Put Sonics settlement toward KeyArena debt, budget director says

Most of the $45 million settlement Seattle received in exchange for the Sonics leaving town should be used to retire KeyArena debt, Seattle budget director Dwight Dively said today.

Dively said the rest of the money should be used to pay the city's $2.8 million legal bill to K&L Gates for the Sonics trial, to replace lost revenue from the basketball team's early departure and to fund capital improvements at the arena and Seattle Center.

"The first benefit is we would pay off debt related to remodeling KeyArena," he said after a City Council briefing. Also, "the general fund and Seattle Center don't lose money by the Sonics having left."

The team's owners, led by Clay Bennett of Oklahoma, agreed to pay the city $45 million in July to exit early from the KeyArena lease and move the team to Oklahoma City. If Seattle does not get another NBA franchise in the next five years, the owners will have to pay the city another $30 million.

Today, Dively proposed spending the $45 million on the following:

• $34.2 million to pay off all remaining KeyArena debt, which financed a 1995 remodel.

• $2.8 million to pay legal fees to K&L Gates for representing the city in the Sonics trial. Some expenses are still being negotiated between the City Attorney's office and the law firm.

• $1.9 million to cover revenue losses from Sonics games that were scheduled in KeyArena for the coming season.

• $2.3 million for capital improvements to KeyArena, such as technology upgrades at concession stands.

• $3.8 million for Seattle Center capital projects.

The City Council will discuss the 2008 spending in the next few weeks. The council will then decide whether to approve the 2009 expenses as part of the 2009-10 budget.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com