Sacramento delays Kings arena vote “indefinitely” while deal is finalized

So that “huge pile” of documents detailing the final Sacramento Kings arena deal really wasn’t ready last week: City officials have now postponed next week’s vote on the plan “indefinitely” while they finalize just what exactly the heck they’ll be voting on:

Nonetheless, officials said they remained confident the deal is moving forward, the delay will be brief and the project’s October 2016 scheduled opening isn’t in peril.

“The definitive agreements are in the last stages of completion and will be finalized soon,” the city said in its announcement.

Soon. Just not any particular time soon.

It’s still pretty likely that all the t’s will get crossed and this will get rubber-stamped by the council in due course, but there’s a reason why final votes are called final votes. You do have to wonder if somebody on the Sacramento city council is looking at that interest rate on the arena loans and blanching.

Kings delay release of arena funding details, as city’s interest costs go through roof

Sacramento officials and the owners of the Kings yesterday announced that they were postponing the release of a huge pile of documents — seriously, that’s what the Sacramento Bee article says, a “huge pile” — on the team’s final arena deal, so that they can “spend more time to perfect the provisions and details.” I.e., it’s not ready yet, it’ll be ready when it’s ready. This is a little bit of a problem, since the Sacramento city council is set to vote on the deal on May 13, and proposals are legally required to be made public 10 days before a vote, meaning the huge pile will need to emerge by no later than tomorrow if the Kings don’t want to risk a delay in the council decision.

Cosmo Garvin of the Sacramento News & Review, meanwhile, has taken a look at the bits of the deal that have been released so far, and contrary to initial reports that it would be slightly better for the city than the original deal since the Kings would pay more rent, he says it could actually be even worse than the initial plan. His reasoning goes as follows:

  • The city would have to pay $21.9 million a year in debt service, compared to $17 million a year in the original plan, because projected interest rates have risen from 5.75% to 6.75%.
  • The team’s rent would rise only from $4.7 million a year to $6.5 million a year, though that latter figure would increase further starting in 2020. And the team would no longer share profits with the city, meaning that $4.7 million could have turned out to be more in time.
  • The city’s added cost of $4.9 million a year is more than the team’s added annual contribution of $1.8 million. By a huge pile of money.

I’m not entirely sold on Garvin’s argument — I’d like to see a present-value comparison of the old and new rent payments over time, for starters, and you know what I think of profit-sharing deals and the machinations that teams can use to avoid paying out on them. Still, that interest-rate hike is a huge hit, and is definitely going to make it harder for Sacramento to cobble together enough money to pay its arena bills each year. Maybe the council should identify a hospital it can sell, just to be safe.

Revised Kings arena deal would cut Sacramento’s losses to $173 million

The Sacramento Kings have announced that they’ve revised their arena deal with the city of Sacramento, and there are more new details than you can shake a stick at:

  • The total construction cost has gone up from $447 million to $477 million, thanks mostly to the increased costs of developing the area around the arena site.
  • The city’s share of the costs will actually go down slightly, from $258 million to $255 million (though with the value of free parking spaces, billboards, and other infrastructure, the actual public cost is probably more like $331 million).
  • Instead of the Kings paying $4.7 million in annual rent (mostly from ticket tax money), the team will now be committing to a rent starting at $6.5 million a year, and rising over time.

Sacramento assistant city manager John Dangberg calls this a “significant enhancement to our financing package,” and it certainly looks like a better deal for the city, even if it still won’t come close to repaying the $9 million a year (and rising over time) in future parking revenues that the city will be siphoning off towards arena cost, let alone the city’s $13-14 million a year total bond cost for the arena. (Figure on the high side of that estimate, since interest rates have gone up, and the city has acknowledged the Kings will be putting in too much money to allow for the use of tax-exempt bonds.)

There’s a new city council report that spells out the latest agreement — I haven’t made my way through all of it yet, but it does estimate the present value of the Kings’ future rent payments at $157,555,183, which if you take the total public cost as $331 million, would mean that Sacramento taxpayers would only be taking a $173 million bath on this project. That’s better than the old deal, and possibly better than a poke in the eye with a sharp stick, though I’d want to read all the fine print before saying for sure. Not to mention test the sharpness of the stick.

Sacramento group threatens to sue if Kings don’t build 24/7 public bathrooms

Thought the Sacramento Kings arena project was finally all over but the shouting, did you? Well, think again, people:

A coalition of labor, environmental and low-income housing advocates has a list of 25 terms they want agreed to before the city hands over a $255 million public subsidy.

Among the demands are giving hiring preference to Sacramento city residents and mitigating traffic impacts. There are also some unusual requirements, such as building public bathrooms that are open 24 hours a day, and donating $600,000 to local underserved arts groups…

The coalition says it could sue to stop the arena if their terms are not met.

This is the “community benefits agreement” model, which is swiftly turning from a promising way to demand public benefits from development projects to a way for local groups to shake down developers for a few specific goodies. No clue what grounds this coalition thinks it has for a lawsuit, since pretty much every possible lawsuit has already been filed, but at least this promises to drag out the always-hilarious Sacramento arena battle for a bit longer.

Kings eminent domain suit cleared, final arena approval possible in April

The Sacramento Kings eminent domain case is over, and it didn’t even take an out-of-court settlement to get resolved: A Sacramento Superior Court judge just up and ruled that the city can seize the former Macy’s building to use for the site of a new Kings arena, and that’s that.

This shouldn’t come as a surprise to anyone: Ever since the Kelo case, the courts have established that pretty much anything can count as a “public purpose” for which eminent domain can be used. (Maybe not organ smuggling. Maybe.) The courts will now figure out a fair purchase price for the property, but in the meantime arena preparations can proceed apace.

Next up: public hearings in April on the city’s environmental report and bond offering, with arena bonds to be sold shortly thereafter. According to the Sacramento Bee, the final agreement between the city and the Kings “will be released to the public 10 days before the City Council takes its final decision,” which is totally plenty of time to decide if it all makes sense. Or plenty of time to hold a couple of hearings and then rubber-stamp it, anyway. Definitely one of those.

Sacramento judge kills Kings arena petition drive dead, finally, no backsies

The nearly two-year-old petition drive to hold a public vote on the proposed Sacramento Kings arena plan finally met its maker yesterday, as Sacramento County Superior Court Judge Timothy Frawley ruled that the Sacramento city clerk was correct in having given it the boot:

In his written decision, Frawley said the proposed ordinance should be excluded from the ballot because it conflicts with the city’s charter and is “beyond the power of the voters to adopt.”

He added that the court found the “volume and magnitude of the proponents’ procedural errors undermined the integrity of the electoral process.”

The procedural errors bit is unsurprising and something that’s been covered in great detail; I’m a bit more surprised that Frawley went along with the city’s argument that voters can’t overrule city spending decisions without a charter revision vote first, but if STOP can’t be trusted to proofread their own petitions, I guess it’s possible they couldn’t read California law before launching this whole quest either.
Anyway, STOP has issued a brief press statement about the ruling, in which the group calls it “deplorable that our city’s leaders have put special interests ahead of the voters who elected them” and that they “make a mockery of democracy,” and calls on “Sacramento’s disenfranchised voters to express their outrage to their City Council and hold their representatives accountable” — but doesn’t threaten an appeal or anything, so it looks like this is indeed the end. Though of course there’s still the STOP lawsuit arguing that the city illegally hid the amount of subsidies it’s giving the Kings owners, which unless I missed something is still trundling along. But it sure sounds like it’s full speed ahead to see a groundbreaking soon — not that the city has figured out how it’s going to pay for this yet any better than its crazy-ass “divert parking revenues and make up for them with parking revenues” plan, but actually paying for it is the kind of thing you can figure out later, right?

Sacramento judge calls Kings petition errors “fatal flaw,” hints at ruling against public vote

Sacramento Superior Court Judge Timothy Frawley has put off until this week a final ruling on the petition campaign to force a public vote on the Kings arena project, but it doesn’t sound like he’s likely to rule in favor of the petitioners:

“These petitions are defective in a multitude of ways,” Frawley told a packed courtroom during a hearing that lasted about 90 minutes. While it could be argued that each individual error wasn’t enough to scrap the petitions, he said, “collectively there are so many errors” that they added up to a “fatal flaw.”

Frawley says he’ll allow the petitioners to submit new arguments on Tuesday, but if you see handwriting on the wall, you’re not alone. At least we may finally get an answer to the question of which side in this dispute is more farcically inept.

Meanwhile, with a respite of a couple of days, the Sacramento Bee’s Marcos Breton has penned a column arguing that voting on things is undemocratic, because journalists can play at this game, too.

Change of venue motion filed in Sacramento eminent domain suit! Feel the excitement!

The Sacramento Kings arena battle is deep into its terminal lawsuits phase now, though of course it’s yet to be determined who it will be terminal for. (That’s what the lawsuits are for. Duh!) In the latest twist, the owners of the former Macy’s store that the city wants to seize by eminent domain have filed a motion seeking a change of venue, saying “local bias” would make it impossible for them to get a fair trial in Sacramento.

There’s more detail, but let’s skip straight to this paragraph in the Sacramento Bee’s coverage of the story:

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.

Seriously, guys? All this over a little more than $5 million in price? Admittedly, that’s real money to normal humans, but it’s a rounding error to a $447 million project. Like all eminent domain cases, this is likely to end with a settlement somewhere in the middle once each side sees on which side its legal bread is buttered.

Meanwhile, the two other Kings arena lawsuits — The One About The Public Ballot Petitions, and The One About The Subsidy Value — are forging on ahead, though with no new developments this week. Yet, anyway.

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.

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.