Council members voted 6-2 to approve Chris Hansen's plan for a $490 million arena near the Seahawks and Mariners stadiums south of downtown.
"I was a skeptic when this came forward because I was worried about our taxpayers," said Councilwoman Sally Bagshaw. "The fact that we have a personal guarantee from Mr. Hansen ... that makes a big difference.
"At the end, we're going to have something the city is proud of."
Seattle hasn't had an NBA team since 2008, when the SuperSonics moved to Oklahoma City and became the Thunder, devastating their fans here. It's been quite a bit longer since Seattle had major-league hockey: The Metropolitans, who won the Stanley Cup in 1917, disbanded in 1924.
The Edmonton Oilers is one NHL team already discussing possible relocation to Seattle after plans for a proposed $475 million arena in Edmonton were thrown into doubt earlier this month.
Though the franchise said it still hopes to reach a deal with Edmonton on a new arena, owner Daryl Katz, team president Patrick LaForge and Kevin Lowe, president of hockey operations, were in Seattle for meetings Monday about a possible relocation.
The Oilers said in a statement that the team is listening to proposals from a number of potential NHL markets.
Hansen, of San Francisco, is a Seattle native, an early investor in Facebook and a big Sonics fan who approached Seattle Mayor Mike McGinn last year in hopes of building a new arena to attract an NBA team and hopefully an NHL team as well. KeyArena, where the Sonics played, is considered outdated and financially unviable. The $200 million in public financing would be repaid by arena-related taxes.
The deal Hansen worked out with the mayor's office met with resistance at City Council, where members worried about the effect of more traffic in what is a crucial shipping corridor, thanks to the nearby Port of Seattle, and about creating competition for the publicly owned KeyArena, which turned a profit last year.
But Hansen made a number of concessions and won over a majority. In addition to personally guaranteeing the debt payments, he agreed to kick in more money for transportation improvements and $7 million for KeyArena, and he agreed to buy the new arena back from the city for $200 million at the end of the 30-year use agreement if that's what the city wants.
He also agreed to be independently audited to assure that he's worth at least $300 million.
"I want to thank all of Seattle's elected officials and their staffs for their willingness to roll up their sleeves and work with us to get us to this point," Hansen said in a written statement. "Today's vote demonstrates that by listening to each other and working hard to address the concerns of all stakeholders that we can make the arena a reality and bring professional basketball and hockey back to Seattle."
The King County Council already approved the original deal but needs to approve the revised version.
Under the deal, the arena proposal will undergo an environmental review that could take a year. The review will look at whether other sites, including Seattle Center, where KeyArena is, should be considered.
The two city councilmen who opposed the deal, Richard Conlin and Nick Licata, said that while it might be good as far as stadium deals go, that doesn't mean it's a good use of public money. Conlin said that when new businesses typically move into the city, the taxes they generate are a benefit to the city. In this case, he said, the city is giving away $200 million in tax revenue up front, only to collect it back later on.
Licata said professional sports franchises aren't like non-profit cultural organizations like operas or symphonies, which don't threaten to skip town when money's tight.
"What some citizens see is that those who have a lot of money are using public resources to get more money," he said.