Seattle wants to divert hotel taxes to fund KeyArena remodel, get NBA team

Seattle Deputy Mayor Tim Ceis said a group led by Microsoft CEO Steve Ballmer continues to talk with the NBA about bringing a new team to the city, but city officials have not spoken to NBA Commissioner David Stern directly.

"I know the ownership group is in communication with the NBA," Ceis said Friday.

Before the Sonics settled with the city to get out of their KeyArena lease and move to Oklahoma City, Ballmer's group had expressed interest in buying the team. Ceis last summer said Ballmer had called Stern during settlement talks to assure him that his investor group was committed to acquiring a replacement for the Sonics to play at KeyArena — provided state and local politicians approved a $300 million upgrade.

Sonics owner Clay Bennett had sought a new arena.

The Ballmer group earlier this year proposed a 50-50 public-private split of the remodel cost. For the public's $150 million share, $75 million would have come from the city of Seattle, through an admissions tax at KeyArena or other revenues generated by the building; the other $75 million by temporarily extending car-rental and restaurant taxes. Those taxes, collected only in King County, are currently used to pay off the debt on Safeco Field.

State lawmakers declined to authorize King County to raise local taxes.

Instead of seeking to extend car-rental and restaurant taxes, the city now plans to ask the Legislature to redirect $75 million from a hotel-motel tax to a KeyArena remodel. The 7 percent tax levied on Seattle hotel visitors now goes to the Washington State Convention & Trade Center. The city has suggested dividing that tax so 1 percent goes to KeyArena while 6 percent stays with the convention center. Ceis says the tax has generated more revenue than expected.

"We believe this is a better approach because it's only levied on Seattle and it's purely a tourist tax, and because Seattle Center and KeyArena are such tourist destinations," he said.

Providing funding for a KeyArena renovation would be the first step toward getting an NBA team in Seattle. But it's hard to say where the team would come from. The NBA has no plans to expand, so one of the financially struggling teams would have to relocate to Seattle.

And the prospective ownership group headed by Ballmer doesn't have a team.

Stern was asked Thursday in a teleconference if he had an update, or any contact with the city or state.

"I don't want to mislead, so I will say that we have had some contact and we are aware of what's going on," Stern said. "But I'd rather not deal with the specifics of it at the time. But we have had some positive contact."

Staff reporter Percy Allen contributed to this report. Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com