Judge backs city of Sacramento in arena lawsuit

A Sacramento judge issued a tentative ruling Thursday that a lawsuit challenging the city’s arena financing plan is premature, favoring the city’s argument that no final deal has yet been struck between the city and the Sacramento Kings to build the downtown facility.

Sacramento Superior Court Judge Eugene Balonon set a hearing for 1:30 p.m. today to allow both sides up to 20 minutes to present their arguments before issuing a final decision.

The lawsuit, filed in May, alleges that the city is trying to conceal the true amount of its investment, or subsidy, in the $448 million downtown arena project.

City officials and the Kings owners agreed earlier this year to an arena financing “term sheet” that requires the city to invest $258 million into the deal. City officials contend the term sheet merely establishes a process and framework that will lead to a definitive agreement, after further negotiations. Officials have said they expect to sign a final deal with the Kings in 2014. The city would own the arena; the Kings would operate it.

Sacramento attorneys Jeffrey Anderson and Patrick Soluri argue in their lawsuit that the city is hiding the true nature of the deal, including a subsidy that is higher than the published $258 million. They contend the deal amounts to an illegal giveaway of city funds.

In his tentative ruling Thursday, Balonon indicated the lawsuit is premature because the term sheet is non-binding and doesn’t force the city to enter into further transactions.

“The Court has sustained (city’s) demurrer ... because Plaintiffs have not shown any action that is ripe for the Court’s review,” Balonon wrote.

Plaintiff attorney Soluri said he disagreed with the judge’s ruling, pointing out that the city already has spent money on arena consultants. Soluri said he wants the court go-ahead to depose people with knowledge of the arena plan in hopes of showing that the city is conducting a backroom deal.

“We are obviously going to challenge that tomorrow at court,” he said of the judge’s tentative ruling. “We have alleged specific allegations of fraud and misconduct. Should taxpayers have to wait a full year to have the right to challenge this fraud?”

Assistant City Attorney Matthew Ruyak said city officials are pleased with the tentative ruling, but will reserve further comment until the court issues its final ruling.

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