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ShareThough no deal has been struck, the two sides have spent the last week discussing an 18,000- to 24,000-seat arena near the George R. Brown Center, costing about $100 million.
Public funds would cover part of the cost, but Alexander would contribute a chunk and so would the fans of the two-time NBA champions.
A source close to the talks said no deal will be struck without the approval of Houston Aeros owner Chuck Watson, who owns the lease to the city-owned Summit, where the Rockets are committed to play through the year 2003.
Watson has proposed that about $45 million be spent updating the 20-year-old Summit, mostly to install at least 40 luxury suites and new club seats. Watson and Lanier have said that The Summit has an airtight lease that would keep the Rockets there, unless Watson agrees to let the team go.
Alexander has been cool about remaining in the 16,265-seat Summit, skeptical that it can be retrofitted to keep Houston on the same level as other cities building state-of-the-art facilities.
Lanier began the serious negotiations after Alexander warned the mayor that he would seriously consider offers from other cities wanting NBA teams unless something was done in Houston, sources said. The message, sent within the last month, said Houston had until the end of December to respond, sources said.
As a result, Lanier asked local business consultant Barry Silverman to begin discussions with the Rockets organization. Among Silverman's clients is Sam Houston Race Park, partially owned by Lanier confidant Charles Hurwitz, sources said.
Lanier did not want to comment, said mayoral spokesman Sarah Turner. Neither did Rockets vice president John Thomas nor Silverman.
On Dec. 14 and 15, Silverman held long meetings with Alexander, Thomas and Houston lawyer Michael Goldberg of Baker & Botts, the firm that represents the Rockets, a source said.
On Dec. 16, Silverman and Alexander met with Lanier to discuss finalizing a proposal by the end of January, the source said.
Any proposal would be an agreement in principle. A final plan would have to be worked out by attorneys and sent before City Council.
It is unclear whether the proposal would require a referendum.
Sources said Alexander wants to keep the team in Houston because he believes he can maintain the team's winning tradition even after aging stars Hakeem Olajuwon and Clyde Drexler retire. But meeting escalating salary demands poses a problem for the Rockets in The Summit, Alexander fears, sources said.
Updating The Summit remains a possibility, but most talks focus on a new arena tied into the George R. Brown Convention Center and a proposed downtown convention hotel.
Building a $100 million arena would mean at least $8 million in annual debt payments to retire construction bonds, another source said.
By connecting the arena to the convention center and hotel on downtown's eastern edge, local officials would be able to take advantage of some available public funds, the source said.
A city official said the Brown Center generates about $2 million in annual profits that are not dedicated. If the arena is tied into the proposed hotel, officials would be able to recover all state and local tax revenues generated inside the venue for 10 years as the result of state legislation local officials successfully lobbied for earlier this year to help build a hotel.
But public funds would not be enough, and Lanier has repeatedly said local taxpayers should not bear the full cost of subsidizing sports arenas.
So Alexander has agreed to chip in some of the money needed to build an arena and both sides are talking about seeking some type of user tax, such as a parking fee or ticket surcharge, sources said.
The exact dimensions of an arena have not been finalized because it is unclear whether it would house basketball only, basketball and hockey, or basketball and other events.
A source said that one reason to exclude hockey would be an attempt to win the Rockets an early release from The Summit, where Watson's Aeros also play.
