Furthering the story:
The Sonics owners declined to file anything by the March 1 deadline requesting relocation. Unless any loopholes exist, they're in Seattle for 2007-08.
Meanwhile, an election in Seattle yielded a ban on further public funding for sports facilities. http://seattlepi.nwsource.com/local/291528_keyarena08.html
"Citizens for More Important Things" pushed the ballot measure.
The Sonics have announced a site and an agreement with Renton to site the new arena. The citizens group promised to take their fight county-wide, but their website no longer functions. Apparently, the agreement depends some on state funding, and the state of Washington is currently mulling over legislation.
BTW- Paul Allen has signed a letter of intent to buy the Rose Garden from his former creditors. There was some thought last month (published) that Allen would continue from there by buying the arena, renegotiating the lease, and actually moving the Blazers to Seattle, but given these developments, that seems to be going by the wayside. An alternate possibility that Allen might trade franchises to end up with the Sonics gets whispered here and there. How Oklahoma City gets a team they appear to deserve (since the Hornets have announced they are playing full time in New Orleans next year) is an open question.