The non-binding agreement -- which was approved on a 12-0 vote -- clears the way for AEG to begin arranging financing to pay for the construction of a 72,000-seat stadium. It's a game plan that puts the financial responsibility of the $1.2 billion project in the hands of AEG.
Under the memorandum of understanding, AEG would pay for the football stadium and two new parking structures. The city would issue $275 million in tax-exempt bonds to pay for the convention center, which will be built by AEG.
"This city today demonstrated that it can move things forward. That it can move the ball forward and move a step forward to getting football back here in Los Angeles but also building on the industries of tomorrow," said Councilman Eric Garcetti.
Much of the support for the project to move forward came from labor unions whose members would fill the more than 6,000 jobs needed to build the stadium and new convention hall.
According to the agreement, AEG would lease the land the stadium and convention hall would be built on from the city. The NFL would pitch in around $150 million for construction; no public funds would be used.
However, the deal will only move forward if an NFL team signs a long-term agreement to move to downtown Los Angeles and play in Farmers Field. Both sides call this their best shot at bringing the NFL back to L.A.
There has been talk that the Jacksonville Jaguars or the Buffalo Bills will move to the city, as well as wishful thinking that the San Diego Chargers will return to L.A.
"We could send a message to them that there is a business plan that works for the citizens of L.A. and for the council of L.A. That is the greatest statement we could make to the NFL, that this city is prepared and we have a vision on how to get a stadium built," said AEG president Tim Leiweke.
Environmental impact reports were under way and were expected to be complete by next year.
The firm's stadium plan is one of two competing proposals to bring professional football back to Los Angeles some 16 years after the Rams and Raiders left the nation's second-largest market.
Warehouse magnate Ed Roski's Majestic Realty Co., which also has not yet secured a team, has permits in place to build a separate 75,000-seat stadium about 15 miles east of Los Angeles, in the city of Industry.
John Semcken, a Majestic vice president, said in a statement after the vote that its proposal would generate more money and jobs and be a better choice for the NFL.
"We are more active than ever and are currently working with the league, owners and teams to bring a franchise back to Los Angeles," he said.
The Los Angeles council members are set to take up the additional binding votes over the next nine months, with groundbreaking on the new venue possible as early as June.
City News Service and The Associated Press contributed to this story.