SEATTLE -- Seattle and King County's top leaders Wednesday announced an agreement with hedge-fund manager Chris Hansen to build a $490 million sports and entertainment arena in Sodo, sending the proposal to their respective councils to decide if the plan's financing is solid and if added arena traffic will harm Sodo's industrial economy.
Seattle Mayor Mike McGinn and King County Executive Dow Constantine praised the agreement as containing unprecedented protections for taxpayers and leveraging upward of $800 million in private investments from Hansen and his investment group, ArenaCo.
The group will contribute $290 million to the arena construction and upward of $500 million to purchase a National Basketball Association team. The investors also hope to attract a National Hockey League franchise.
Constantine said the deal represents "one of the largest commitments of private capital ever made for a project like this in North America."
The memorandum of understanding (MOU) now goes to the city and county councils, whose members have echoed concerns raised by the Port of Seattle and the Seattle Mariners over traffic in the congested Sodo neighborhood and the potential impacts on the region's $3 billion in marine-cargo business.
One critic called McGinn's attitude toward freight mobility "flippant" and warned that it was the city's responsibility to provide infrastructure necessary to support one of the region's biggest economic engines.
Members of both councils already have expressed skepticism and suggested the financial plan needs a thorough examination.
The councils are likely to ask for the identities and financial strength of Hansen's other investors. Hansen previously indicated he would likely provide their names sometime in June.
If both councils approve the plan, Hansen could begin shopping for an NBA team. Once that's secure, arena construction could begin.
Bonds for land
Under the MOU, the city would purchase the land from Hansen for up to $100 million, using general-obligation bonds. Hansen and ArenaCo would privately finance construction of the arena and pay for any cost overruns.
If a hockey team also is secured, the city would pay an additional $20 million and the county $80 million, to buy the completed arena back from Hansen.
If no hockey team is found, the city would contribute only $15 million more, and the county $5 million. Hansen and his investors would make up the difference.
The city's share of bonds is larger, officials said, because the city has a larger tax base and revenue stream.
ArenaCo would repay the public debt through taxes generated by facility events and rent. It would be required to maintain a reserve fund equal to three years' debt payment and would have to pay for all operations and maintenance.
Both sports franchises would have to agree to 30-year nonrelocation agreements.
The state-of-the-art arena would hold approximately 19,000 people for concerts, 18,500 for NBA games and 17,500 for NHL games.
"It really is what we promised," said Hansen at the Wednesday news conference. "It's good for the city, it protects taxpayers and it includes protections that the team will stay here. That's my objective as an owner."
Constantine urged the respective councils to be diligent and prudent but also timely in reviewing the agreements. If approved, the MOU would be legally binding and would allow Hansen to approach the NBA and negotiate for a team.
"We are in competition with other communities around the country. It's time to put the ball in play," Constantine said.
But Hansen said he was not putting pressure on the councils to act faster than they needed to give the proposal a thorough review.
"It's not my intent to force them to do it more quickly," he said.
The traffic question
The Mariners, Port of Seattle and the Manufacturing Industrial Council all have said the arena's proposed Sodo location could increase traffic enough to put at risk some of the region's $3 billion marine-cargo business.
McGinn downplayed that concern Wednesday, saying freight mobility is a long-term, regional issue and should not be tied to a new arena. He said the stadium district is well-served by light rail, transit and freeways.
He also noted that most of the arena events would be at night or on weekends and generally wouldn't coincide with freight activity.
"There is no fatal flaw" in the arena proposal, McGinn said. "The issue of how to maintain port viability is far bigger than an arena."
Hansen is paying for a traffic study of the Sodo area and how the new facility might impact congestion. That's expected to be completed within the next two weeks, but his study is not expected to address freight mobility.
Hansen said a more detailed analysis of transportation impacts and potential mitigation would come with a required state environmental review of the project.
But marine-cargo advocates said Wednesday the issue, and adequate mitigation such as a new Sodo overpass, must be addressed by the city and county councils.
"It isn't how do we get people to an NBA game. It's how does this neighborhood continue to function," said Dave Gering, executive director of the Manufacturing Industrial Council, which represents 60 Sodo-area businesses.
The Port of Seattle issued a statement after the news conference saying "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."
It calls on the city and county councils to conduct a "thorough analysis of impacts to transportation, land use and, most importantly, the jobs that depend on access to Elliott Bay and markets across the state."
Michael Ennis, of the conservative Washington Policy Center, said 10 traffic studies of the Sodo neighborhood in the past 10 years suggest specific remedies to fix transportation problems. But he cautioned that the price tag could run to hundreds of millions of dollars.
An overpass that would cross the railroad lines at South Lander Street, for example, is estimated by the Seattle Department of Transportation to cost about $180 million.
"This is the city's responsibility. The mayor's response fits his pattern of being flippant about transportation concerns around the arena," Ennis said.
Other council members sounded cautious about the proposed arena deal. Seattle City Councilman Nick Licata said he's concerned that if a hockey team doesn't materialize, the ownership group might not be able to repay the public funds.
"I think the risk of exposure goes up significantly. Are we going to proceed?" he asked.
County Council member Larry Phillips said he still hasn't gotten answers to 67 questions he submitted to the Arena Review Panel, which studied the plan and recommended the city and council proceed with the memorandum of understanding.
He said he'd like to see an outside analysis.
"Until there's an independent look ... I don't think we're in a position to say 'go ahead.' I think we have to do a very thorough analysis of the proposal."
But the atmosphere at the news conference was celebratory, as fans, some of whom hold elected office, greeted what they hoped was another milestone toward the return of the Sonics.
Seattle City Councilman Bruce Harrell said the council can address the freight-mobility issues and ensure the roads in Sodo continue to support marine cargo.
"We'll look at Holgate (Street), we'll look at Massachusetts (Street). We'll make this work. Bringing back the Sonics means a lot to the city," Harrell said.
* Seattle Times reporters Emily Heffter and Steve Miletich contributed to this report.
* Lynn Thompson: 206-909-7580 or lthompsonseattletimes.com.
On Twitter lthompsontimes.