Judge: Arena eminent domain suit will stay in Sacramento

Sacramento officials won a key ruling in their quest to consolidate control of the site for the new Kings arena Monday, when a judge rejected an attempt to move the city’s lawsuit out of town.

The ruling by Superior Court Judge Robert Hight sets the stage for a pivotal courtroom showdown March 19, when the city will seek to wrestle custody of the vacant Macy’s men’s store at Downtown Plaza from the property’s owners. The old Macy’s store, at the southeast corner of the dying shopping mall, is the last parcel needed for the $448 million arena.

The city sued the building’s owners under the eminent domain law in January, after sale negotiations broke down. The two sides are millions of dollars apart on price. The owners asked Hight to move the court case to a “neutral venue” such as Alameda County, saying they probably couldn’t get a fair trial in Sacramento. The judge denied the request.

The owners didn’t prove “that prejudice is likely if the trial is held in Sacramento,” Hight said. “The normal venue for eminent domain is the county where the property is located.”

Arguing that a relocation could mean substantial delays in the project, city officials fought strenuously to keep the case in Sacramento.

“We need to get this piece of property,” said Assistant City Attorney Matthew Ruyak after Monday’s hearing. If the city wins the bigger ruling next week, on possession of the building, it could begin demolishing the property in late spring or early summer. The city wants to break ground on the arena this fall.

A jury would decide price sometime in the next few months. Although the city is suing, the Kings would pay for the building. The team already paid $36 million for the rest of Downtown Plaza.

The building is owned by CalPERS and a collection of mortgage holders whose interests are held in trust at US Bank and are being represented by a firm called C-III Asset Management. CalPERS, unlike the other owners, isn’t opposing the eminent domain suit.

The change-of-venue dispute turned on a hair-splitting discussion of whether US Bank, as trustee for the mortgage holders, could be considered a company doing “substantial” business in Sacramento. City officials noted that US Bank operates multiple branches in Sacramento, is a Kings sponsor and is the “name” tenant on one of the largest downtown office towers.

The bank “is clearly not an outsider in Sacramento” and wouldn’t be treated that way by a jury, said a city lawyer, David Skinner.

But George Speir, a lawyer representing the investors, said the bank’s retail presence is irrelevant to its role as trustee. He described the bank as a mere holder of documents for the investors and said it is playing no role in the fate of the Macy’s building.

“US Bank is not terribly thrilled with the publicity it’s getting here,” Speir added. “It’s not calling the shots.”

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