Kevin Johnson: ‘Nobody's going to hold this project hostage anymore’

08/01/2014 6:34 AM

08/01/2014 11:43 PM

It was a match born of desperation, uniting a luckless basketball franchise in search of a new home and a dying shopping center in need of a fresh start.

The marriage between the Sacramento Kings and Downtown Plaza took its next logical step Friday. Hard hats came out, construction barricades went up and work finally began for the Kings’ new $477 million arena.

Mayor Kevin Johnson and Kings President Chris Granger made brief speeches to a crowd of about 100 construction workers outside the south end of the mall, and a few minutes later the project got underway.

Demolition crews began hauling steel barricades into the arena site from Seventh Street, at the east end. Granger said electricity would be shut off to the vacant buildings, along with other prep work. Buildings will start to tumble in two or three weeks. Portions of the mall will stay open, including Macy’s at the western end.

“All of the obstacles have come down, one after the other,” the mayor said. “This is the day we all imagined, being here with our hard hats on, doing something cool.”

Before getting to work, demolition crews donned purple hard hats and posed for pictures with the Kings’ mascot Slamson, outfitted in a tool belt.

“Thanks for making this happen,” construction worker Khalid Saleem, a foreman with Placer Electric, told Johnson as the mayor worked the crowd.

There was a palpable sense of can-you-believe-it from team executives and others who recalled nearly two decades of frustration over Sacramento’s quest to replace Sleep Train Arena. The NBA had deemed the old building unsuitable, leading to years of speculation that the team might leave town.

Johnson recalled when the Kings’ former owners, the Maloofs, abandoned a tentative agreement to build a new arena in 2012 at the downtown railyard. “That was one of the lowest moments,” Johnson said.

A year later, the Maloofs cut a deal to sell the Kings to investors from Seattle. Granger, a vice president with the NBA at the time, said he began working on issues relating to the franchise’s potential relocation to the Pacific Northwest. From the vantage point of league headquarters in New York, a new Kings arena in Sacramento seemed unlikely.

“I will tell you, there were weeks when I did not think this was going to happen,” he said.

What helped keep the Kings in Sacramento was the availability of Downtown Plaza as an arena site. The once-thriving mall had just been sold. The new owners were willing to work with an investor group, led by software tycoon Vivek Ranadive, that was making a competing offer for the Kings.

The NBA liked the arrangement and vetoed the Seattle move. Ranadive’s group bought the team from the Maloofs and soon after purchased the mall. The start of demolition followed months of negotiations with the city on a development agreement and the completion, earlier this week, of the Kings’ financing.

“Finally!” Granger shouted to the construction workers. “It’s a wonderful day for the Sacramento Kings and a wonderful day for Sacramento.” The Kings have pledged to eventually build a hotel, stores and other developments adjacent to the arena.

This isn’t the first time Sacramento has pinned major hopes on the land where Downtown Plaza sits. When Macy’s opened at the future mall site in 1963, city officials hailed it as salvation for a rundown, low-income neighborhood, City Historian Marcia Eymann said. Gov. Pat Brown presided at the ribbon-cutting ceremony.

“It was a huge deal,” Eymann said.

It wasn’t enough to enliven the central city, however. So in 1968, Macy’s partnered with a group including Sacramento contractor Henry Teichert on a $50 million redevelopment plan covering an eight-block stretch. The heart of the project, a $7 million retail complex called Downtown Plaza, opened in 1971. Other projects followed in years to come, including the downtown Holiday Inn and an office tower on Capitol Mall.

“They really did a lot to make sure that part of town didn’t die,” said Marilyn Hirschi Slipe, a former Downtown Plaza marketing director, in a phone interview.

The mall had its ups and downs. A $157 million face-lift in 1993 doubled its square footage, and for several years the mall prospered. Downtown Plaza was so strong, in fact, that it was too expensive to serve as a feasible arena site when city officials raised the idea in 2004. Australia’s Westfield Corp., which bought Downtown Plaza in the late 1990s, wanted at least $200 million for the property.

All that changed when the mall started bleeding tenants. In 2012, the San Francisco investment firm JMA Ventures bought the mall from Westfield for a mere $22 million. JMA sold the property to the Kings for $36 million. The price doesn’t include the sum the Kings will have to pay for the former Macy’s men’s store at the eastern end of the mall. The city has wrestled control of the building away from its owners through eminent domain proceedings, but a price hasn’t yet been established.

Beyond the real estate purchase, the Kings are contributing $222 million to the project. The city is putting in $255 million.

Johnson and Granger expressed confidence the $477 million arena will open on time, in October 2016, despite lingering litigation. Two citizens groups have filed lawsuits under the California Environmental Quality Act. One group, led by retired Caltrans director Adriana Saltonstall, filed an appeal Thursday seeking an injunction to block construction, one week after a Superior Court judge rejected an injunction request.

“We’ll read about her for a week or two,” the mayor said of Saltonstall, dismissing the idea that the litigation could interfere with the project. “Nobody’s going to hold this project hostage anymore.”

Granger added, "We are not worried. ...We will fight through every lawsuit, every hiccup along the way.”

In time, viewing areas will be set up so Sacramentans can watch the shopping center transformed into the Kings’ new arena.

“It had a 40-year run,” Slipe said of Downtown Plaza. “It didn’t do too bad. But it sure is time to move on.”

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