May 22, 2014

Judge says he’ll toss suit claiming ‘secret subsidy’ in Kings arena deal

A judge Thursday moved to dismiss a lawsuit accusing the city of handing the Sacramento Kings a “secret subsidy” in the just-approved deal for the new downtown NBA arena.

A judge Thursday moved to dismiss a lawsuit accusing the city of handing the Sacramento Kings a “secret subsidy” in the just-approved deal for the new downtown NBA arena.

The two lawyers behind the lawsuit said they will forge ahead with their legal case anyway. The lawyers, Jeffrey Anderson and Patrick Soluri, also are trying to spearhead a voter referendum to overturn the $477 million arena project.

The lawsuit, filed more than a year ago, attacked the nonbinding arena “term sheet” the City Council approved with the investor group seeking to buy the Kings and prevent their proposed relocation to Seattle. The term sheet outlined a $258 million public subsidy.

The Kings’ move to Seattle was vetoed by the NBA and the team was sold to an investor group led by Silicon Valley executive Vivek Ranadive. The new owners made a slightly revised deal, approved by the City Council on Tuesday, in which the city will contribute $255 million to the new arena at Downtown Plaza.

In a tentative ruling, Sacramento Superior Court Judge Timothy Frawley said he would go along with the city’s request to dismiss Anderson and Soluri’s lawsuit. His reasoning: The term sheet wasn’t a binding document. He’ll hold a hearing on the matter today.

After Frawley issued his tentative ruling, Mayor Kevin Johnson tweeted, “ain’t no rain allowed on our parade!”

Frawley is the same judge who earlier this year rejected petitions submitted by taxpayer groups trying to place the arena subsidy question on the June ballot. Although the petitions had enough valid signatures, the judge said their wording was legally flawed.

The “secret subsidy” lawsuit hasn’t completely gone away. Frawley gave the plaintiffs leeway to refile the suit, and the lawyers plan to do just that. Anderson said they’ll rewrite the claim to go after the binding agreement that was approved by the City Council.

Ultimately, they’re seeking an injunction blocking the project, even as the Kings’ owners prepare to begin demolishing Downtown Plaza.

“This case hasn’t gone away,” Anderson said. “The Kings’ owners proceed at their risk.”

He and Soluri are representing the same three citizens, Isaac Gonzalez, James Cathcart and Julian Camacho, who were involved in the failed petition drive earlier this year.

In the lawsuit, Anderson and Soluri argue the city gave the Ranadive group secret sweeteners to compensate them for overpaying for the Kings. The investors bought out the Maloof family in a deal that valued the franchise at $535 million, at the time an NBA record.

The alleged sweeteners include the parking garages at Downtown Plaza, which aren’t being counted as part of the $255 million, according to the lawsuit.

The city says there were no backroom deals. The underused garages are badly in need of repair and are essentially worthless. Anderson called that “laughable.”

Aside from the lawsuit, Anderson and Soluri say they are forming a political action committee that will seek a voter referendum blocking the city’s financing for the arena. City officials said Wednesday the financing vote by the City Council isn’t subject to a referendum.

Related information:
•  Sacramento Kings press ahead with arena while opponents plan petition drive
•  See new downtown arena concept drawings
•  Editorial: Now that the Kings arena deal is approved, much work remains to be done
•  Blog replay: City Council votes in favor of downtown Sacramento arena
•  Festive crowd lines up for Sacramento City Council vote on new Kings arena

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