There were two stories that broke last week that could speed what is arguably the most significant development project proposed for downtown Sacramento.
Shortly after 5 p.m. Friday, the Kings owners made public their plans for transforming the depressed Downtown Plaza shopping center. They call for 1.5 million square feet of mixed-use development along what is currently a dreary stretch of J Street.
Scheduled for a first review by the Sacramento Planning Commission on Dec. 12, the Kings’ plan features a 250-room hotel, 550 housing units, 350,000 square feet of retail and commercial space and 475,000 square feet of office space.
These developments would be erected on what is now the northern edge of the Downtown Plaza. The arena/entertainment center would be built in the southeast section of the mall and face L Street.
Up until now, the proposed $248 million city subsidy of a $448 million arena has generated most of the public attention and controversy.
But Friday’s news of what could become a much greater investment in downtown Sacramento by the Kings could change the debate entirely.
While the team’s development application to the city did not include a price tag, a March city report cited an estimated $500 million investment by the Kings owners to develop the area around the arena.
The Kings owners would be expected to put up $200 million toward arena construction, though some believe their investment will exceed that number.
All told, the ownership group led by software mogul Vivek Ranadive could invest more than $700 million in what would amount to a complete makeover of the Downtown Plaza shopping center.
This is on top of Ranadive acquiring 72 percent of a Kings franchise that commanded a selling price of just under $535 million – a record for an NBA team.
Sacramento’s investment in the arena is capped at $248 million, so Ranadive and his partners would have to absorb any cost overruns in the Downtown Plaza project. The Kings owners are already paying pre-development costs, though the Kings and city have not yet finalized a binding agreement.
And recently, the new team owners imposed a ticket surcharge on all events at Sleep Train Arena to pay off by 2016 the remainder of a $74 million loan that Sacramento extended to the Kings in 1997.
Taken as a whole, these financial commitments by the Kings put the proposed $248 million arena investment by the city in a completely different light.
City leaders view the subsidy as justifiable in that it makes a much larger investment by the Kings possible. It would satisfy a city desire to breathe life into a downtown corridor that goes dark when all the state workers, politicos, lobbyists, consultants and other downtown denizens go home at 6 p.m.
Opponents have tried to cast the arena subsidy as a corporate giveaway that would imperil city finances for the gain of billionaire NBA owners.
But that argument took two big blows with Friday’s unveiling of the Kings development plans and a Sacramento Superior Court judge’s order earlier in the week that all but dismissed a lawsuit against the city over the arena subsidy.
Three Sacramento residents had sued the city, claiming it had “fraudulently” concealed the true value of the arena subsidy. But last week, Sacramento Superior Court Judge Eugene Balonon sided with the city, although he allowed the residents 15 days to amend their lawsuit and re-file. They would have to convince the judge that the city should be restrained from making an expenditure that is illegal, wasteful or injures city coffers.
Because the city has not yet entered into binding agreements with the Kings, Balonon ruled that the case is “not ripe for judicial review.”
It’s hard to imagine what could change in 15 days to alter Balonon’s ruling.
Ultimately, the fatal flaw of arena opponents is that they allege fraud on the part of the city, though the process of remaking the Downtown Plaza will play out in public.
The Sacramento City Council will get an update on the arena and its financing plan at its Dec. 10 meeting.
There will be the Dec. 12 planning commission meeting to begin considering renovation plans for the Downtown Plaza.
On Dec. 16, the city is scheduled to release a draft environmental impact report on the entire project. A public workshop on that report is scheduled for Dec. 18.
These public events and others speak to a representative process that arena opponents refuse to acknowledge. They continue to base their opposition on numbers within non-binding preliminary agreements that may not come close to resembling the final, legally binding agreement.
A hotel, apartments, office and retail space – all built to complement a new arena/entertainment center flanked by public walkways and open spaces – would be a massive upgrade over what is at the Downtown Plaza now.
It is part of an overall strategy to energize downtown Sacramento that has been years in the making and includes the city landing control of buildings that could become more valuable with a remodeled Downtown Plaza.
The Kings plan for an arena and surrounding developments creates a public venue for concerts and other shows that is far superior to Sleep Train Arena. It continues the momentum in downtown in a city that could benefit from massive private investment in its urban core.
None of this is a secret. It will continue to play out at a public meeting near you.
Call The Bee’s Marcos Breton, (916) 321-1096.