Lawsuit challenges legality of Seattle arena deal

You know what the whole are-the-Sacramento-Kings-moving-to-Seattle-or-aren’t-they situation was missing until now? A good lawsuit!

Joined in the lawsuit by two other Seattle residents, Mark Baerwaldt of Citizens For More Important Things contends a “memorandum of understanding,” signed by the city, King County and the arena investor group, is illegal and has asked a county judge to nullify the agreement…

Describing the stadium project as a “giveaway” of public funds, attorney Cleveland Stockmeyer contended the city would be acquiring land from stadium developers at far above the fair price. Such a move, Stockmeyer continued, violates city regulations on such matters.

I’ll admit to being puzzled over exactly what the lawsuit is claiming here, since my understanding is that Chris Hansen is giving the arena land to the city for free — unless the complainants are claiming that the public money being fronted for arena construction is in exchange for the land, which would be, let’s say, a novel legal argument. The suit also claims that the deal violates Initiative 91 by not generating a positive return on the public’s investment — it has a better case there, but given that I-91 wasn’t written to take into account deals like the one Hansen is proposing, it still doesn’t seem likely that this violates the letter of the law. (Disclosure: I am not now and never have been a Washington state judge.)

In any case, the lawsuit will serve to even further muddy the waters of this already beyond-muddy intercity NBA franchise smackdown, at least for the immediate future. Did I mention the bizarre open letter in Grantland from Sonics fans to Kings fans (saying, in effect, “We feel your pain, but maybe one day you can steal a new team of your own too!”) and subsequent response by SB Nation’s Kings blogger (saying, in effect, “You can have our team when you pry it from our cold, dead fingers”)? Right now everybody seems to be eager to say that the enemy isn’t other fans, it’s those damn NBA owners who steal teams from them, but it looks like there’s going to be plenty of hate — and no doubt, lawsuits — to go around for everybody before this is all over.

25 comments on “Lawsuit challenges legality of Seattle arena deal

  1. “…city would be acquiring land from stadium developers at far above the fair price.” Does the lawsuit contend that the land being given to the city is worth far less than the valuations made by the developers?

  2. How the heck do they know what the fair price will be in 30 years?

    They just hope to slow this deal to death.

    Those open letters are funny. They accomplish nothing.

    Hansen’s next move will be to increase his offer. He is crazy drunk motivated. Just watch. This actually could hit $600m.

  3. Neil, now that KJ has said he’ll talk to the bog, what chance do you give him? It’s hard for me to see how an April meeting helps his cause.

  4. Interesting to note that when the final MOU was approved by Seattle City Council, Chris Van Dyke who drafted I-91 and heads up the organization named in the lawsuit acknowleged is was a “remarkable deal”.

    I wonder what changed their minds.

  5. KJ is throwing stuff at the wall to see what’ll stick. Offer to talk to the Board of Governors can’t hurt, anyway.

    JB, which final MOU do you mean, the one in May or the one in September? As late as July, Van Dyk was still threatening a suit over I-91 violations:

  6. I can see where going to the BOG might hurt, though. The arena plan drawn up last year relied on fairly low cost estimates for that arena, coupled with high estimates on what they’d receive for the parking asset. It wasn’t going to take much to break that deal.

    After the deal died, the Council took a formal vote to suspend the process, so any sort of changes to the deal would have to go back through the Council. And there was no EIR yet. They hadn’t even started it.

    So, if the BOG says, Sure, Kevin, we want this team to stay; the local buyer gets the team. Yay!

    And then the arena deal falls apart again.

    I really do think the BOG is fully aware of this possibility. If it happened and there was another delay, and KJ was back before them pleading his case in April 2014, Sacramento wouldn’t get another sports franchise for 50 years, expansion or otherwise. At least by letting the Kings go, it leaves open the possibility that a team would be there within 5 years.

    That’s the harm that would come of it.

    But we have a mayor who does not think strategically. That’s the bottom line.

    In 2011, the NBA told Sac they had one year to get their arena act together. So here it is, nearly 2 years later, and we’re no closer to any kind of deal. If Hansen goes to $600M, like I think he will, that means it’s time for Sacramento to let it go.

  7. Like a lot of these deals, this one at least is providing employment for lawyers, who seem to do well no matter who wins.

    As the saying goes, when war breaks out, don’t take sides: sell bullets.

  8. I was talking about the September MOU. Quoting Chris Daniesl (Reporter in Seattle). Public Stadium Financing Critic Van Dyk told me back in September that #SeattleArena deal was “remarkable”..a “catalyst”..met spirit of I-91

    Digging into it, Mark Baerwaldt, co-chair and co-founder of “Citizens For More Important Things” is listed as a plaintiff but Van Dyk is not listed as a plaintiff so I guess Mark has issues but Chris Van Dyk does not.

    Oh this is just so much fun…

  9. The city/county pay Hansen for the land right away. That transaction occurs before ground is broke on the arena in phase 2 (and is probably how Hansen comes up with a good chunk of the money… by being reimbursed for the land). Seattle will have paid for and own the land right away, so counting its appreciated value in the future seems silly. The arena, however, will be an expense on top of the land, such that the total city contribution is $120 million (plus, potentially, some 25 million bond financing for traffic improvement funds).

  10. Van Dyk is lobbying for the taxi cabs lately. I’m betting taxis get some good business around arena events and Chris isn’t eager to bite the hand that’s feeding him.

  11. Amen to that, Dave.

    Mike: It might not be so much about ‘strategic’ thinking. The fact is that KJ is now just another politician… and right or wrong we all know that no politician wants to be tarred with the “But we lost the (insert sports team name here) on his watch” epithet.

    It may be that not channelling endless public funds into an arena to benefit the Maloofs (funny, I always write “Madoffs” by mistake when I type their name…) is actually the right decisions (I certainly believe it is) for Sacramento. But come election time, his opponents will throw out that sound bite and KJ will be dead in the water.

    None of that is “right”, but it is what’s likely to happen. So KJ likely doesn’t care how much it costs nor who pays, so long as the team doesn’t leave on his watch.

    If there was a way to accomplish that at reasonable public cost while getting rid of Mad- sorry – Maloof ownership, I think many people in Sac would support it. But I don’t see a path to that outcome, do you?

  12. As an aside, I wish “Citizens for More Important Things” would change it’s name to “Community Needs Important Things”.

    CNIT is just so much more memorable…

  13. Here’s a challenge: Name a single elected official who was voted out of office primarily because a sports franchise left town on their watch.

  14. Yes, I do see a clear path to the Kings staying. It involves a little thing I like to call “Panic.”

    KJ admits this entire thing is now on a six-week track. It’s hard to see how you do that; I admit it. But maybe the three lawsuits now pending in Seattle stretch that out to 12 weeks, or 18 weeks, and in that time, they’re able to buff up the original plan so that it requires a small bond sale to account for increased costs. Or maybe KJ attains the unthinkable: That we forgive the current bond debt.

    The fact that KJ has told the Maloofs that they can even have a role in running the team once someone else buys into the team is a good indication of how desperate KJ is.

    If six weeks is the hard, set-in-stone deadline, then yes, the team is out of here. The City would need to take a massive gamble to make that work, and I don’t think they’re willing to do that. So given these special circumstances, maybe the BOG is willing to extend the relocation deadline, just like they did in 2011.

    It wouldn’t be a long extension; and if the City can’t get it done in that timeframe, it would definitely be over.

    So that’s the answer: Six weeks? Forget it. They’re moving. Eighteen weeks, and the City blows that deadline? Forget it. They’re moving. But if it all gets done in eighteen weeks, they will stay. And even eighteen weeks will be really hard.

  15. Neil, has it ever gone the other way? Has an elected official lost his or her job because he or she lead a successful effort to retain a team?

  16. George Petak changed his vote at the last second to cast the deciding vote for the Brewers’ stadium, and then became the first Wisconsin state legislator ever to be recalled in the middle of a term. And Miami-Dade Mayor Carlos Alvarez was recalled after backing the Marlins stadium, though there were other factors at work there as well.

    How important was the Sonics’ departure to Nickels’ defeat? I see some people claiming it online, but none of the press coverage at the time focused on it — it was all about how he mishandled the snowstorm.

  17. Was going to say Bob Lanier, but after he told Bud Adams to take a hike when the Oilers owner demanded a luxury-box lined stadium, I don’t think Lanier lost. I’m pretty sure he just didn’t run for another term.

  18. It’s a good question, Neil, but there is rarely (if ever) a “single” reason announced when voters send someone to the showers…

    And often when cities decide to let sports teams “go” (since they have no control over what sports cartels do, it is inaccurate to suggest they let them go I suppose… but they choose not to shower them with massive subsidy, thus accelerating their departure), it is a decision made mindful of a red ink laden budget that would not allow significant subsidy.

  19. MikeM: Former San Diego mayor Susan Golding’s political career was ended by her give away (stadium expansion, ticket guarantee) to the Chargers. She wanted to move up to the state or national level of politics, backed by the Spanos’ money, but she became a cancer.

  20. A group begins to form in Sacramento:

  21. News tonight that an agreement has been concluded on the purchase.

    The source I read (not entirely reputable, it must be said) claimed it was $525m for 65% of the team (as expected at least one minority owner has agreed to sell, meaning Hansen/Ballmer will hold a controlling interest).

    I would be shocked if the $525m was for just 65%… I suspect it’s just poor journalism/math skills that lead to that sentence. If the team as a whole is valued at $525m in the sale, the numbers make much more sense… and the new majority owners are paying $340m or so for the privilege.