Cal Expo, NBA formalize 6-month pursuit of arena deal

Nobody's ringing wedding bells yet, but Cal Expo and the NBA took a significant step toward commitment Wednesday.

"We've decided to get engaged," said National Basketball Association consultant John Moag. "Now we have to get the prenuptial done."

With NBA Commissioner David Stern smiling on, the Cal Expo board Wednesday voted unanimously to approve a document that defines its courtship with the league for the next 180 days. The two parties will work together on a conceptual plan for how the 360-acre site might accommodate a new arena for the Kings, a revamped fairground and a development profitable enough to pay for both.

Consultants for the NBA and Cal Expo also will try to calculate the enormous cost of building roads, alleviating traffic congestion and bringing other needed improvements to Cal Expo, and the potential pots of money that could be tapped to fund them.

At the end of the six months, or perhaps sooner, Cal Expo and the NBA plan to solicit proposals from developers interested in overhauling the 40-year-old, sprawling fairgrounds complex. The idea is to build enough homes, offices, retail stores and restaurants to pay for a replacement for Arco Arena – which the NBA says is obsolete – and a modern state fair facility.

The arena alone could easily cost $500 million, and the cost of rebuilding the fairgrounds has been estimated at $150 million.

Stern said at least six developers have expressed interest, some of them unsolicited. Cal Expo could conceivably issue bonds to pay for the arena and fairgrounds up front, with repayment coming from development proceeds over many years.

"This board sits astride perhaps the most valuable site in the state of California," Stern said Wednesday.

He was joined at the meeting by former Gov. Pete Wilson, lead negotiator for Cal Expo. The board also voted Wednesday to renew its contract with Bingham McCutchen, the international law firm that employs Wilson. Cal Expo already has spent about $50,000 on Bingham's services. On Wednesday, it capped further spending at an additional $100,000.

"The time has come to embark on a very serious effort," Wilson told the board. But, he added, "I have been at pains to point out that it might not happen. It is an ambitious undertaking."

If the Cal Expo and NBA plan comes to fruition, it will be no ordinary real estate deal. Cal Expo has no intention of selling its land, said Brian May, the fair's deputy general manager. Instead, it would lease the property long-term to a developer.

The length of the lease has not yet been determined. But when it runs out, control of everything on the site – from the arena to the retail shops – would revert to Cal Expo, May said.

Stern is courting not just local politicians, with whom he met Wednesday, but state officials as well. The NBA-Cal Expo delegation was scheduled to meet with Gov. Arnold Schwarzenegger, Assembly Speaker Karen Bass, Assemblyman Dave Jones, D-Sacramento, and state Sen. Darrell Steinberg, D-Sacramento.

The governor "has been encouraging of our collaboration with the Cal Expo board," Stern said.

Cal Expo board member Steve Beneto injected a dose of political reality into the discussion Wednesday, saying the NBA should hurry up before Schwarzenegger leaves office. "This board could change with the next administration, and you'd be back to square one again," Beneto said.

So far, the NBA has shouldered most of the costs associated with devising the arena plan for Cal Expo. Stern, NBA lawyer Robert Friedrich and league president Joel Litvin are spending time on the deal, paid by the league. Moag's costs are paid by the Maloofs, who own the Kings. The Maloofs are paying for professionals hired by the league as well, Stern said.

The costs, he said, "are gladly being met by the Maloofs."

Moag, the NBA's point man on the arena, said he has still not met the Maloofs face to face. But that doesn't mean the team owners don't know what's going on.

Stern said Joe and Gavin Maloof were briefed last Friday in a phone conversation that lasted two hours. The owners have stayed out of the public discussion since the crushing defeat in 2006 of a sales tax increase to build an arena in the railyard.

Maloof Sports & Entertainment issued a statement Wednesday saying the owners were appreciative of the efforts made by the NBA and Cal Expo, and "optimistic about the progress made so far."

The next step for Cal Expo is to define its ideal "fair of the future." To do so, board members said, it will likely have to hire its own consultants, which could prove costly. Those items have yet to come before the board.

"There certainly are things we're going to have to do that will come at considerable expense," said Board Chairman Marko Mlikotin.

Moag said developers interested in the Cal Expo site would be required to reimburse the NBA and Cal Expo for their costs.

Response from community members and local leaders attending the meeting Wednesday was overwhelmingly positive.

"I know we're not supposed to get too excited, but I can't help it," said City Councilman Rob Fong.

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