NEW YORK -- Charlotte is a step closer to becoming an NBA city again.

Tuesday, NBA owners authorized league commissioner David Stern to appoint an expansion committee to assess the viability of the Charlotte market, which became vacant when the Hornets fled for New Orleans in June. The action came at the semi-annual league Board of Governors meeting.

If the NBA's tentative agreement with the city is finalized, an ownership group pays a yet-to-be-determined expansion fee and the Board of Governors approves the new owners, a team could be back in Charlotte for the 2004-05 season.

"It's a great city and I look forward to see if (expansion) happens," Dallas Mavericks owner Mark Cuban said. "The NBA talks to the city and we just come in on the final decision."

In the tentative deal, which was laid out before the Charlotte city council on Monday night and was presented to the NBA owners on Tuesday, the city will help finance a new arena, along with the local business community, and the team will reap the revenues associated with the facility, agreeing to run the day-to-day operations. Any cost overruns on the arena, aside from additional team requests, will be picked up by the city.

"I think we're close to a deal with the city and the business community, but then again that's only half of the equation," said NBA deputy commissioner Russ Granik, who noted that the team would play its first season in the Charlotte Coliseum. "The other half is a deal with the ownership."

The league has set up a unique situation, whereby the incoming owner will have to agree to run the team under the basic financial agreement set up between Charlotte and the NBA.

Under the current plan, Charlotte-based businesses, including Wachovia Bank, Bank of America and Duke Energy, will finance $100 million of the estimated $200 million cost for the arena. The city will initially finance the other half through hotel taxes, capital reserves and bonds.

Team ownership will eventually pay $23.2 million back to the businesses, which is expected to be in lieu of an annual lease cost to the city. The team is also responsible for the operating costs.

According to Lynn Wheeler, chairman of the Charlotte city council's economic development committee, if the city were to run the arena, they could expect a $3.5 million lease payment from the team. Last year, Wheeler said, it was estimated that operating costs for a new arena would be closer to $10 million a year. Ironically, when the former Hornets ownership group recommended the structure whereby the city would pay for the arena while the club assumes all costs associated with operating, it was rejected in the community.

The city council is scheduled to vote on the entire deal on Oct. 23. The package will pass with a majority vote of the council, unlike the $342 million bond proposal last June, which required a referendum and was soundly defeated by a 57-to-43 percent margin.

Granik said the league expects to have interest from at least three ownership groups. Although Boston businessman Steve Belkin, who has partnered with NBA Hall of Famer Larry Bird and former NBA player M.L. Carr, is expected to be one of the main bidders, Granik insisted Tuesday that "there are no frontrunners." Other interested parties are believed to be Miami Heat minority owner Bob Sturges and Black Entertainment Television founder Robert L. Johnson.

"I think we're the frontrunner," Belkin said. "It's pretty tough to beat Larry and M.L."

Given that the Boston Celtics ownership recently agreed to sell the team for $310 million -- a price which includes a $50 million deduction since the new investment group will not assume that debt -- the expansion fee is expected to be set at around $300 million. While a price wasn't set on Tuesday, Granik said that the fee will be a "marketplace-fair price."

"We can barely live with $300 million, but we are prepared to pay it," Belkin said. "At more than $10 million per team, I'd expect that's pretty hard to pass up."

In 1995, the last time the NBA expanded, Toronto Raptors and Vancouver Grizzlies owners paid $125 million each for their teams. Seven years before, an investment group led by George Shinn paid a $32.5 million expansion fee for the Charlotte market.

Belkin said that the way the current deal between the NBA and the city is structured, it still allows for the necessary breathing room.

"The numbers still work under that type of arrangement," Belkin said. "It's close, but we're not doing this to make a whole lot of money. We just want to make sure that, with those numbers, we can run a championship-caliber franchise."

Granik said that while the nuts and bolts of the deal would be in place for the new owner, the owner would be able to personalize his options.

"It's like building a house on spec that's 90 percent done, but you can still choose the tile in the bathroom," Granik said.

Wachovia Bank, Bank of America and Duke Energy will receive $90 million of its funding back, taking $50 million in land acquisitions from the city -- including the site of the Charlotte Coliseum and the old convention center. Other loans will be repaid to the businesses by the Charlotte Coliseum Authority ($16.8 million) -- in return for the food and beverage contract in the new arena.

The members of the expansion committee will include Jerry Colangelo of the Phoenix Suns, Larry Tanenbaum of the Toronto Raptors, the Sacramento Kings' Joe Maloof, Denver Nuggets owner Stan Kroenke and current New Orleans and former Charlotte Hornets co-owner George Shinn.

In other league business matters, owners were presented with how instant replay would function during the season. NBA officials also told owners that it would allow teams to borrow up to $100 million each, with the money secured by the revenue guaranteed by the new television rights deal.

The league also announced that it will allow non-NBA owners to own WNBA teams and allow cities that don't have NBA teams to bid for WNBA teams. NBA owners who currently operate WNBA teams, but don't own them, will now be given ownership of the team at no cost and have the right to shop their team around.

Darren Rovell, who covers sports business for ESPN.com, can be reached at darren.rovell@espnpub.com.