California Northstate University clears $426K tax default on old Arco Arena site
California Northstate University paid $426,341.30 on Wednesday to Sacramento County to clear a property tax default over the former Sleep Train Arena site.
The payment was made at 12:02 p.m. Wednesday, according to a clerk at the public counter for the Sacramento County Tax Collector. This payment came about 1 hour and 45 minutes after The Sacramento Bee emailed CNU President and CEO Alvin Cheung for comment about the tax default. The email followed a voicemail left Monday.
Cheung had not responded as of 3 p.m. Thursday. University spokesperson Doug Elmets provided an emailed statement hours after the payment.
“The property tax bill has already been paid,” wrote Elmets, who declined to be interviewed. “The delay was simply an oversight by the CNU Accounts Payable team during a period of staff turnover.”
The former Sleep Train Arena was known as Arco Arena for much of its existence.
The Sacramento Kings deeded the former arena site through a related company, SBH Natomas LLC to California Northstate University LLC in August 2021, according to county records. The university announced plans that year to build a teaching hospital and medical campus at the site of the former arena but has faced repeated issues since then.
Prior to the recent tax default, the university has faced multiple lawsuits and has fallen into tax delinquency four other times for the former arena site. Delinquency is generally when a payment is late, with default occurring after “an extended period” of lateness, according to Centris Federal Credit Union’s blog.
More than four years after the university acquired the property, construction has yet to start.
According to the university’s website, CNU currently has locations at 9700 W. Taron Drive in Elk Grove, 2910 Prospect Park Drive in Rancho Cordova and 2200 X St. in Sacramento.
Two months ago, university officials announced they hope to start construction in 2026 for the $1 billion teaching hospital. “This is a transformative investment in Sacramento’s future,” Cheung said then in prepared remarks. “We have nearly finalized our financing and are moving forward with confidence.”
The former Sleep Train Arena was demolished in August 2022. This came roughly six years after the Kings vacated it to play in the new Golden 1 Center downtown at the start of the 2016-17 season. The old arena was used as a hospital for a time during the COVID-19 pandemic. Popstar Demi Lovato also practiced there in preparation for a tour, according to media reports.
Even without a building on the land, the 41.78-acre site has value. The Sacramento County Assessor reports the undeveloped land’s value at $25,036,185.
On Monday afternoon, work appeared to be underway on an adjacent parcel where an innovation park is planned. That site, which the Kings sold last year through their company SBH Natomas LLC for $75 million, is now owned by a separate company, 510 IP Development LLC.
The site for the future innovation park appeared Monday to have recently had grading-related work. Numerous cars were parked on a road that was blocked off near the site and construction sounds could be heard.
Sacramento City Councilmember Lisa Kaplan, whose district includes the former arena site, said via email that the city was working to bring an enhanced infrastructure financing district, or EIFD, for the innovation park to the council members “for approval by the end of the year.” Kaplan declined to be interviewed.
By contrast, the former arena site looked bleak on Monday, with cracked pavement and overgrown, dead weeds. The city’s permitting system Accela showed that a temporary power pole was applied for at the site in August.
Tax records show that the university previously faced delinquency for the second installment of its regular property tax bill for the 2023-24 fiscal year, with a payment of $207,631.62 being made in June 2024, two months late. The university also faced delinquency with its supplemental property tax bills for the 2021-22, 2022-23 and 2023-24 fiscal years, for a total amount of just over $31,000.
The 2024-25 tax year appears to be the first time that the university has faced default over its property taxes. The default occurred when the 2025-26 fiscal year began on July 1.
Few people had much to say about the university’s tax default. Sacramento County Director of Finance Chad Rinde demurred at The Sacramento Bee’s request for a phone interview.
Sacramento City Councilmember Karina Talamantes, who represents a district close to the former arena, said via email, “Yes this project is still in the works,” but directed additional questions to Elmets.
One person who did have thoughts, which he offered in a phone interview Tuesday: Former Kings owner Gregg Lukenbill, who in the mid-late 1980s built the arena that stood on-site for many years. Lukenbill hadn’t been aware of the university’s tax default, though he spoke positively of the project.
“I think it’s genius what they’re doing and it’s great for Sacramento,” Lukenbill said. “My concern is I want them to be successful.”
This story was originally published October 16, 2025 at 3:26 PM.
