SEATTLE -- King County Executive Dow Constantine and Seattle Mayor Mike McGinn signed legislation Tuesday on the funding plan for construction of an arena that could be used to lure the NBA back to Seattle.

The executives signed the deal a day after a negotiated memorandum of understanding between the city, county and investor Chris Hansen was approved by the city and county councils.

"The process is still not finished, but a major and critical milestone has been achieved," Constantine said.

The plan calls for a $490 million arena built in the area where Safeco Field and CenturyLink Field are located, with $200 million coming in public financing. The public investment would be paid back with rent money and admissions taxes from the arena, and if that money falls short, Hansen would be responsible for making up the rest. Other investors include Microsoft Chief Executive Steve Ballmer and two members of the Nordstrom department store family.

As part of the renegotiated agreement, Hansen has also agreed to divert a portion of arena revenues into a pool of money to help with transportation projects in the neighborhood around the arenas. That concession by Hansen brought added support from lawmakers who were concerned about what a third arena might do to an already congested area that includes two sports venues and the Port of Seattle.

"A lot of people told me, when I first started this process, about the Seattle way, about how difficult it was. Thank God I didn't listen to them," Hansen said.

The arena plan is still subject to environmental reviews, which could take up to a year to complete. A longshoreman union has already announced its intentions to file a lawsuit opposing the arena plan.

But the signed agreement now gives Hansen the ability to go make his pitch to any NBA ownership that might be looking to sell. Hansen, a Seattle native, wants to bring the NBA back to Seattle after the SuperSonics moved to Oklahoma City in 2008 following 41 years.

"Standing here today, with this legislation signed, giving us the ability to go out there and get Squatch back is just a great day," Hansen said, referencing the old Sonics mascot.

After the signing, McGinn took off his jacket and played about five minutes of spirited one-on-one basketball with A.J. Brooks, who is the assistant athletic director at the Rainier Visit Boys and Girls Club.

"We've taken a big step today to get a new arena built in Seattle and bring the Sonics back, back home where they belong," McGinn said.