In reading what is being presented it appears the the City of Seattle considers the Sonics very important to the city. As I would paraphrase, important to the fabric of the city. They have pointed out how important it is to have players go to schools and such to improve the "fabric".

Well I think an astute judge would give the city three choices:
1: Let the team leave and pay off the lease.
2: Have the team stay one more year and forgive the last year's lease.
3: Since the team is so important to the "fabric", forgive the last two years lease in
return for the team to stay those two year.

Otherwise the judge should look at this an consider that all the arguments are tongue in cheek and the city just wants to bleed the team before they leave.