Kings complete arena financing, will start preparing Downtown Plaza for demolition on Friday
07/30/2014 5:58 PM
07/31/2014 6:01 AM
The Sacramento Kings will begin building their new $477 million arena Friday.
The NBA’s advisory/finance committee Wednesday approved the Kings’ financing terms and lease arrangement with the city of Sacramento, Kings President Chris Granger said. The team then closed on a loan with Goldman Sachs Group Inc. The first installment of its money was expected to be wired to the Kings’ organization early today.
With that final green light from the league, Granger said preliminary demolition of Downtown Plaza would begin at 6 a.m. Friday. He and Mayor Kevin Johnson will greet what’s expected to be an initial wave of 100 construction workers. Purple hard hats will be handed out to the demolition crew, but the event isn’t public. A more formal groundbreaking ceremony will be held at a later date, he said.
The first few days will be mostly consumed with prep work. While portions of the mall are already fenced off, he said more permanent barricades will go up, and electricity will be shut off to the construction site in the eastern portion of the mall. Macy’s and other tenants at the western end will stay open during the two-year project.
“We’re excited to get to work,” Granger said. “After so many twists and turns we’ve finally arrived.”
He said the Kings plan to install “viewing stands” on Fifth and Seventh streets for people to watch construction, although there won’t be much to see at first.
“It’s going to be a couple of weeks before buildings start coming down and you see visible signs of construction,” he said. The team also plans to install webcams and to occasionally fly cameras mounted on drones over the site for online viewing.
At its peak, the project will involve hundreds of workers. Most days, Monday through Saturday, the site will be busy from 6 a.m. to 11 p.m., with a handful of 24-hour shifts to haul in construction materials overnight.
The building, a replacement for aging Sleep Train Arena, is supposed to open in October 2016. “I feel very confident that we remain on schedule,” Granger said.
A former NBA vice president, Granger said teams that are building new arenas have to get approval on financing and lease terms from the league’s advisory/finance committee, a panel consisting of 10 NBA owners. The Kings will operate the arena but will pay the city lease payments that will start at $6.5 million a year and grow to around $18 million.
The Kings are contributing $222 million to the project. Granger wouldn’t say how much the team is borrowing, or how much it would receive in the first installment of the loan. City officials have said they expect the Kings will have spent about $75 million by the end of October, not counting land purchases. The team owners have spent $36 million buying most of the mall.
While the Kings are finalizing their Goldman Sachs loan, the city has wrapped up a bond-purchase agreement that ensures the city will be able to finance its share of the project. The agreement, also with Goldman Sachs, represents a guarantee that the city will be able to sell its lease-revenue bonds to cover the bulk of the $255 million public contribution to the arena.
Three pending court cases, including two challenges to the project under the environmental laws, won’t interfere with the start of construction but mean the city probably can’t sell the bonds until next spring. In the meantime, the Kings needed assurances the city would be able to sell the bonds eventually before the team could close on its financing. The city’s bond-purchase agreement provides that certainty.
“It’s been a long time coming,” said Assistant City Manager John Dangberg, referring to the start of demolition. “It’s a very exciting milestone not only for this project but for all of downtown.”
The eastern end of Downtown Plaza has been vacant since late May, shortly after the City Council approved the subsidy and development deal with the Kings. Since then, other signals have emerged that demolition was imminent. The fountains on the ground floor have been shut off, and signs have been erected warning motorists that the main underground garage will close permanently on Thursday. Drivers will be able to use the garages at Third and L, Fifth and J and beneath 24 Hour Fitness at the eastern edge of the mall.
Another retailer at the mall, the GNC store, shut down Tuesday.
The NBA’s approval came five days after the last legal hurdle to demolition was removed. Last Friday, a judge rejected a request by arena opponents to issue an injunction that would have halted construction. The opponents said the project would be harmful to the environment.
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