HECTOR AMEZCUA / hamezcua@sacbee.com

City Councilman Jay Schenirer, left, chats with Gavin Maloof, center, and Joe Maloof at a Kings game last month, a day after the council approved a nonbinding term sheet to finance a $391 million arena. The Maloofs now dispute some terms.

Sacramento City Council OKs environmental, site plan work for arena

Published: Wednesday, Apr. 4, 2012 - 12:00 am | Page 1A
Last Modified: Wednesday, May. 15, 2013 - 6:22 am

The dispute over who should cut the first checks for a downtown arena intensified Tuesday, with the leader of the state Senate saying that the owners of the Sacramento Kings "seem to be looking for every reason not to proceed" and the mayor accusing the Maloof family of "tactics and antics."

The tension spilled into City Council chambers in the evening, when several council members questioned whether the Kings' owners were serious about partnering with the city after the team said it does not intend to pay a share of pre-development costs on the $391 million project.

The council eventually approved moving forward with crucial pre-development work required for the arena by a 7-2 vote, agreeing to spend $200,000 provided by the NBA to fund that work over the next two weeks.

The league agreed to forward those funds last week after the Maloofs, who own the Kings, said they never agreed to pay for pre-development work. City officials dispute that claim, saying the term sheet clearly lays out how the pre-development work would be funded.

"I need to know we have partners willing to go the distance with us," said Councilwoman Angelique Ashby, who nevertheless supported moving forward with the process.

Added Councilman Steve Cohn, another project supporter, "I believe the city should stand up to its commitments and I expect all of our partners to do likewise."

Cohn and Ashby were joined by Mayor Kevin Johnson and Council members Rob Fong, Jay Schenirer, Darrell Fong and Bonnie Pannell in voting to move ahead with the pre-development process. Council members Sandy Sheedy and Kevin McCarty opposed the motion.

The NBA's financial lifeline will allow the process to move ahead for two weeks, officials said. The NBA's Board of Governors is scheduled to meet in New York next week, and Commissioner David Stern is expected to address the dispute over the pre-development funding with the league's owners – including the Maloofs.

City officials said they were hopeful that meeting would provide them with clarity over whether the Maloofs will contribute to the pre-development process.

Under a nonbinding term sheet approved last month by the City Council, the city would eventually chip in $6.5 million of the $13 million in pre-development costs. That work, scheduled to begin today, includes environmental and design reviews.

City officials say they believed the Maloofs had agreed during negotiations last month to chip in $3.2 million toward the pre-development work, as did AEG, the company signed to operate the arena.

But Kings co-owner George Maloof disputed that last week, saying his family never agreed to pick up pre-development costs. He said it would be unfair for the team to have to cover those costs because it will be a tenant – not owner and developer – of the arena. The team owners also balked at a deal point that would force them to pay AEG its $3.2 million share if the deal falls through, unless it's AEG's fault.

The NBA's $200,000 for the pre-development work is expected to last until April 17, a few days after the NBA owners meeting. Assistant City Manager John Dangberg said that if the NBA meeting does not lead to a resolution of the dispute, "all pre- development work would cease."

In the meantime, "there is no risk to the city because city dollars will not be spent," said City Manager John Shirey.

That was not enough for some arena opponents.

"I don't know why we're rushing to action," said Councilwoman Sandy Sheedy. "Pushing this ahead with $200,000 and nothing else just for the sake of pushing it ahead is kicking the can down the road."

The Kings' public announcement that they have issues with the deal drew rebuttals Tuesday from the mayor and state Senate President Pro Tem Darrell Steinberg.

At a morning event on the rooftop of a South Natomas office building, Johnson lashed out at the Maloofs and accused the family of making "disingenuous" statements regarding their contributions to the pre- development work. He added the family had engaged in "tactics and antics that are not becoming of a true partnership."

"We as a city can't be jerked around," he said.

Steinberg, D-Sacramento, also questioned the family's commitment to the project.

"The Maloofs seem to be looking for every reason not to proceed as opposed to looking for ways to make it work," Steinberg said in an email to The Bee.

Asked if the city would seek new ownership for the Kings should the Maloofs continue to balk, the mayor said, "We're not going to be a city that sits on its hands."

"Do we need to look at contingency plans? Absolutely," he said.

While the mayor would not elaborate, billionaire Ron Burkle has expressed interest in purchasing the Kings. The Maloofs, however, have insisted several times that they have no interest in selling.

The Maloof family has additional concerns beyond the pre-development funding.

In a letter to city officials sent Monday, an attorney for the Maloofs questioned the city's ability to build an arena by 2015, the opening date targeted by the NBA.

Attorney Scott Zolke challenged the city's timeline of completing environmental impact reports in time to start construction next year.

Steinberg brushed those concerns aside, saying a state law he wrote – Assembly Bill 900 – was designed in part to smooth the way for the arena, allowing certain large infill projects to qualify for expedited legal reviews in court, if challenged.

"The Maloofs are wrong about the timing of the CEQA and appellate review process," Steinberg wrote. He concluded. "We stand ready to work with the city and the appropriate state agencies to ensure the project can qualify for expedited review but we need some willingness from our partners to start the process."

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