A development agreement for a professional sports arena in Oklahoma City, costing at least $900 million, won approval Tuesday in a 7-2 city council vote. 

The deal with the owners of the National Basketball Association’s Oklahoma City Thunder allocates the lion’s share of the project’s funding to the city, with the team contributing $50 million. 

In December, Oklahoma City voters overwhelmingly approved the continuation of a Metropolitan Area Projects (MAPS 4) one-cent sales tax for six years beyond its April 1, 2028, expiration date. The revenue will secure a minimum of $772 million in financing for the project, according to City Manager Craig Freeman. The city will also contribute $78 million in MAPS 4 funds that have been earmarked for Paycom Center, which has been the Thunder’s home since 2008.

Those two funding sources are the only public funds available for the project, Freeman told the city council.  If costs exceed budgeted funds, the deal calls for the parties to “work together to value engineer the project” and that PBC Sports and Entertainment LLC, the Thunder’s owner, has the option to privately fund portions of the project, according to a city summary of the agreement.

Oklahoma City will own the state-of-the-art NBA facility — targeted for completion in June 2028 and no later than June 2030 — and will have the ultimate responsibility for its maintenance, Freeman said.

The arena’s financing plan is unclear. Oklahoma City Chief Financial Officer M. Brent Bryant, who did not immediately respond to a request for comment, said in December the city will evaluate various financing options while the design and construction timeline is developed. 

Prior to that, the use of privately placed tax anticipation notes, structured like a line of credit, was being considered to bridge the gap until the arena facility sales tax collections begin in 2028.

MAPS financing began in 1993 with voter approval of a temporary one-cent sales tax. City voters passed the debt-free, pay-as-you-go funding method in subsequent years, most recently MAPS 4 in 2019 to raise a projected $1.1 billion over eight years starting in 2020. 

Under the approved development agreement, revenue from the voter-approved sales tax that remains after the arena’s construction and repayment of financing costs will be allocated to capital improvements and maintenance of the arena, which will be located at the city-owned site of the former Cox Convention Center.

The team’s 25-year commitment to remain in Oklahoma City begins when it moves into the new arena.

Last week, Oklahoma Gov. Kevin Stitt signed into law a bill that gives major league sports teams that have at least $10 million in new payrolls within a year quarterly state rebate payments for up to 5% of the actual gross payment of sport-league jobs employed by the team for the duration of the team’s existence in Oklahoma, according to a legislative report on the measure. 

The payments are capped at $10 million annually and would be clawed back if the team does not remain in Oklahoma for more than three years.