Only NBA team needed for Seattle arena to move forward

Chris Hansen, the Seattle native who wants to build a new multipurpose arena in Sodo, would need to secure only an NBA team before the city contributes public money help construct the new venue -- a departure from original reports that NBA and NHL franchises would both need to be secured.

The parties involved with the proposed project seem to all agree that it's nearly impossible to secure both an NBA team and an NHL team at the same time. By requiring only an NBA team to move forward, the city's chances of regaining the SuperSonics -- and getting them sooner rather than later -- are much better.

But without an NHL team, King County would not contribute much to the effort. With only an NBA team lined up, the city of Seattle would take on most -- if not all -- of the public financing.

Under a formal agreement unveiled Wednesday, the city and county would contribute $200 million to construction of a new arena south of Safeco Field: $120 million from Seattle and $80 million from King County in the form of bond loans. If no NHL team is secured, only $120 million in public money would go to the project, with the county's contribution capped at $5 million and Seattle still on the hook for up to $120 million.

The public financing would be paid back by tax revenue from the arena itself, and by rent paid by the arena's sports tenants. No new taxes will be created to pay for the arena construction, officials have maintained.

"There is a balance, in our case, of more of the revenues donated to support the bonds come from the city," Mayor Mike McGinn said Wednesday at a news conference in downtown Seattle. "Our tax base, our revenues from the arena project, is larger."

Hansen, McGinn and County Executive Dow Constantine announced a "memorandum of understanding" among the parties -- and an "interlocal agreement" between the city and county -- that allows the arena project to continue at its markedly rapid pace. The memorandum now goes before the city and county councils for scrutiny and consideration.

Under the current plan, a Sodo arena would cost $490 million to build, paid for by the $200 million in public funds and $290 million more from Hansen and his investment group. When finished, it would seat about 17,500 people for NHL games, 18,500 people for NBA games, and 19,000 for concerts and other events.

Hansen plans to acquire an NBA team and find a partner to acquire an NHL team, and relocate them to Seattle, to the tune of up to $500 million.

"This commitment to invest in upwards of $800 million of private capital -- I feel like repeating it: $800 million in private capital -- is one of the largest commitments of private capital ever made for a project like this in North America," McGinn said. "It's a real vote of confidence in this city, and what this city can accomplish in the future. It means jobs, it means investments, it means revitalization -- and that's a good deal."

Hansen has already purchased land south of Safeco Field, in an area already zoned for stadiums. Hansen's group is funding, at its own risk, pre-development costs such as transportation and environmental studies.

The transportation study, paid for by Hansen but carried out by the Seattle Department of Transportation, could be done in the next two weeks, McGinn said. Meanwhile, the city and county councils could approve the project "fairly quickly," City Councilman Bruce Harrell said.

"Yes, I've been very supportive of trying to move foward on this," Harrell said. "That does not mean that we don't seriously understand the impacts of this on our great ... marine cargo industry" in Sodo.

"We will work feverishly to look at the impacts we must mitigate to move forward," he added. "We'll make this work if we have this vision."

Hansen, a San Francisco hedge-fund manager who grew up a Sonics fan in Seattle, approached local leaders last year about building a new sports and entertainment venue in Seattle. The proposal was made public in February.

A local Arena Review Panel, set up by McGinn, completed a preliminary review of Hansen's proposal and on April 4 recommended that the city and county move forward on the project. The Seattle Mariners and the Port of Seattle have voiced concern over an arena's effect on Sodo, including added traffic. 

"The agreement before the councils has some benefits to the region, but also has the potential to hamper one of King County's most reliable and successful economic engines," a port representative said in a statement Wednesday. "There must be a thorough analysis of impacts to transportation, land use, and, most importantly, the jobs that depend of access to Elliott Bay and markets across the state prior to ruther action."

On Wednesday, McGinn stressed that the new arena would be much smaller than stadiums like CenturyLink Field and Safeco Field, and would have connections to many transit options. The port's long-term vitality, McGinn added, is a much larger issue than merely the effects of a new arena.

Hansen, who also spoke at the news conference, said most events would take place in the evenings and on weekends, anyway.

"It could be up to 200" events per year, Hansen said, "but you have to remember that the mix of what actually occurs in the arena. I mean, you guys can add up the NBA and NHL home schedules. Then there's a certain number of major concerts, minor concerts. Then we have other things to consider like Seattle U and the Storm. And then there's just a lot of community events that will occur on the weekends, as well."

McGinn said the city is "committed" to working with the Mariners, the port and any other groups who are skeptical of building a new arena in Sodo. He shot down questions Wednesday about whether Sodo is the best place for an arena, saying Sodo is the only area where the city is getting $800 million in private investment for such a project.

"People coming to the city to an event is a good thing," McGinn said. "I mean, think about it, people. You know, seriously. People coming to the city to work is a good thing. We have a thriving economy with many different bases of jobs and revenue here. And we care about all of them. We don't pit them against each other; we try to figure out how to make them work together."

Also included in Wednesday's formal agreement are the safeguards that should protect the city and county from any construction overrun costs. Under the proposal, if tax revenue begins to slip once the arena is in operation, the arena tenants would be on the hook for extra rent to cover shortfalls.

If Hansen's group acquires an NBA (or NHL) team, that team could stay in its current city or could temporarily play at KeyArena until the Sodo arena is complete. The teams would be under contract to not relocate for 30 years -- something that is now fairly common in professional sports but did not apply to the SuperSonics.

The teams and the arena operator must be headquartered in Seattle, so that they pay taxes to Seattle and King County. If a team were to default and try to relocate, the city and county governments could block relocation, or allow the team to move and just pay off the city and county.

"This agreement ... is the framework for our path going forward," Constantine said Wednesday. "I urge members of our repective councils to give these agreements their thorough review. Be dilligent. Be prudent. And be timely.

"We should not let this opportunity pass by. Events have aligned to present an unexpected window of opportunity for this region to make its case to the NBA to bring back the Sonics and acquire an NHL franchise. We are in competition with other communities across the nation that want the NBA and NHL. Well, it's time to put the ball in play."

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.