Ranadivé and Johnson testify on arena lawsuit
Sacramento Mayor Kevin Johnson deleted text messages, including some related to the city’s arena deal, after city officials received a legal letter advising them that they were required to preserve all electronic communications related to the deal.
Johnson, testifying in court on day six of a lawsuit that seeks to invalidate the city’s agreement to subsidize an arena, told the court he sent texts infrequently at the time and that very few of those he deleted involved arena discussions.
“I did it without thinking,” Johnson said on the witness stand in Sacramento Superior Court on Tuesday afternoon. “There was no ill intent.”
He described what he erased as “chit chat, but nothing relevant” to the court case challenging the deal the mayor and the city struck in 2014 to partner on building a new arena.
Judge Tim Frawley asked the mayor a series of pointed questions, however, and indicated he would consider Johnson’s actions when ruling on whether the city engaged in secret elements of the arena deal.
The plaintiffs, three city residents, allege the city put several goodies into the half-billion-dollar arena deal in order to secretly compensate an investor group for overpaying for the team in 2013 to keep it from moving to Seattle.
Frawley noted that the plaintiffs have asked him to impose sanctions on the city for failing to adhere to their attorneys’ legal request in June 2013 for preservation of communications relevant to the arena deal, including emails and texts.
The judge said the law allows him, when deciding the case, “to draw a negative inference from the destruction of that evidence.”
“I’m trying to get a handle on what would be an appropriate sanction, if any,” Frawley said Tuesday as he questioned the mayor.
Johnson did not estimate how many texts he erased but said that he may have texted 10 to 15 times a day and that it was his normal habit to erase texts. Johnson said he did not recall how many texts he erased from players in the arena deal but conceded at least a few were arena-related.
Frawley told the attorneys for the city and the plaintiffs that he will give the text issue the weight he feels it deserves, at trial’s end, in issuing his ruling on the case.
The trial is expected to last at least to the end of the week.
The plaintiffs sued in 2013 after the city and Kings agreed to a nonbinding term sheet. They are seeking to invalidate the deal that the team and the city reached last year. If that were to happen, it is unclear what effect it would have on arena construction, which is well underway and scheduled for completion in October 2016.
Johnson spent more than three hours on the stand Tuesday. During his testimony, he said the prospective Kings owners initially asked the city two years ago if it could chip in more to the deal, but he said no.
“I shot it down,” Johnson. “It was ridiculous from the onset. They were just negotiating. We said absolutely not and moved on.”
Plaintiffs’ attorney Jeffrey Anderson, who has said he believes the city did put sweeteners in the deal, showed Johnson and the court numerous memos and emails, obtained from the city during lawsuit discovery proceedings, that indicated the mayor and other city representatives did continue to discuss deal points that could provide value to the Kings over time.
Those included giving the team rights to build six digital billboards and rights to operate several thousand city-owned parking spots at the arena site. Anderson and co-counsel Patrick Soluri contend the city should have listed dollar values for those in published deal documents.
As part of the arena agreement, the city committed to providing $255 million in cash and land value toward construction a new arena at the former Downtown Plaza site, as well as giving the Kings the billboard rights and parking operations rights. The arena construction cost is now estimated at $507 million, with the Kings paying everything beyond $255 million.
City officials say they made all the deal points public in numerous documents and discussions and did not list dollar values for the parking spaces and billboard sites because the entitlements did not cost the city any money. In the case of the parking spots, city officials said those were garages that are in such disrepair that they would become money losers. The Kings have agreed to fix the garages, pending another inspection of their condition.
Mayor Johnson used his perch on the witness stand at several points to say that the deal’s details have been vetted repeatedly in numerous City Council discussions and votes. “We got a great deal,” he said.
No one asked for or participated in any secret dealings, he said when asked that question by the city’s attorneys. “Absolutely not,” he said.
Anderson, the plaintiffs’ attorney, displayed several documents produced by people involved in the deal negotiations that cited the potential for tens of millions of dollars in revenues to the Kings from digital signboard rights.
The mayor said he believed those were estimates the Kings group tossed around, but he said in any case turning those assets over to the Kings did not cost the city money, or at least represented a nominal cost to the city to offer.
“Those are their projections on what they may or may not get,” he said. “The real question is the cost to the city. That wasn’t a cost to the city. Again, we were very clear in terms of the city, ($255 million) was what we could give.”
“If they could get additional revenues on their side, that was great, but we were firm on what we could do.”
Earlier in the day, Vivek Ranadive, the Silicon Valley entrepreneur who bought the Sacramento Kings two years ago, took the stand.
Ranadive pointedly disagreed when plaintiffs’ attorney Patrick Soluri asked whether the parking spots and digital signboard rights were thrown into the deal by the city to quietly help preserve the long-term viability of the franchise in Sacramento.
“No,” he said. “The way you preserve the viability of the Kings is to have a team that succeeds ... have a well-managed organization, a good TV contract.”
Asked by plaintiffs’ attorneys about the allegation that the city should have stated a dollar value for the digital signboard rights, Ranadive said that value isn’t knowable yet because the Kings have not yet attempted to put those rights to use.
“To this day, I couldn’t tell you want that value is,” he said. “It is just dirt right now. It is air. There is nothing there. I simply don’t know.”