In a public letter today to the City of Sacramento, two local attorneys are calling into question the validity of public funding for a downtown arena project, and warn the city they may take any City Council funding action to a public vote via referendum.

"If the proposed subsidy is similar to what the City Council approved (during arena efforts) last year, our coalition will likely file a referendum petition so that the voters will be able to decide the matter," the attorneys wrote to council members and other city officials.

The attorneys, Patrick Soluri, of Soluri Meserve, and Jeffrey Anderson, of Cohen Durrett, say in the letter they represent a "nascent coalition ... concerned about the city's proposal for a significant public subsidy to keep the Kings NBA franchise in Sacramento."

In a conversation with the Bee, the pair declined to say how many people are in their group, or name any names.

"We are not going to get into at this point naming anybody specifically," said Soluri. "The coalition is growing every day. We expect it will get larger."

The 14-page letter contends an arena would not be an economic catalyst for Sacramento, and that a public subsidy may be an "unlawful gift" of public funds, even though arena subsidies have been ruled legal elsewhere.

The letter concludes by saying the group will back off its call for a referendum if the council willingly puts any subsidy to a vote of the public.

"The city needs to think long and hard and provide a robust debate before it invests significant resources into a project that evidence overwhelmingly shows will not provide economic benefit to the city," Soluri said.

The call for a referendum is similar to one issued during failed arena talks last year by then Councilwoman Sandy Sheedy, who opposed the mayor's arena efforts.

"We know that there is a breadth and depth of support for a public-private partnership to build a downtown based arena that will create thousands of jobs and transform the downtown - all while putting the taxpayers first and protecting the general fund," said Ben Sosenko, spokesman for Mayor Kevin Johnson.

Johnson and other city officials have argued that a downtown arena will be an economic benefit to the city by creating construction jobs and serving as a catalyst for ancillary development in the immediate area, including restaurants, stores, housing and possibly a hotel.

Assistant City Manager John Dangberg said of the letter, "I'll take a look at it," but declined further comment.

City officials say they are negotiating now with representatives of businessmen Mark Mastrov and Ron Burkle in hopes of pulling together a term sheet to be presented to the public next Thursday, and to the council the following Tuesday. Mastrov and Burkle have send a letter to the NBA indicating they would like to buy the Kings from the Maloof family to keep the team from moving to Seattle.

That term sheet is expected to contain a city commitment in the $250 million range to help finance an arena at the Downtown Plaza site. City officials say they can come up with that money by bonding against future city downtown parking revenues and possibly selling some city land.

Sacramento City Attorney Jim Sanchez acknowledged that a council "final" action on an arena deal could be subject to a referendum, but he said the expected upcoming council vote on a preliminary arena financing term sheet is not a final council action, and would not be subject to a referendum.

If, down the road, the council approves a final deal, and finishes an environmental assessment, opponents of that deal could initiate a petition drive to put a measure on the ballot, Sanchez said. In that case, they would need to gather legal signatures equivalent to 10 percent of the voter turnout in the previous general election. In Sacramento, officials have put that number at about 20,000 signatures.

Opponents of the new 49ers stadium under construction in Santa Clara tried to push a ballot referendum to block the city's $850 million loan, but were brushed aside by the City Council last December. The council declared that a referendum can only be used to challenge "legislative" acts that make new policies, while the vote to approve the stadium loan was merely an "administrative" act not subject to voters' approval.

Voter approval also is typically necessary when a government seeks to raise taxes - as the city and county attempted, unsuccessfully, when it tried to raise money for a new Kings arena in 2006. Sacramento city officials have indicated they are not inclined to propose any general tax increase to fund a downtown arena.

Call The Bee's Tony Bizjak, (916) 321-1059. Follow him on Twitter @tonybizjak.

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