April 5, 2013

Arena plans may help NBA decide on Kings' future home

Set aside the talk of billionaire executives and flashy plans to redefine downtowns. The final stretch of the Kings saga will likely come down to which city – Sacramento or Seattle – has the more solid arena plan.

Set aside the talk of billionaire executives and flashy plans to redefine downtowns. The final stretch of the Kings saga will likely come down to which city – Sacramento or Seattle – has the more solid arena plan.

Over the next two weeks, leaders in both cities will scramble to prove to the NBA that they can deliver a world-class facility the fastest. Both projects face friction, from the threats of lawsuits and voter referendums to potential environmental challenges.

Following presentations by representatives of Seattle and Sacramento on Wednesday in New York, NBA Commissioner David Stern said the league's owners had taken notice of obstacles that might exist in both cities. As a result, he said, the league needed time to vet those issues before deciding whether to approve the sale of the Kings to a group in Seattle or to a competing contingent seeking to keep the team here.

"There is no finality to the construction schedules in either city, and so we have a lot of work that we have to do," Stern said. He underscored the importance to the NBA of getting a new arena built quickly when he called the existing facilities in both cities "suboptimal."

Arriving at Sacramento International Airport on Thursday, Mayor Kevin Johnson claimed the city's arena project "will be a model" for other cities.

The plan – which calls for a $448 million facility at Downtown Plaza – was the centerpiece of the city's pitch for the Kings a day earlier to key NBA executives. Johnson led that effort along with a team of billionaire investors seeking to buy the franchise and help in the arena financing.

"We laid out a compelling case," the mayor said. "I know for a fact the NBA does not want to move a franchise."

Still, Sacramento's arena plan is in its early stages. The City Council voted just last week to approve a preliminary financing package that includes a $258 million city subsidy and a $190 million investment from a group led by Southern California billionaire Ron Burkle.

Seattle's plan is further along in the process.

The Seattle City Council and King County Council have agreed to contribute $145 million toward a $490 million arena, although the subsidy would grow to $200 million if the private investment team behind the deal can attract a National Hockey League team in addition to an NBA team. The project is also undergoing economic and environmental reviews, which have not begun here.

Sacramento's nonbinding term sheet calls for the arena to open in the fall of 2016, and Assistant City Manager John Dangberg said it's clear the NBA is concerned about the facility opening on time.

"It's going to come down to what could stand in the way of deliverability," Dangberg said, adding, "I feel very confident about our ability to deliver."

He said the city is waiting until the NBA decides the Kings' fate before plowing ahead with environmental site reviews. But he said the city is likely to begin early paperwork without waiting for the NBA. "Based on the comments (by Stern), I'm more inclined to get that going right away," he said.

Dennis Howard, a stadium- finance expert at the University of Oregon, said both cities appear to have come up with solid arena deals. "I think it's a dead heat," he said.

Yet Howard said both cities face potential hurdles, including lengthy environmental reviews and permitting issues. The fact that Johnson is so committed to the arena could be a plus for the city in convincing the NBA that much of the red tape can be cleared.

"That is critical in assuring they'll do everything in their power to move this thing forward," he said.

An 'active' opposition

One of the potential obstacles to a Sacramento arena that will be examined by the NBA is the ongoing threat by project opponents to place the issue before the voters.

Sacramento attorneys Patrick Soluri and Jeffrey Anderson and a group of community activists have threatened to collect signatures and force a referendum on the City Council's approval of a public subsidy for the arena.

"This coalition is very active and concerned about this," Anderson said. "There is blowback to what the mayor and the city have tried to do, rushing this through the public hearing process with little or no significant public opportunity to analyze what's going on."

Qualifying a referendum for the ballot is an expensive task. According to the City Clerk's Office, a group seeking to reverse a council vote would need to collect a minimum of 22,000 signatures from registered city voters – plus a buffer of at least another 10,000.

Rob Stutzman, a Sacramento political consultant, said a campaign that large would likely need to hire paid signature gatherers who demand as much as $2 a signature.

If the referendum did qualify for the ballot, Stutzman said there would be "overwhelming funding on the other side to defeat it." The city's trade unions and business groups – not to mention billionaire Burkle – support the plan.

"That's a pretty hard coalition to defeat," he said.

Soluri and Anderson also have notified the city that they intend to file a lawsuit challenging the arena on the grounds that the city approved plans to build it without conducting the necessary environmental reviews.

The City Attorney's Office dismissed that claim, saying the council's term sheet vote last week was preliminary, and that intense environmental reviews will be completed before a development agreement and formal financing package is brought to the City Council.

Steinberg optimistic

State Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he told the NBA owners that California's environmental laws shouldn't interfere with construction of a new Kings arena. "The state is committed to streamlining the process," he said upon arrival at the airport on Thursday.

One key law aimed at streamlining the process, however, is facing legal challenges. A judge in Alameda County said last week he would strike down a portion of AB 900, a 2-year-old state law designed to expedite court challenges to big construction projects under the California Environmental Quality Act, or CEQA. The judge's tentative ruling came in response to a lawsuit filed by the Planning and Conservation League.

Even with a portion of the law struck down, much of AB 900 will remain intact and would help speed up court cases, said the conservation league's lawyer Antonio Rossmann. The law could easily shave one year off the time it takes to process CEQA lawsuits, he said.

"Keep in mind that Washington (state) has its own environmental quality law," Rossmann added. California isn't "really at a competitive disadvantage."

Steinberg, asked about the Alameda ruling, said he thought it would be a nonissue.

Seattle's arena deal is facing two legal challenges already. The longshoremen's union in Seattle is suing on environmental grounds, saying the proposed facility would create gridlock and pollution issues at the port of Seattle.

The case was dismissed earlier this year by a judge, but the union is appealing.

Separately, a community activist named Mark Baerwaldt has sued to block the tentative financing package, saying it violates an initiative approved by voters seven years ago. That initiative, called I-91, says public financing for a sports arena in Seattle must generate a return on investment equal to U.S. Treasury bond rates – currently a little over 3 percent for a 30-year note.

In court papers, Baerwaldt said the deal is set up so the city would make no money from its investment in the arena. A hearing on the lawsuit is set for April 12.


April 12: A hearing is set on a suit fighting Seattle's arena financing plan.

April 18-19: NBA owners might consider the two competing bids for the team.

Call The Bee's Ryan Lillis, (916) 321-1085. Read his City Beat blog at Follow him on Twitter @ryan_lillis.

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