Arena proposal passes committee, now goes to full City Council

When the proposal to build a new arena in Sodo first went to the Seattle City Council in May, there was little chance it would pass. But as has become plainly clear in the past few months, and particularly the past few days, city officials thought the original proposal didn't have enough protections for taxpayers if the deal went sour sometime down the line.

But an amended agreement between the City Council and the main arena investor, Chris Hansen, does provide enough financial safeguards for officials to now be comfortable. Among other additions, as announced on Tuesday, Hansen's personal guarantee to pay back the public's debt seems to have been a tipping point for most councilmembers to get on board.

At a committee hearing Thursday, six councilmembers approved the amended agreement for the public financing of a new basketball and hockey arena in Seattle. The proposal, which represents a key step toward getting an NBA team back to town, will go before the full council on Sept. 24 for consideration.

If it's passed, Hansen will officially have the green light he needs to go shopping for an NBA team to relocate to Seattle and, ostensibly, rename the SuperSonics.

"I was quite skeptical and wary of the proposal to begin with because it presented, and does present, great risks to Seattle Center and KeyArena, as well as to the taxpayers," City Councilmember Tom Rasmussen said Thursday at City Hall. "But I think that the proposal before us now is a much stronger one to protect the taxpayers.

"It's a compromise and consensus document that I feel comfortable supporting because it simply is a vote to move forward to the next step."

That next step, should the full council approve the deal later this month, will be an environmental impact study as required under state law. In addition to identifying traffic and other issues, the study will look at alternate locations for an arena other than the proposed Sodo site.

That process could take as long as a year. The City Council is requiring that at least one alternate location, at the Seattle Center, is included. But because the study will ultimately just list the pros and cons of different locations, the City Council will end up having to make the final decision on where -- and whether -- to build a new arena.

The location continues to be a sticking point. Hansen's proposal to spend up to $800 million on an NBA franchise and arena construction only applies to the Sodo site where he already owns property, in the block just south of the Safeco Field parking garage. But the plan to build a third sports venue in Sodo has drawn opposition from the Port of Seattle, maritime industry associations, labor unions and the Seattle Mariners. 

During a public-comment session Thursday, industry representatives urged city councilmembers to delay their full vote until the public can take an in-depth look at the additional pieces of the financing agreement that could protect port-related jobs and ease Sodo's infamous traffic issues. Opponents have pointed out Wednesday that the new "memorandum of understanding" (MOU) between the City Council and Hansen includes an entire section consisting of one sentence: "The Arena will be located on the Project Site, which is south of downtown Seattle."

Councilmember Bruce Harrell said he didn't see much point in changing the word "will" to something like "may," since everyone knows the Sodo location is the one being considered. Yet councilmembers Sally Bagshaw and Tim Burgess said they want to make clear that they are still quite concerned about the proposed arena's potential effects on Seattle's shipping industry.

To allay some of those concerns, the City Council negotiated into their new MOU a $40 million fund for improving transportation infrastructure near the stadiums. Depending on the scenario, that fund would be partially funded by the city and county -- but all of it would eventually be paid back by Hansen through taxes on arena operations.

Councilmembers also have proposed creating a Port Overlay District that would more clearly define the boundaries between the stadium area and the surrounding industry.

"I think there are some of us who would like to do that as soon as possible as a good-faith gesture," Burgess said. "We know that we've had problems here with freight mobility for many, many years. We don't have to review that history; I think we're all keenly aware of it. And whether this arena is built or not, someday we have to start addressing those concerns."

The amended MOU also includes a $7 million fund for improvements to KeyArena.

Because Hansen's ownership group would need the future Sonics -- and potential future NHL team -- to play at KeyArena while a new arena is constructed, Hansen plans to pay for the upgrades he'd need for KeyArena to be a viable interim venue. However, the new agreement sets aside at least $2 million, to be controlled by the city, for additional upgrades for the long-term future of KeyArena.

The other $5 million of that fund could also go to KeyArena upgrades or end up going to the proposed venue. If Hansen's ownership group gets the Seattle Storm WNBA team to move to the new arena, that money would follow the Storm to Sodo.

"I'll tell ya, I really struggle with how we justify making a public investment in one private facility while preparing to abandon another one," Councilmember Nick Licata said. "No one has really -- I haven't come up with a proposal of how we are going to save the KeyArena, assuming we want to save it, as a facility for sports or entertainment.

"I really appreciate having the money set aside for the upgrade process; that's good. But honestly, while including it in the (location study) process, I personally feel that it's a stretch to believe that it's going to be chosen as the best location."

If approved by the full council, the legislation will go back to the King County Council for reconsideration. The County Council, which already approved the original MOU with a few minor amendments, would need to agree with the new draft for the process to move forward.

On Thursday, councilmembers Bagshaw, Burgess, Sally Clark, Jean Godden, Harrell and Rasmussen voted in favor of the proposal. Licata chose to abstain, saying he wanted to make sure the legislation goes before the full council on Sept. 24.

Nick Eaton can be reached at 206-448-8125 or nickeaton@seattlepi.com. Follow him on Twitter at twitter.com/njeaton. Visit seattlepi.com's home page for more Seattle news.