The agreement announced Wednesday between Seattle and King County leaders and investor Chris Hansen to fund a new NBA/NHL arena in the city is being touted as one of the best in the country, but it still has a catch that taxpayers could be on the hook for.

“We have reached a new milestone in the quest to bring back our beloved Sonics and … to attract the NHL to our region,” King County Executive Dow Constantine said at a news conference, amid cheers from Sonics fans in attendance.

The agreement features several taxpayer protections, according to a joint news release posted Tuesday morning (bullet points quoted directly from the release):

• No new taxes are being sought for construction or operations;
• The project will be self-financed by using revenue that would not otherwise exist but for the operations of the arena;
• Binding non-relocation agreements for the NBA and NHL teams will be in place covering the full term of any public financing;
• A security reserve fund will be established to provide an additional layer of taxpayer protection for the duration of the public debt;
• Revenue sufficient to support annual debt service is guaranteed by the investors;
• The private investors will be solely responsible for any cost overruns and operating revenue shortfalls over the life of the facility, including funding a capitol improvement fund;
• No public funds will be committed until franchise acquisition and all environmental review and permitting processes are completed;
• The City and County will be in a first priority payment position from Arena revenues and in the unlikely event of a financial default, will have a security guarantee in the equity of the parent company for the teams and the Arena operator.

KIRO 7 Senior Political Reporter Essex Porter spent Wednesday afternoon digging through documents to figure out if there were any potential problems in the deal. 

There's little dispute that the 25-page memorandum of understanding (MOU) is one of the best in the country at protecting taxpayers. They're being asked to contribute as much as $200 million, which would be borrowed by selling bonds. According to the agreement, the developer of the arena will contribute money to a reserve account, so bond payments can be made even in the event of harsh economic conditions. There's another provision to ensure rent payments are secure. 

But skeptics remember the financial troubles of KeyArena, the contentious negotiations with the Mariners over Safeco Field and that the Kingdome became obsolete.

"I can say with assurance that a deal is never a deal, especially over the long haul," said King County Councilmember Larry Phillips, who was there through all those venues' sagas. "The economics changes, the circumstances change."

While revenues generated by the proposed arena are supposed to pay off the bonds, Phillips notes they will not be sold on the basis of arena revenues; rather, they'll be backed by the general funds of the city and county.

"I would prefer to find a way to hold King County harmless relative to any ultimate payback on those bonds, and the agreement so far doesn't do that," Phillips said.

Seattle Mayor Mike McGinn pointed out that building an arena, buying and NBA team and possibly buying an NHL hockey team would amount to about an $800 million private investment in the city of Seattle.

Constantine and Seattle Mayor Mike McGinn will now send the MOU to their respective councils for review and possible adoption. You can read Constantin's and McGinn's letters and download the full agreement at the following links:

www.seattle.gov/arena/

www.kingcounty.gov/exec/constantine/ArenaProposal.aspx