"We'll be going to the Legislature in their next session" beginning in January, Nickels said Monday at a ceremony inside KeyArena to announce Seattle University will be using it when the school returns to Division I basketball this season for the first time since 1980.
Nickels said Seattle will ask for state authorization to divert 1 percent of the existing hotels tax in Seattle from the convention and visitors bureau to the city. He said the convention center no longer needs that revenue and the city should get it.
"Those funds (would be) available for an NBA franchise," he said.
They potentially could generate enough money to back $75 million in bonds - the missing piece in a $300 million arena renovation plan proposed by Microsoft chief executive Steve Ballmer. Ballmer's group would contribute $150 million, and another $75 million would be culled in city dollars from other sources.
In a statement immediately after the Sonics and Seattle settled their lease dispute in July, which allowed the team to move to Oklahoma City, NBA commissioner David Stern said the league would assist in helping Seattle acquire a new team if state lawmakers approve a KeyArena remodel before the end of 2009.
"We think the door is open there," Nickels said Monday. "We feel like there's a working relationship possible there."
The city, Clay Bennett - the owner of the now-Oklahoma City Thunder - and former Sonics owner Howard Schultz have all previously failed to gain state legislative approval for arena funding. Bennett's plan asked for state authorization to use King County tax revenues to fund the majority of a $500 million palace in the suburbs.
Even though Seattle's latest plan asks for far less, legislative leaders aren't thrilled the NBA and now Seattle officials are trying to force a 2009 deadline upon them.
"It's not going to work, with these 147 individually elected members of the state Legislature, to threaten them and bully them," House Majority Leader Lynn Kessler, D-Hoquiam, said in July. "God love the fans, but we have a state to run. And I think the city of Seattle, they have to go out and make their case to the state."
Nickels blessed the settlement between the city and the Sonics, worth $45 million initially and potentially more, announced hours before a federal judge was to rule in the trial over the final two years of the team's lease at KeyArena.
The mayor said most of that settlement - about $33 million - is retiring the debt from the remodeling of KeyArena from the original Seattle Center Coliseum more than a decade ago. He said about $3 million is paying the city's legal fees from the Sonics' case.
Fans of the now-former Sonics still vilify Nickels and city leaders for selling out to out-of-state billionaires and allowing the team to leave after 41 years in town.
Nickels still defends his decision.
"I have a dual responsibility: No. 1 to the taxpayers of Seattle, and No. 2 to the significant debt on KeyArena," he said. "We were only going to have two more years with the Sonics (before their lease ended).
"Now, the bonds are paid off. We're financially in the clear and have flexibility to move forward in the future."