The first meeting of the Arena Advisory Panel was held Wednesday night to look at whether Chris Hansen's proposal to build an NBA and NHL arena in Sodo will work for taxpayers.

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The citizen committee charged with reviewing financing for a proposed new sports arena in Sodo on Wednesday night posed tough questions to city officials that reflected the hard lessons learned from the loss of the Sonics and an empty, city-financed KeyArena.

In its first meeting to scrutinize the public-private partnership put forward by San Francisco hedge-fund manager Chris Hansen to bring back the NBA and launch an NHL team in Seattle, the Arena Advisory Panel members said it wanted to ensure that taxpayers were protected from significant financial risk.

“In a worst-case scenario, they’re not making money, can they file for bankruptcy?” asked Estela Ortega, executive director of El Centro de la Raza.

“That’s extremely important and one of the things we have to work through,” said Hugh Spitzer, the city’s bond attorney.

Representatives from the city budget office and finance department and the sports-facilities consultant hired by Mayor Mike McGinn in June all detailed ways the investment group has agreed to guarantee the city’s investment.

The investors would pay $290 million for construction of a $490 million state-of-the-art, 18,000-seat sports and entertainment venue.

The public contribution would be capped at $200 million and would be repaid through taxes and rent generated by the arena.

Additionally, the investors would guarantee a return on the city’s financial contribution, would create a reserve fund equal to three times the city’s annual debt payments on the arena, would enter a 30-year non-relocation agreement for both teams, would pay any construction cost overruns and would pay the operating costs and upkeep of the arena.

“This is an unequaled opportunity to bring back Sonics basketball and welcome the NHL,” said Carl Hirsh, the city’s consultant.

The advisory panel was asked to ensure that the proposal protects the city from financial risk and complies with Initiative 91, which required the city to make a profit from any public financing of a sports facility.

The task force has been given a short timeline: just three or four meetings by mid-March, when the City Council and Metropolitan King County Council may be asked to approve a framework for the deal.

The timeline appears to be driven, in part, by a scheduled April meeting of NBA owners.

In a Feb. 15 letter to McGinn and King County Executive Dow Constantine, Hansen wrote, “It is our hope that this [public review] will proceed at a pace that will allow us to make a formal offer to the NBA at the league’s April ownership meeting, with the goal of returning a professional basketball franchise to this area in the near future.”

Hansen is scheduled to appear before the panel Wednesday.

That urgency seemed to abate somewhat this week, with the announcement that the owners of the Sacramento Kings had reached a tentative deal with that city and the league to keep the Kings in place. The team had been considered the most likely to relocate to Seattle.

Hansen has said he needs an official commitment from the city and county to negotiate with the NBA for a new professional basketball team. He has said another ownership group will secure an NHL team, but that both will finance and build the arena.

City and county leaders have said no public money will be committed to the arena project until NBA and NHL teams have been secured for Seattle.

Early opposition to the location of the proposed arena was raised by Longshore and Warehouse Union Local 19, which is concerned about additional traffic blocking freight corridors in the Sodo area.

“There’s no such thing as a risk-free transaction,” the union’s John Persak told the panel. “If there are problems getting freight through, it’s easy to send it to Los Angeles, to Oakland, to Vancouver.” He said 21,000 jobs could be in jeopardy.

The panel was appointed two weeks ago by McGinn and Constantine, who agreed to a partnership to finance construction bonds for the new arena.

Before the first panel meeting got under way, one of the co-chairs, Maud Daudon, asked to serve in an advisory capacity and not as a member. Daudon is president and CEO of Seattle Northwest Securities, which has for many years provided financial advice to the city and King County under competitively bid contracts.

The panel meeting at City Hall wasn’t as heavily attended as a cheering announcement of the arena proposal two weeks ago, but a cadre of longtime Sonics fans spoke.

“This is not just rich millionaires playing a game. It’s about community. It’s about family,” said Jeff Brown, who runs a Facebook page, Bring Back Our Sonics. “I would hate to see this opportunity passed up.”

Lynn Thompson: 206-909-7590 or On Twitter @lthompsontimes.