Everybody in Sacramento now suing everybody else

Isn’t that always the way? You announce you’re filing a nice little lawsuit, and next thing you know everybody wants to get involved. In the case of Sacramento Kings arena opponents’ suit against the city for denying their petitions to put the arena deal up to a public vote, the Kings, the The4000 pro-arena group, and state senate president Darrell Steinberg have all filed paperwork looking to intervene in the suit, which would allow them to make legal arguments in the case.

A preliminary hearing is set for tomorrow morning, at which we can be sure of at least one thing: The courtroom will be very, very full of lawyers.


19 comments on “Everybody in Sacramento now suing everybody else

  1. I figure one of these days I’ll wake up and find I’ve been named in one of these lawsuits. Why the heck not?

    Anyway, the Kings owners have graciously decided to support a trolley project with $500,000 in funds. This is part of their mitigation expenses from the draft EIR. Never mind that the trolley will cost between $130M and $150M — at least, that’s the amount the say it’ll cost. I’d bet it’ll cost more.

    Read the Bee’s spin on this here:

    http://www.sacbee.com/2014/02/03/6122677/kings-expected-to-pay-500000-to.html

  2. It is interesting that in one case before the court the city is arguing that the deal to build an arena is not yet in place and, therefore, the lawsuit is premature and should wait for a final vote of the city council. In this case, they are arguing that the deal is so far down the road that stopping it at this point will cause great loss of the time and money already spent.

    So which is it? The deal hasn’t started or the deal is “very late in the fourth quarter.”

  3. Folks this latest Team KJ legal msnuever has just one purpose, to muck up and delay the lawsuit decision until after March 4 which is the deadline for putting the initiative on the June ballot. Typical Steinberg move. To Team KJ the ends justify the means and they will do everything they can legally to steam roll over the taxpayers. So let’s do a recap. JMA bought downtown plaza for $22M and now are selling it to the Kings/city for $36M. Hey Ron here’s your check. Then there is eminent domain, CEQA law changed, petition disqualification, $500,000 in fees for a street car system to cost $125M and no funding source, a jiffy pop arena design, undervaluation of parking assets, a needed refinancing of existing arena bonds, and an ROI on this scheme that requires ancillary development. They sure are moving mountains to achieve their ends.

    Good article today in the Bee about how the courts view minor flaws in a petition form. Public vote here we come.

  4. Actually, though, I think the judge on the election will not just laugh at the “Look how much money we’ve already spent!”-argument, but could actually let using that argument work against them. The appearance is that if you spend enough, you’re immune from legal judgments, and a lot of judges really don’t like that. I think arguing that position might actually harm them.

  5. And funding the streetcar is a complete joke. You’d think that the deal would be that the Kings pay 10% of the streetline’s costs. Nope. Not even enough to pay for one trolley station. What a joke. The State is satisfied with that?

    I’ve heard that Steinberg and the head of Caltrans are buddies. If I didn’t know any better, I’d say agreeing to contribute $500,000 to a trolley that stands a very real chance of never being built is excellent evidence of that.

  6. I’ll give the Bee some credit in this editorial:

    http://www.sacbee.com/2014/02/04/6125332/editorial-kings-payment-toward.html

    Freeway construction is so incredibly expensive these days that the “Boat Section” will never be modified. What would $500,000 in modifications to that section buy, anyway? New paint striping? So the mitigation is to spend $500,000 towards a $130M streetcar line that stands a great chance of never being built. Honestly, why should the Kings contribute less than 10% of the costs of that streetcar? I don’t see it.

    I tell you, they’re going to avoid an election, and this arena will get built… And run in the red, because we’re not requiring the “ancillary” development. How can they call it “ancillary” when building it is the only shot of making money? This is Brooklyn Redux. The Council needs to make this development required, and it cannot have any subsidies… So, guess what? We won’t require it, and when they do build it, it will require subsidies.

    What we have here is a combination of Orlando’s, Brooklyn’s and Louisville’s fiascos, all rolled into one. It amazes me still that 7 of 9 Council members can’t see this coming.

  7. Mike,
    To be more accurate, they will be contributing less than 1% (0.3% to be exact) to the cost of the streetcar. What I don’t understand is how a $500K fee “mitigates” the amount of traffic both on the freeway and on surface streets that this boondoggle will generate.

    I’d like to be in the courtroom listening to the arguments regarding STOP’s suit. I’m looking forward to some reports.

  8. Actually, RA, I think they should contribute at least $15M towards this trolley, and if it doesn’t get built, the arena should not either. You’re right that they’re contributing under 1%, but it’s actually over .5%.

    I actually laughed out loud when I heard about the judge disqualifying himself. I’d guess they’ll have a hard time finding a judge that DID NOT sign this petition.

  9. Mike, for the percentage, I think it depends on which cost estimate you use. The number I have heard most frequently is that the street car is expected to cost $150 million. Estimates range from $130 million to $180 million depending on the time of day, the wind direction, and whether the speaker is trying to sell it or kill it. I used the $150 million in my calculations.

  10. Old Sacramento businesses now think the Arena will hurt their businesses:

    http://www.sacbee.com/2014/02/04/6127319/old-sacramento-business-leaders.html

    Just is simply a specific example of a general problem I think will happen; right now, you can validate parking and shop in Macy’s or go see a movie, and the parking is free. I think an arena will destroy the parking validation program, which will, in turn, close down the theater and the Macy’s permanently. It really will be a ghost town in that area on non-event nights, which is consistent with what other arena districts have experienced.

    Now, the arena proponents will tell us it’s a ghost town there every night, but I can tell you from experience this is untrue. There are crowded businesses there already.

  11. MikeM: It looks like you forgot to mention this part.

    “The letter states, however, that the group strongly supports the downtown arena. McSwain said Old Sacramento business owners want the added cultural life an arena would bring downtown.”

  12. Another article on the lawsuit:

    http://www.sacbee.com/2014/02/06/6135805/councilman-says-he-thinks-sacramento.html

    They really do need to tell why the property we’re “contributing” wasn’t appraised. I can’t see the judge calling this entire deal fraudulent, but I can see him asking for a more complete accounting of the subsidy. I still don’t see how the subsidy is $258M if we have to borrow $304M. That’s a general obligation debt — it’s part of the subsidy.

  13. “I still don’t see how the subsidy is $258M if we have to borrow $304M. That’s a general obligation debt — it’s part of the subsidy.”

    Well, no. If the Kings owners are on the hook for paying off part of the debt, that’s not a subsidy. The problem here appears to be that they’re getting other stuff that’s not cash in addition — something that’s been clear from the start if you read the Eye on Sacramento analysis, so I’m not really clear why this is supposed to be a deal breaker, but maybe there’s some provision in California law I’m not aware of where you have to account for everything clearly in a term sheet?

  14. It’s definitely misleading to keep insisting that the value of the parking and the digital signs is $0, and to not speak directly about the amount of money they’re borrowing ($304M, not $212.5M). And as others and myself have noted, how come the value of the parking spots we’re donating is $0 (for 2,700 spots), while the spots we’re keeping have a value of $212.5M (for 3,500 spots)?

    When you hide the true value of the subsidy, what else are you hiding?

  15. Neil,

    The kings are not on the hook for paying off part of the $304 million of the bond debt. The city is saying that they will cover 100% of that from parking revenue and, since that will not be enough, from transient occupancy taxes. The revenue from the arena, if there is any, will be back fill for the amount the city’s general fund is losing by redirecting the parking revenue to the arena. Yep, it is a shell game.

  16. I just realized: I should have said “part of the back fill”. The city’s general fund will be losing $9 million per year and income from the arena (including sales taxes, the ticket surcharge, possessory taxes, and profit) only sums to 6.5 million.

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