City Council approves financing plan for Sodo arena

The Seattle City Council on Monday approved a financing plan for a new multipurpose sports arena in the Sodo neighborhood, marking a huge step in the effort to bring the NBA back to town.

Councilmembers voted 6-2 to approve the deal. The "memorandum of understanding" (MOU) between the City Council and the main arena investor, Chris Hansen, now goes back to the King County Council for approval.

Assuming the County Council reaffirms its earlier support for the arena plan, the process will move forward to a state-mandated environmental review for the proposed construction site south of Safeco Field. The study, as required by a City Council amendment to the MOU, will also consider Seattle Center as a potential alternative site.

Meanwhile, Hansen now has the firm support from the city he needs to secure an NBA team to relocate to Seattle. He also wants an investment partner to acquire a professional hockey league for Seattle, which has never had a NHL team.

"This is about a can-do spirit," City Councilman Tim Burgess said during Monday's hearing at City Hall, "and grabbing onto the opportunities that are handed to our city."

"This is the kind of decision that is difficult," he added, "but the kind I see the people of Seattle wanting to make -- looking forward and not looking back."

Burgess was among the councilmembers who voted yes on the arena plan Monday. Councilmembers Richard Conlin and Nick Licata voted no; voting yes were Sally Bagshaw, Burgess, Sally Clark, Jean Godden, Bruce Harrell, Mike O'Brien. Councilmember Tom Rasmussen was not present.

Under the agreement, the city and county would contribute up to $200 million in bonds to help construct the arena. The loans would be paid back over a period of 32 years (two 30-year bonds that start two years apart) via taxes on the arena and operations there. No new general taxes would be created, so only people who use the arena would help pay for it.

The MOU that passed Monday includes several amendments to further protect taxpayers from financial risk if the arena venture were to turn out unsuccessful. Aside from several requirements for reserve accounts and legal liabilities, the agreement most notably includes a personal guarantee by Hansen to repay the city and county's debt if it all goes sour.

That was an unusual and key concession for the City Council to finally support Hansen's proposal.

Burgess said Hansen's guarantee was one of four major reasons he switched from an opponent, when he first saw the arena proposal, to a supporter by Monday. Other key MOU adendments included the creation of a $40 million fund to enhance transportation infrastructure in Sodo, and a plan to help fund improvements to KeyArena.

Seattle Center ended up being a big topic of concern as City Council and community members deliberated the proposal for the past few months. People like Councilmember Jean Godden wanted to make sure KeyArena was not forgotten as the city essentially abandons one arena for a new one.

"Change is undoubtably coming to Seattle Center," Godden said on Monday. "This MOU provides us with the resources we need ... for preserving it as an urban hub, and a destination for (Seattleites) and tourists alike."

"The coming changes are a little open-ended, and for some a little scary," Godden said, but it is time to come up with a new direction for KeyArena, she said.

Also key to Monday's legislation was minimizing an arena's impact on the Port of Seattle and its ecosystem of industry near the proposed site. Councilmembers said they were satisfied that the establishment of a Sodo Transportation Fund would address longstanding traffic and congestion issues in Sodo.

Councilmember Bagshaw said it was also very important that the city not be stuck with a worthless, outdated building in three decades. One of the council's MOU amendments allows the city to compel Hansen's group to purchase the arena back if the city no longer wants it after 32 years.

"It's not going to be a white elephant," Bagshaw said.

Conlin, who has opposed the arena proposal since Seattle Mayor Mike McGinn sent it to the council in May, said he still wasn't convinced that using public resources to support a private sports team would be "appropriate." Even though Seattle wouldn't lose any revenue it currently brings in, it would lose out on some of the tax income it would get if an arena were entirely privately funded, Conlin said.

Hansen and the investment partners he has so far announced -- Microsoft CEO Steve Ballmer and two members of the Nordstrom family -- certainly have the money it would take to build an arena entirely with private money, Conlin said. 

Licata, who also voted no Monday, said he was pleased that his fellow city councilmembers made the admendments they did. But he thought the plan was certainly a "death knell" for KeyArena and was still too short-sighted.

"I believe the proposal is a good one," Licata said, "however, I concur with those who focus on the state of a whole forest, and not an individual tree."

McGinn, whose office helped develop the original arena MOU with Hansen, congratulated the City Council for approving the proposal.

In a statement on his arena project's website, SonicsArena.com, Hansen thanked the council for their hard work and cooperation. He plans to now work with the County Council for the final approval process.

"Today's City Council vote marks the culmination of a long and productive negotiation process that started with the Mayor and his staff more than a year ago, and more recently with the City Council," Hansen wrote. "I want to thank all of Seattle's elected officials and their staffs for their willingness to roll up their sleeves and work with us to get us to this point. I think that today's vote demonstrates that by listening to each other and working hard to address the concerns of all stakeholders that we can make the Arena a reality and bring the NBA and NHL to Seattle.

"While we still have a long way to go, I am heartened by the tremendous level of support this project has enjoyed. I look forward to working with the County Council again as they now consider the modified MOU."

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.