Sacramento councilmember: Would-be Kings owners wanted hidden subsidies before we gave team hidden subsidies

That Sacramento city councilmember who Kings arena opponents subpoenaed to testify about the Kings arena deal testified that he thought it would cost more than the city has publicly revealed, which is no surprise, given that not only he but a lot of other people have been saying this for almost a year now. The surprising part, sort of, is that he said that some of the people trying to buy the Kings admitted it too:

McCarty, who has consistently opposed the subsidy, said he was contacted by representatives of the Kings investment group asking if the city would be willing to pay a subsidy beyond the $258 million figure. The men, he said, were lobbying the city on behalf of the investors trying to buy the Kings last year to prevent them from moving to Seattle.

McCarty identified one caller as Sacramento developer David Taylor. He also said he was contacted by lobbyist and businessman Darius Anderson and Frank Quintero, a representative of Southern California billionaire Ron Burkle. Burkle, Anderson and Taylor wound up not buying the team. Instead, a group led by Bay Area tech executive Vivek Ranadive purchased the Kings last May and is pressing ahead with plans to build a new arena at Downtown Plaza – with what the city has pegged as a $258 million subsidy.

Taylor and Anderson declined to comment Thursday. Quintero couldn’t be reached for comment.

“So-called whales lobbied me and other councilmembers asking the city if they would contribute more than last year’s $258 million subsidy and using the number $125 million more because they were overpaying,” McCarty said…

McCarty added that City Manager John Shirey told him the “whale team stormed out” of a negotiating session over the investors’ insistence that the city throw in an additional $125 million. The deposition does not specify which investors were in the meeting with city officials.

So that’s not exactly a smoking gun that there are hidden subsidies in the Kings deal, but given that we already know there are hidden subsidies, it’s evidence that the would-be Kings owners (who ended up not owning the Kings) knew it, too. Sacramento Taxpayers Opposed to Pork attorney Patrick Soluri declared yesterday that this “constitutes a gift of illegal funds for private benefit, and we believe that part of the term sheet is unlawful and we believe that a court would strike that arrangement”; that sounds like a reach to me (if every stadium deal that included hidden subsidies were thrown out, the Yankees would still be playing at Hilltop Park), but I guess it’s possible there’s some wrinkle of California law that requires “honesty.” Those hippies would be just like that.

10 comments on “Sacramento councilmember: Would-be Kings owners wanted hidden subsidies before we gave team hidden subsidies

  1. As plenty of people have pointed out, the 2,700 parking spots the City is donating do not have a value of $0, as stated in the term sheets. This is public property that we are gifting to a private developer; we do have provisions against giving away taxpayer-owned property.

    If the Kings replace that parking lot with a smaller lot, it seems likely that they’ll create a parking shortage in Downtown Sacramento, which will then give them further license to change parking terms in that area; parking meters that now expire at 6 p.m. will be extended to 10 p.m., for example, which will make parking more expensive for people who have no intention of going to the arena.

    Last point I’d like to make here, we plan to sell $304M in bonds to finance this deal. Since these bonds really are ultimately backed by the general fund, it’s hard for me to see how this can be considered a $258M subsidy if the bonds alone will cause a debt of $304M.

  2. I forgot to mention that the City has released the responses to the Draft EIR. Lots to read, but here it is:

  3. You can read my comments:

  4. I read Kevin’s reply and you had me at “Please note my opposition.”

    Renovating the current arena does what for the city? That ship has sailed.

    It’s time to pimp da people!

  5. Has anyone found a copy of the deposition transcript on-line? I would like to read it for myself.

  6. Kevin, I think I can answer your question about the timing. The assertion is that rush hour ends at 5:45, and people will start arriving for events at the arena at 6:00, producing no overlap at all between the commute time away from downtown and the arrival time of event-goers.

    As a bicycle commuter myself, I can tell you it’s complete garbage that the work commute ends at 5:45. I was hoping an agency would provide better information that just my anecdotes. Anecdotes are worthless. But I have seen traffic jams at 6 pm in the boat section, and on both directions of 50 at the same time (and yes, traffic on 5 and 50 are closely related).

    Also, I did see that someone pointed out that the traffic data used was from a single May. That’s an absurd predictor. We need traffic data from several months, not just one month, after the standard CSUS semester ends. We need to see data from several months of the basketball season — the Kings haven’t played a basketball game in May in probably 2 decades. Someone did call them on that, and I hope that sticks. We should see averages for November-May. True enough, we’ll never see May basketball in Sacramento, but the lighter traffic in May actually helps arena proponents. If I insisted on November-March, the data would be much worse for them.

    Plus, I just like making fun of Kings fans. Basketball? In May? In Sacramento? Must be a youth league.

  7. I consider this to be a somewhat interesting development:

    It strikes me that, perhaps, the pretrial stuff wasn’t going the way the City had hoped. Maybe there’s trouble in Paradise?

  8. I just love the closing paragraph in the article I linked:

    “City officials have said the Kings need swift access to the parcel. The new $448 million arena is supposed to open in 2016. The NBA has given the city a year’s grace period, to 2017, but if the building doesn’t open by then the league has the right to buy the Kings and move them out of town.”

    The threat is always hanging around, isn’t it. Perfect.

  9. My favorite paragraph is this one:

    “A separate filing spells out just how far apart the city and the property owners are on price. The owners said the property has been valued at $10 million for tax purposes. The city, by contrast, recently put $4.3 million into an escrow account – the amount it says the property is worth.”

    So they have been paying taxes on a $10 million appraisal but the property is worth less than half of that. Do they get a refund?