The King County Council voted 6-3 late Monday afternoon to approve an amended Memo of Understanding for the construction of a $490 million sports arena in Seattle's stadium district, a vote that happened just hours after the Seattle Council signaled major concerns about the arena proposal.

Eight of nine Seattle councilmembers unveiled a letter to arena investor Chris Hansen on Monday saying changes must be made to the proposal before they can support it. The City Council wants to ensure that a portion of tax revenues generated by a new arena would help pay for local transportation improvements. Currently, the proposal calls for those taxes to be used to pay off the $200 million in city and county bonds for the arena.

The Seattle Council's letter to lead arena investor Chris Hansen said the deal as currently structured lacks a balance of public and private benefits and offers insufficient protection against financial risks inherent in the arena's financing.

City council members asked Hansen to revisit the proposal and address the following areas of concern:

--financial risks against the city/county
--public debt
--the split of tax revenues
--impact on transportation and shipping
--lack of a confirmed business plan
--management of KeyArena

Rarely does the city invest so directly and in such large sums in an asset that will be operated by a private, for-profit enterprise, the letter states. To do so requires not just adequate security for our investment but also that the city receive significant and guaranteed public benefits.

At a press conference Monday, Councilmember Tim Burgess said, When most development happens in this city -- new construction, new companies coming here -- there's a pie of tax revenues that are created. And we're asking for a slice of that pie to be used for the public benefit and protecting freight mobility and transportation.

To read the complete letter to from the Seattle City Council to Hansen, click here.

Late Monday afternoon a statement came from Mayor Mike McGinn's spokesperson, Aaron Pickus.

The mayor and his team, including outside experts, worked for months to craft an agreement that protects the public from financial risk. The mayor respects the Council's work to perform their due diligence. It's important that they understand the deal before they vote on it. But it would be a mistake to pass up the opportunity for hundreds of millions of dollars of private investment in Seattle. Other cities are looking to see if Seattle will trip and turn away this investment. An arena outside of Seattle would be devastating to the Key Arena and would negatively affect tax revenues to our city. With Chris Hansen, we have a private investor motivated to help Seattle with the Key. That would not be true if an arena is built elsewhere, like Bellevue.

The plan approved by the King County Council on Monday also needs approval from the Seattle Council. If the city makes any changes, it will need to be voted on again by the county council.

King County Councilmembers voting for the deal were Kathy Lambert, Larry Gossett, Jane Hague, Julia Patterson, Joe McDermott and Bob Ferguson. Voting no were Reagan Dunn, Pete von Reichbauer and Larry Phillips.

In a statement issued after the vote, Hansen said, I want to personally thank the King County Council for all of their hard work and for taking a big step today to move forward on our proposal. There is still much more to be done, but I am looking forward to sitting down with City Council members to figure out how we can make this deal work for everyone.

Also on Monday, a coalition of commerce, labor and maritime groups also voiced their concerns about the potential impact of a third arena on traffic and employment in the SODOneighborhood.

We know from experience here in Seattle that an NBA team can be ripped away from a community on short notice. But if we lose the Port, we lose those jobs, we lose industrial lands, that s forever, said Larry Brown of the Washington Machinists Council.

The threat of increased traffic hampering freight and and shipping was also expressed, as well as the need for a complete environmental study.

Background: Developments in the SODOarena project

For months, talk of bringing an NBA and NHL team to Seattle has swirled around Hansen's arena proposal; it calls for a mix of private and public funds to build a new, multi-purpose arena in the SODO neighborhood -- $290 million in private money from investors such as Hansen, Microsoft CEO Steve Ballmer, and Peter and Erik Nordstrom, and $200 million in public money.

Traffic concerns in the SODO neighborhood -- where Safeco Field, CenturyLink Field and the Port all share limited neighborhood space -- remain a core argument against Hansen's plan to build the arena in SODO. The Port of Seattle has been the loudest to voice dissent, saying that jobs would be lost, but hasn't provided the data to back those claims.

Last week, city council members brought up how the arena would affect Seattle's lease agreement with the Seattle Storm. The agreement currently calls for a $300,000 payment each year from the city to the WNBA franchise as part of a revenue sharing agreement.

Reporting by KING 5's Chris Daniels, Linda Brill and the Associated Press

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