City Beat

Sacramento Kings will pay $12 million for former Macy’s property under court settlement

Workers remove the facade of the old Men's Macys on Thursday, September 18, 2014 in Sacramento Calif.
Workers remove the facade of the old Men's Macys on Thursday, September 18, 2014 in Sacramento Calif. bnguyen@sacbee.com

Clearing what had become a prolonged legal hurdle in the effort to construct a new sports arena in downtown Sacramento, an eminent domain case arguing the value of the former Macy’s men’s store at the arena site was settled last week.

The Sacramento City Council agreed to the settlement amount during a closed-door session Tuesday night.

Under the agreement, the Sacramento Kings will pay $7 million to an investor group called C-III Asset Management and $5 million to CalPERS. Those entities controlled the Macy’s property at 600 K St. until it was seized by the city of Sacramento last year following a contentious court battle.

After a judge ruled that the city could take possession of the property, the Kings tore down the former 211,000 square-foot department store to make way for the new arena. But even after the building was gone, the former owners and the city engaged in a months-long fight over the property’s value.

C-III had asked for $21.75 million for its share of the property, Sacramento Assistant City Manager John Dangberg said. CalPERS, the state employee pension fund, owned the land under the former Macy’s building and valued its share in court documents at $12.85 million.

The city’s appraisal of the property was much lower. In court documents filed in December, an appraiser hired by the city said the property was worth $6.3 million.

“We’re just happy we were able to settle in a fair and equitable matter,” Dangberg said. “All the parties are pleased with the outcome.”

CalPERS spokesman Brad Pacheco said the settlement was “in the best interests of our members and the city.”

“We look forward to the arena and the economic growth it will bring to Sacramento’s downtown community,” Pacheco said in an email.

A spokesman for C-III could not be reached for comment.

The Kings have now paid $48 million for the land where the new arena will stand; the team already spent $36 million for the rest of Downtown Plaza. Sacramento Kings team President Chris Granger said in an email Tuesday that the franchise is “pleased to have settled this matter (the eminent domain lawsuit) to each parties’ satisfaction, and we remain focused on delivering a world class Entertainment and Sports Center to our incredible fans and the Sacramento community by fall of 2016.”

The city and Kings are still facing two other unrelated legal battles as construction of the $477 million arena continues.

Three citizens are tentatively scheduled to go to trial in June on their claim that the city’s $255 million contribution to the arena financing was an “abuse of discretion” and “illegal or wasteful.” The city’s legal bill for fighting that lawsuit is estimated to reach $1.45 million before the fight goes to trial.

On Monday, a hearing was held in the 3rd District Court of Appeal on a lawsuit challenging the environmental impact report the city prepared for the arena project. A group of a dozen citizens has challenged the document, arguing that the arena would expose downtown Sacramento to increased traffic congestion, air pollution and postgame rioting by Kings fans.

City attorneys do not think either case could halt construction of the arena.

Call The Bee’s Ryan Lillis, (916) 321-1085. Read his City Beat blog at www.sacbee.com/citybeat.

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