitsap Peninsula currently
  attracts visitors, which is a significant
  economic contribution we want to retain. Why
  sacrifice one known economic benefit for an
  unknown?

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ISC Requested Exemptions

• County Admission Tax Exemption
• Sales Tax Deferral Exemption
• Noise Exemption
• Public Works Exemption
• Forest Land Compensation Tax Exemption
• Forest Practices Development Waiver
• Leaseholder Excise Tax Exemption

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Other concerns

• Safety
• Emergency vehicles
• Accidents
• Personal
• Property
• Cost of roads upkeep
• Wear and tear
• Improvements
• (taxpayers foot the bill)

• Impact on family and community
• How do we go about our liveschurch, youth
  activities, errands, shopping, socializing.

• Unanswered Questions

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The track will be a transformational issue for
Kitsap Peninsula.THIS WILL BE A BURDENNOT A
BENEFIT
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Traffic and Transportation

• 82,000 people
• 37,000 vehicles
• (ISC estimate)
• Two lane roads
• Choke Points
• Gorst
• Ferry terminals
• Bridges

• Begins a week before race
• Race weekend traffic jam

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Egress from Track
25 MPH
Track
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Road Infrastructure
2 Lanes
24.5 Miles
1 Lane
48.6 Miles
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• Rick Flaherty
• Co-Chairman
• Checkered Flag Club
• Tim Thompson
• President
• Thompson Smitch Consulting Group

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RICK FLAHERTYCHECKERED FLAG CLUB

• I am here today as a resident of Mason County and
  Chairman of the Checkered Flag Club in Kitsap.
• There is overwhelming support in the local
  community for this proposal
• We will not allow the vocal minority to distort
  the facts and attempt to dictate our future.
• We fully support the speedway and urge you to act.

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Tim ThompsonThompson Smitch Consulting Group

• Role on Project
• What Issues Still Need to be Addressed Facts vs.
  Fiction
• Footprint Left Behind by Tourism
• Testing the Proposal
• Working Cooperatively to Address Issues

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Local Support Groups

• Silvia Klatman
• Executive Director, Bremerton Chamber of Commerce
  
• David Porter
• Executive Director, Kitsap EDC
• Roger Nance
• Former President, Navy League
• Ralph Morton
• Executive Director, Seattle Sports Commission
• Ruthie Reinert
• Executive Director, Seattle Sports Commission

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Silvia Klatman Bremerton
Chamber of Commerce

• Clear Mandate to Support
• Fit for the Community

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David Porter Kitsap EDC

• In Line with the Mission
• Tourist Attraction
• Complete Due Diligence
• Support the Proposal

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Roger Nance Navy League

• Unique Relationship
• Active Duty NASCAR Fans
• NASCAR Motorsports Program
• Support the Proposal

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Ralph Morton Seattle Sports Commission

• Back the Track
• Regional Asset
• Valuable Opportunity

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Ruthie Reinert Tacoma Regional Convention and
Visitor Bureau

• Welcomed Tourist Attraction
• Welcomed Spending
• Support the Proposal

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• Lieutenant Governor Brad Owen
• Washington State