Sacramento accuses Kings of evasiveness on loan payoff

The Sacramento Kings saga this week turned into a duel of terse letters.

Positioning for a potential lawsuit, Sacramento city officials sent another missive to the Kings on Thursday, accusing the team of being evasive on how it will pay back its $77 million city loan, and calling for a meeting between team owners and city leaders.

Assistant City Manager John Dangberg said the city wants details from the Kings on how and when they will repay the loan if they leave town. The city wants an escrow account set up for repayment.

"I hereby request direct, non-evasive and unambiguous written responses," Dangberg wrote.

The Kings reportedly are in the final stages of a deal to move to the city of Anaheim next year. That city last week approved $75 million in bonds to facilitate the move.

The Kings have until April 18 to request NBA approval for the move. Team representatives will be in New York next week briefing the league's other team owners on their efforts.

Sacramento Mayor Kevin Johnson also is headed to New York to plead Sacramento's case that the Kings should stay.

The city's Thursday letter is the latest of several that have crisscrossed among involved parties in the last week.

In an earlier three-paragraph letter, a Kings attorney told the city the team would address the loan issue "at the appropriate time." The Kings issued a brief statement Thursday afternoon saying the Maloof family, the team owners, "intend to fully abide by those documents."

"We have always paid our loan," co-owner George Maloof told The Bee last week.

Earlier this week, an NBA attorney sent the city a letter noting the team has not requested permission to move yet.

"As of this time, the NBA has not received an application from the Kings to relocate," the April 4 letter states. If the Kings do make the request, "we expect that the team will act appropriately with respect to any remaining financial obligations it may have to the city."

The city's Dangberg declined to say if the city intends to take the Kings to court before the team leaves town. "We will take the next steps according to what happens here," he said.

City officials say they want the team to pay the loan balance in cash. It is possible, however, under the contract, that the Kings could pay the loan partially in cash and partially by leaving Power Balance Pavilion, formerly Arco Arena, in city ownership.

At the Kings' request, the county appeals board last week reduced the valuation of the arena, the adjacent building, the land and fixtures by $12 million. The arena and practice court now are assessed at $35 million, and the total site at $51 million. Those numbers may not, however, equate to the market value of the site, should it come into play as collateral.

If the city ends up with the arena, officials could be faced with deciding whether to sell it or hire a company to operate it for them.

The outstanding debt on the loan is $67 million. However, if the loan is paid off now, that would trigger an estimated $10 million prepayment penalty, making the total amount today $77 million, city officials say.

The city would forward that $77 million to the private bond buyers who put up the initial loan money.

• Read more articles by Tony Bizjak

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