Seattle Sonics… coming back?

Mayor: ‘Full partnership’ to build $500M arena

Seattle Times staff reporters

A proposal for a new half-billion-dollar NBA and NHL arena in Sodo would include $200 million in city and county financing, but no new taxes.

UPDATE, 2:35 p.m.:

McGinn said that part of the money that Hansen is investing will go toward a study on how to utilize KeyArena.

“KeyArena is going to continue,” he said. “It’s just not a basketball arena, like it was.”

McGinn quickly added that he’s proud of the Seattle Storm, the WNBA team that plays at Seattle Center arena.

The news conference has ended.

UPDATE, 2:29 p.m.:

McGinn declined to speculate whether the proposal will become a reality.

“I’m not in the prediction business,” McGinn said. “This is a strong proposal, a promising proposal. All the planets have to align. I’m not going to make any predictions.”

UPDATE, 2:27 p.m.:

“The job of Dow and I is whether we’re in a position for the proposal,” McGinn said, adding that working with the NBA and the NHL is the job of Hansen. “My understanding is there are pathways to obtaining a team. Our job is making sure we’re in a position to respond and provide an answer to the proposal.”

UPDATE, 2:20 p.m.:

King County Executive Dow Constantine said this is the “first real path” to bringing back the Sonics and the first chance to bring in the NHL here.

“This proposal we’ve received is worthy of serious consideration.”

Constantine said there would be no new taxes and that the arena would be self-funded. He said that existing city and county services would not be impacted. Private investors would be responsible for cost overruns and that the public debt would be backed by rents paid by the owners.

He said he and Mayor Mike McGinn have appointed an arena panel with such members as King County Councilmember Jan Drago and former Sonics coach Lenny Wilkens.

Constantine said they hope for a report back from the Arena Panel within a month.”We would like to move quickly and deliberately,” he said.

“Construction of this arena would create thousands of good-paying construction jobs. Games played by a new NBA team would bring visitors who spend thousands of dollars to boost our regional economy,” he said.

UPDATE, 2:14 p.m.:

King County Executive Dow Constantine said, “My fellow fans, yes, we have the chance to do something special.

“No, it’s not game seven. This is the tip off of the first game of the pre-season.”

Among those attending the news conference is Lenny Wilkens, the coach of the Seattle Sonics 1979 championship team.

UPDATE, 2:12 p.m.:

Mayor Mike McGinn said that the proposal includes constructing an area in Sodo that would be appropriate for NBA and NHL games, concerts and private events. He said that the maximum public participation would be $200 million, combined from the city and the county.

“This is a full partnership between the city and the county. This is ultimately a regional investment.”

The public investment, he said, will be repaid through rent payments. McGinn insists that this would be revenue that would not exist if not for the arena project.

UPDATE, 2:09 p.m.:

Touting the arena proposal, Mayor Mike McGinn said that the move “could mean that the Seattle Supersonics will play once again in our city.”

“A major reason we’re here today and you see some of the newspaper reports is because of Chris Hansen. He approached us a few months ago about bringing an NBA team back to Seattle. He was and is a major fan of the Supersonics.”

McGinn said that when Hansen approached him and told him of his plan to bring the Sonics and an NHL team to Seattle, he wanted to know if the city would be serious.

“We knew we had to get a fair return on our investment,” McGinn said. “We also wanted to ensure the arena was going to get a fair return and had to be funded through its own revenue streams. Equally important was that we wanted to make sure we had the kind of relationship that was long-term and enduring.”

UPDATE, 2 p.m.:

A proposal for a new half-billion-dollar NBA and NHL arena in Sodo would include $200 million in city and county financing, but no new taxes, Mayor Mike McGinn and King County Executive Dow Constantine said today.

The mayor and county executive were scheduled to announce details of the proposal at a 2 p.m. news conference.

The $500 million arena would be paid for mostly by a private investment group led by Seattle native Christopher Hansen, but includes city and county financing that would be repaid over the next 30 years through rent on the arena and tax revenue it generates, including property, sales and admissions taxes.

The proposal includes no new taxes, and the city and county wouldn’t pay anything until the teams were secured. Construction would take about two years.

The investors would rent the facility from the city and county, and Fred Podesta, the director of finance and administrative services for Seattle, said if there’s a revenue shortfall, taxpayers would still be protected by an agreement that investors would pay the difference.

The deal also requires a “security fund” set up by the investors, which would eventually include three year’s worth of debt payments. The investors would also have a fund for upgrades, so the city wouldn’t be responsible for fixing up the arena as it ages.

The contract would require the NBA team to stay for 30 years — the duration of the lease.

The city doesn’t yet have a solid plan for KeyArena, which the city said “barely breaks even now.” It would probably become a venue for community events.

ORIGINAL POST, 1:40 p.m.:

Mayor Mike McGinn and King County Executive Dow Constantine will announce at a 2 p.m. news conference details of a proposal for a basketball and hockey arena south of Safeco Field.

Their offices have been in talks for weeks about the proposal by San Francisco hedge fund manager Christopher Hansen. The mayor’s office has been extremely tight-lipped about the discussions until today.

Hansen was in town this week to meet with reporters, councilmembers and other officials.

In an interview with The Seattle Times on Wednesday, Hansen, a 44-year-old hedge-fund manager and Seattle native, said, “We’re very close to announcing our offer to the city. That’s why I’m here.”

Hansen said he is only reluctantly stepping forward now because of the intense interest in and speculation around his arena proposal, the details of which are still not known. While he acknowledged that an arena can’t be a burden on taxpayers, the package is expected to include a combination of private money and tax revenues spun from the facility.

Interest in the arena proposal has soared in recent weeks, following The Times’ disclosure that Hansen and the city have been engaged in intense talks since June. The cost of an arena has been estimated at $400 million, and buying an NBA team would add hundreds of millions more.

Adding to the picture is a March 1 NBA deadline for Sacramento, Calif., to develop a viable plan for a new arena or risk losing the Kings franchise.

The National Hockey League also has expressed a strong interest in Seattle if an arena is built, prompting speculation about the financially troubled Phoenix Coyotes moving to Seattle.

Hansen described his interest as building an arena and attracting an NBA franchise, saying others would have to come forward with a hockey proposal. He declined to say if hockey is crucial to a profitable arena, although others have said that it would be.

Hansen, who has acquired property in the Sodo neighborhood just south of the Safeco Field parking garage, declined to discuss details of his proposal, citing continuing discussions with Seattle and King County officials. He characterized the talks as sensitive and complex, saying the proposal was a long way from becoming a reality and that it could easily be derailed.

But he said, “I think we are very close to reaching an agreement with the city and county.”

Information from The Seattle Times archives is included in this report.

Emily Heffter: 206-464-8246 or eheffter@seattletimes.com. On Twitter @EmilyHeffter.