SEATTLE A deal has been reached between the Seattle City Council and the investor group led by Chris Hansen on the financial terms that would put a new sports arena near Safeco Field, multiple sources confirm.

An official announcement by city council members outlining the terms of the agreement is expected Tuesday.

A key multi-million dollar concession by Hansen, which could see his investor group spend more out-of-pocket to build the arena, appears to have brought reluctant councilmembers onboard with the project.

Transportation lies at the heart of the revised agreement. In the Memorandum of Understanding entered into earlier this year with Seattle Mayor Mike McGinn and King County Executive Dow Constantine, Hansen pledged $290 million of private money to build the NBA/NHL facility in SODO. That original plan envisioned the city and county issuing $200 million in bonds to finance the remaining costs of the project (a one-team scenario would have involved only a $120 million investment by the city and county). Hansen pledged that arena revenue would be sufficient to pay off the bond debt, thus resulting in no risk to taxpayers.

To get that deal through the city council, sources said Hansen agreed to establish a $40 million transportation fund, which would come out of the publicly financed pool of money. He has also agreed to spend $7 million on KeyArena, aided by revenue from an NBA or NHL team that would use the facility while the SODO arena is being built. The money, which would also support planning for KeyArena's future, would also come out of the publicly financed portion.

Sources said the Council will commit to financing up to $145 million in bonded debt rather than $120 million in a one-team scenario. Council leaders are said to believe that the transportation portion of the deal will help secure matching funds from the state, federal government or the Port of Seattle.

Sources said they believe those two issues were important to bring the deal into compliance with Initiative 91 and to win over the Port of Seattle and other maritime interests that have criticized the transportation impacts of the proposed arena site.

Critics have claimed that the original proposal violated I-91 -- the 2006 initiative that effectively forbids the city from using taxpayer funds for a new sports arena unless the city is guaranteed to profit from it at the rate equal to or higher than the yield on U.S. Treasuries.

No specific freight or transportation projects have been identified for funding.

Hansen has remained relatively silent on the negotiations ever since the King County Council approved an amended MOU back on July 30. The Seattle City Council s approval was considered the last major stumbling block.

Sources with inside knowledge of the negotiations said they believe the plan has the needed five votes for majority approval. Councilmembers Bruce Harrell and Sally Bagshaw, an initial arena critic, have signaled their support, sources said. Chief negotiators Tim Burgess and Mike O Brien are also on board and, late Monday, Council President Sally Clark signed on.

After full council approval, sources said the deal will allow Hansen to tell the NBA that Seattle is ready to host a franchise.

Those same sources said there are also several other important changes to the original MOU:

- The amended MOU also calls for the city to strengthen the line between the Stadium Transition area and the Industrial Area.

- The Environmental Review process, which is a requirement in the MOU currently, will be amended to require that alternative sites be considered, including a specific reference to Seattle Center. Also, according to sources, the Council will make it clear that no further action be taken on the financing until the environmental review process is complete and necessary mitigation addressed.

- Hansen will be required to double his security reserves if Arena revenue does not perform as expected. His ArenaCo holding company must also keep a minimum of three months operating and maintenance cash on hand at all times.

- City will have enforcement power over schedules and require the owners of all three sports venues in SODO to coordinate schedules to avoid conflicts.

- Principal investors must also supply further financial portfolio details.

- City/County can require ArenaCo to purchase the land and the Arena in 30 years for $200 million.

- ArenaCo can replace the facility in the future for the amount of the land purchased by the City, plus inflation, but for no less than $200 million. The current MOU calls for the 5.5 acres to be transferred to the City/County upon groundbreaking. The amendment would require ArenaCo to rebuild the arena if it executes that clause.

Councilmember Burgess s Government Performance and Finance Committee is expected to discuss and vote on the changes on Thursday. The full Council would, in theory, then vote to approve the deal on Sept. 17.

The King County Council would then also have to approve the revised deal.

In a statement released late Monday, Seattle Mayor Mike McGinn said: I welcome the news that the City Council has decided to support bringing basketball back to Seattle. Executive Constantine and I negotiated a proposal with Chris Hansen, an Arena Review Panel vetted it and the County Council approved it. The City Council was the last piece of the puzzle. We haven't gotten a team yet, but Sonics fans have a reason to smile today.

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