Judge dismisses suit against proposed Sodo arena

SEATTLE — Investor Chris Hansen cleared another hurdle Friday in his quest to build a new sports arena in Seattle and return professional basketball to the city.

King County Superior Court Judge Laura Gene Middaugh dismissed a lawsuit that alleged the deal to spend up to $200 million in public funds on a Sodo arena violated Seattle Initiative 91, which requires the city to make a profit on any investment in a sports facility.

Middaugh sided with the city, King County and Hansen in finding that the deal reached with Hansen in October to build a $500 million arena isn’t a final agreement and so a lawsuit is premature.

“There are still too many ifs,” the judge said, citing the environmental review, economic-impact study and final transaction documents that must still be approved by the Seattle City Council and Metropolitan King County Council before the deal can go forward.

Hansen’s attorney, Jack McCullough, praised the ruling, but said he couldn’t speculate on whether it would have any affect on the NBA deliberations next week over the proposed sale of the Sacramento Kings to a group led by Hansen.

“The Board of Governors can have confidence that we have a proposal in place that creates a framework for financing that can and will comply with I-91,” McCullough said.

The league’s governing body is expected to consider whether to approve the sale of the Sacramento Kings to Hansen or to a Sacramento group that is trying to put together a counteroffer.

Seattle Mayor Mike McGinn also praised the ruling.

“The City and County are in the middle of following the decision-making path laid out by the MOU [memorandum of understanding] …” he said in a statement. “If the Councils do choose to go forward to issue bonds, we are confident that the proposed financial structure will result in a final deal for the Arena that provides a fair market return that is more than sufficient to meet the intent of I-91.”

The group of Seattle taxpayers who filed the I-91 lawsuit vowed to renew the legal challenge once the arena deal is finalized.

“The judge made clear the case can be brought after the agreement is finalized. There will be a lawsuit,” said Kirk Robbins, who brought the legal challenge along with three other Seattle residents.

The plaintiffs argued that the plan to repay the public bonds through taxes generated by the arena doesn’t meet the terms of I-91.

Cleveland Stockmeyer, attorney for the plaintiffs, argued to the court that the taxes that will repay the public debt return “zero profit to the city.”

After the ruling, he said, “Just how many millions short of fair value is this deal? We think it’s hundreds of millions short.”

The I-91 ruling marked the second legal victory for Hansen and the arena plan. In February, another King County judge tossed a lawsuit brought by the local Longshore and Warehouse Union over the proposed Sodo location.

The judge in that lawsuit rejected the union’s argument that the months of negotiations and public debate that led up to the October agreement with Hansen created a “snowball effect” that ensured the Sodo site would be approved, regardless of potential environmental impacts.

The union has appealed that ruling and asked for an expedited decision.

Peter Goldman, attorney for the union, attended Friday’s court hearing and afterward accused Hansen of trying to have it both ways by arguing to the courts that the arena agreement isn’t final while presenting it to the NBA as a done deal.

During Friday’s hearing, David Bruce, the attorney representing King County, told the judge that the obligation of the city and county to commit public funds is conditioned on Hansen acquiring an NBA team, an environmental review of the site and alternate locations and an economic impact study ordered by the councils.

He also noted that the makeup of the councils could change before the final approval is granted as well as the financial circumstances of the governments or the investors.

“I’m quite certain that this court would not order the elected officials to vote a certain way,” Bruce said.

“It’s tempting,” responded Judge Middaugh, before adding, “I don’t think I have that authority.”

Lynn Thompson: lthompson@seattletimes.com or 206-464-8305. On Twitter @lthompsontimes