Sacramento council votes to exempt arena project from competitive-bidding requirements

It will be several weeks before Sacramento knows if there will be a public vote on the proposed $258 million subsidy for the new downtown NBA arena. But on Tuesday, with cartons of petitions landing in City Hall and the mayor blasting his opponents, it felt as though the election campaign was well underway.

Brushing past dozens of vocal construction workers who favor the arena financing, opponents of the subsidy delivered more than 35,000 petitions to the City Clerk’s Office. Within minutes, Mayor Kevin Johnson was caustically comparing the petition drive to the effort to move the Kings to Anaheim in 2011 and Seattle earlier this year.

Meanwhile, the City Council continued to forge ahead on the $448 million arena proposed for Downtown Plaza. The council late Tuesday agreed to exempt the project from the city’s competitive-bidding requirements – a move that city officials said would streamline construction while allowing the Kings to steer much of the work to small, Sacramento-area contracting firms.

The council also received a briefing from City Treasurer Russ Fehr on the plan to finance the city's subsidy – specifically, by borrowing against future revenue from the city’s parking garages.

So far, the council has only tentatively approved the financing plan, and a vote on issuing the bonds won’t come until next spring. What isn’t known is whether the subsidy issue will come to a public vote in June.

The two citizens’ groups fighting the subsidy, Sacramento Taxpayers Opposed to Pork and Voters for a Fair Arena Deal, hand-delivered a dozen cardboard boxes full of signed petitions to the city clerk’s office. The boxes arrived an hour before the city’s deadline.

About three dozen members of the region’s construction unions gathered in the building’s lobby and chanted, “Shame on you” and “Trojan horse” as the boxes were being delivered at the ground-floor office.

It will take several weeks to determine whether STOP and Voters have enough valid signatures – 22,000 – to qualify for the June ballot.

Although STOP officials earlier predicted they’d turn in 40,000 signatures, STOP co-founder Jim Cathcart said the group had scrubbed out several thousand duplicated signatures at the last minute.

Nonetheless, Cathcart said, “we have substantially over” 22,000 valid signatures.

STOP and Voters for a Fair Arena Deal have argued that the proposed $258 million public subsidy is too expensive and would expose the city to financial risk.

“Most of us are for the arena, just like anybody else – we don’t want Sacramento to sacrifice city services for private purpose,” Cathcart said.

Craig Powell of Voters for a Fair Arena Deal ripped the timetable for issuing the arena bonds next May – a month before the vote on the subsidy would be scheduled. “This city is about to steal an election from the people,” Powell told the council.

The mayor defended the arena deal – and tore into its opponents at a press conference later in the afternoon. He said he will work to make sure the signatures are thoroughly scrutinized for their validity, then cited the previous efforts to lure the Kings out of town.

“Here we are – one more time,” Johnson said. “Outside interests are trying to attack our city.”

Echoing the theme from the union protesters, Johnson called the initiative “a political Trojan horse,” meaning a plan by outsiders disguising their true motives. “Ninety-four percent of the dollars ... have come from outside the city of Sacramento.”

He criticized STOP for taking tens of thousands of dollars from non-Sacramentans, including the $100,000 secretly funneled by Chris Hansen, the Seattle investor who tried to buy the Kings earlier this year and move them to his city. STOP says it wasn’t aware the money was coming from Seattle, and the investor was later fined for violating campaign finance disclosure laws.

“They claim to be Sacramento people – they’re not,” said Sacramento labor leader Bill Camp, among those leading the protest at City Hall. “The voters are being conned.”

Kings president Chris Granger, who was at the council meeting, applauded the mayor and said the team “is 100 percent committed with the mayor and the community to ensure continued progress” on the arena.

STOP president Julian Camacho said he wasn’t bothered by the protests, saying, “There’s always two sides to everything.”

Camacho and other opponents of the financing plan say that by the time the city pays off the bonds, in 36 years, the principal and interest payments would total almost $700 million. They say the city would be exposed financially if the parking revenues aren’t sufficient to repay the IOUs.

City officials, however, said the risk is minimal. In his briefing to the council, Fehr said an analysis of the city's parking system showed it will generate more than enough revenue to pay off the bonds. The deal has been structured with “layers of protection” to keep the general fund safe, the treasurer said. “The city can make this deal work.”

The council voted 7-2 to exempt the project from the customary competitive-bid requirements that would normally come with a project that includes a public subsidy. Officials said the Kings, who are developing the arena, plan to accept competing bids but want the freedom to award work as they wish.

Kings officials said the exemption would help them achieve their goal of awarding 60 percent of the construction work to area contractors, and 20 percent to small businesses.

“These are not no-bid contracts,” said Chloe Hewlett, a San Francisco lawyer speaking on behalf of the Kings. She told the council the contractor plan will “promote economic development within the Sacramento region.”