The Sacramento City Council voted to approve the deal for a $448 million arena to be located at Downtown Plaza.
The 7-2 vote approves a non-binding 'term sheet' calling for a $258 million public subsidy.
The vote sets up a pivotal April 3 meeting in New York, when a committee of NBA owners will hear presentations from delegations from Sacramento and Seattle. All the league's owners will meet April 18 and 19 to vote on the matter.
"This is a good day for Sacramento," said Mayor Kevin Johnson. "We are on track to do something very historic."
Kings fans in attendance, in their white "Crown Downtown" T-shirts, cheered wildly and stood, chanting, "Sacramento!"
