A Sacramento Superior Court judge on Thursday told arena deal foes he will decide in a few days whether to allow them to question City Councilman Kevin McCarty under oath to support their contention that there was a secret deal between some city officials and the new Kings ownership group to help it buy the team.
City officials contend there is no such secret deal, and that McCarty should not be compelled to testify for what a city attorney called a waste of time. Arena deal opponents, however, argued in court Thursday that they believe McCarty and at least one other city official, Economic Development Director Jim Rinehart, may be able to provide evidence that the city tossed some secret “sweeteners” into its agreement with the Kings to jointly finance a $448 million downtown arena.
Judge Eugene Balonon indicated earlier this week he was leaning toward requiring McCarty to submit to a deposition. After a Thursday hearing, Balonon said he likely will issue his decision early next week.
The debate over whether McCarty, who opposes the city arena deal, should be deposed is part of a lawsuit filed last year by local attorney Patrick Soluri, alleging city officials are committing fraud because they have not informed the City Council and public about some elements of the deal.
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The lawsuit is based in part on phone conversations McCarty had last year with Soluri and Isaac Gonzalez, a Sacramento resident who opposes the city arena subsidy.
Gonzalez submitted a declaration to the court stating that McCarty told him that Jeff Dorso, an attorney who was assisting Mayor Kevin Johnson, was encouraging council members last year to give the team owners “additional subsidies that would compensate them” for having to pay a higher price for the team in a bidding war with Seattle. Gonzalez’s court filing also alleges McCarty read him a text message from Dorso saying the “the city needed to ‘pay up.’ ”
In a separate filing with the court, Soluri said McCarty called him last year and told him “that hidden in the term sheet (agreement between the city and Kings) was a secret subsidy intended to reimburse the Kings investors for the fact that they were ‘overpaying’ for the franchise.” In his written court declaration, Soluri included an email from McCarty instructing Soluri “you want (Rinehart’s) emails,” and that Rinehart believed the city had seriously undervalued city land that is being given to the Kings as part of the deal.
Contacted Thursday by The Bee, Councilman McCarty replied “no comment,” later adding, “I’m waiting for the court to sort this out.”
Dorso, who now works for the Kings, could not be reached. City spokeswoman Amy Williams said Rinehart and other city officials would decline to comment because of the pending litigation.
In the Thursday court hearing, Soluri told the judge that questioning McCarty and Rinehart under oath might be his only chance at fleshing out his belief that “there was an intent to deceive the council and public.”
Soluri and other arena critics have focused on three aspects of the term sheet that the city and Kings agreed to in concept last year. The city agreed to put $258 million in value into the arena project, including several parcels that an independent broker estimated are worth $38 million. The city also agreed to give the Kings six small plots where the team can place digital billboards, and it agreed to let the Kings operate some key underground parking spots at Downtown Plaza, the site of the planned arena.
Those elements of the deal were laid out in the term sheet presented to the council and public for approval. Soluri and other critics say the city did not, however, show true values for those items. The parcels, they contend, are or will eventually be worth more than $38 million. Critics also point out that the city failed to place a value on the billboard plots or on the parking spots.
City officials have said they believe the $38 million figure is solid, and might even be overstating the value of the land, given the sluggishness of the real estate market. Officials said they did not put a value on the parking spots because it was not yet certain exactly where the arena would be placed, how many spots that would leave available, and how much money would be required to keep the remaining spots operational over time. The billboard sites are vacant. If the Kings were to put up billboards, they could, at present rates, earn as much as $19 million over the next 35 years on them, according to a Bee estimate.
The attorney representing the city, Dawn McIntosh of the Meyers Nave law firm, called Soluri’s assertions “a waste of everyone’s time.”
“There is simply no fraud here,” she said.