Just a week ago, the city of Sacramento overcame a huge legal hurdle to its proposed subsidy for the new Kings arena at Downtown Plaza. Now officials are trying to navigate through another turbulent courtroom issue: control of the final piece of real estate needed to build the $448 million arena.
A Sacramento Superior Court judge on Thursday ordered the city and owners of the vacant Macy’s men’s store at Downtown Plaza to submit additional legal briefs on the question of whether the city’s eminent domain lawsuit should be moved to another county. Judge Robert Hight said he’s likely to rule Monday.
While the issue is procedural, both sides are taking it very seriously. The store owners want the case moved, perhaps to Alameda County, questioning whether they can get a fair trial in Sacramento. The city says moving the case could interfere with its timetable on the arena project. The city is scheduled to finalize a development agreement with the Kings in April and sell bonds a month later to finance its proposed $258 million subsidy.
In a boost to the city, another judge last week dismissed a lawsuit filed by arena critics who were seeking a public vote on the subsidy. A separate taxpayer lawsuit, still pending, seeks an injunction blocking the public funding on the grounds that city officials have lied about the true size of the city’s contribution.
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The Kings bought Downtown Plaza for $36 million, but the deal didn’t include the former Macy’s men’s building, which has different owners. Situated in the southeast corner of the arena site, the building has been vacant since October, and the Kings and the owners are millions of dollars apart on price. Although the city filed the eminent domain suit, the Kings would ultimately pay for the building.
During a 45-minute hearing Thursday, city lawyer David Skinner said the building’s owners are trying to throw obstacles in the city’s way. “We can’t afford this gamesmanship,” Skinner told the judge.
If the lawsuit stays in Sacramento, a court hearing is set for Tuesday on what is probably the most crucial aspect of the case: the city’s request for an order transmitting control of the vacant Macy’s building so the arena project can proceed. The purchase price would be established later by a jury.
George Speir, a lawyer representing property owners, has sought relocation of the case to a “neutral venue” because of the fairness question.
The change-of-venue question turns on a complicated argument over who exactly the current owners are, and whether they do business in Sacramento.
The building is owned by CalPERS and a group of mortgage-certificate holders whose interests are represented by US Bank. CalPERS isn’t contesting the city’s suit but the other investors are.
The city said the lawsuit should stay put because all the parties do business in Sacramento, including the bank. Skinner noted that US Bank occupies one of Sacramento’s tallest office towers, the US Bank Tower on Capitol Mall.
Speir, a lawyer for a firm called C-III Asset Management, which represents the investors’ legal interests, said the owners are out-of-towners and are entitled to have the case heard in another county. He said the bank’s offices, ATMs and other assets in Sacramento are irrelevant to the eminent domain case. The division of the bank that represents the mortgage-certificate holders is based in Ohio, Illinois and Minnesota, he said.
Meanwhile, the Kings and Turner Construction, the general contractor on the new arena, held the first in a series of outreach meetings at Robertson Community Center on Thursday to meet with potential subcontractors. A coalition of nonunion contractors, angry with the Kings’ agreement to build the arena with mostly union labor, protested at the meeting.