Arena lawsuit over - Kings win! (retitled)

Gliesian

Gliesian

Bench
#1
#1
http://newsreview.com/sacramento/sacramento-arena-lawsuit-unearths-new/content?oid=17159293

3 residents are suing the city of Sacramento for colluding with the Kings. I'm not sure what to make of this, or if it really went down like the journalist says. Was the public really unaware of the many details that finalized the deal?

This stuck out at me the most:

"According to the city, the Downtown Plaza parking had no value because the garage needed to be refurbished."

My friend bought a parking space at an apartment in SF for 40,000 dollars. How can anyone claim that a parking garage at that location has no value? I don't care if the place is haunted, that's ridiculous!


Bricklayer, your thoughts?
 
whozit

whozit

Starter
#2
#2
Matter of perception. With the arena, assets have a much greater value. Without arena, assets are empty space like the parking garage often was.

The lawsuit wants the Kings to refund the sweeteners that are only that with the development that is coming with the arena. Bullcrud.
 
Gary

Gary

All-Star
#3
#3
Will get thrown out like all the others. These pesky lawsuits happen for pretty much every large construction project. It's of no worries, and it will not cause a delay.
 
captain bill

captain bill

Starter
#4
#4
It's not gonna stop the arena deal, so if it ends up that the city gets more money I'm fine with it.

I don't trust the NBA (or any sports leagues) talking about how poor their owners are, and I hate how they threaten to move teams to get cities to pony up for arenas. So I'll be rooting for this one to win, so long as it doesn't actually interfere with construction and the arena opening.
 
whozit

whozit

Starter
#5
#5
captain bill said:
It's not gonna stop the arena deal, so if it ends up that the city gets more money I'm fine with it.

I don't trust the NBA (or any sports leagues) talking about how poor their owners are, and I hate how they threaten to move teams to get cities to pony up for arenas. So I'll be rooting for this one to win, so long as it doesn't actually interfere with construction and the arena opening.
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A deal is a deal. The City got what they wanted, a chance for downtown revival. Up to this deal they have failed miserably at it.

Would you feel the same if it interferes with the product being put on the floor? And ramifications of the product affecting the success of what goes on around the arena? A deal is a deal and that deal made is what kept the team in town.
 
kennadog

kennadog

Dog On It!
#6
#6
Nothing was undisclosed. Downtown parking garages were running at over 50% vacancy. Something that's vacant isn't worth much and they're right when they say there was a lot of deferred maintenance, which the city would have had to pay for, without the arena deal. A lot of renovation expense to bear for spaces that were over half empty.

Edit: Remember, in the end, the city will own all of it and the land 100%.
 
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fansinceday1

fansinceday1

Starter
#8
#8
Tort reform would stop most of these BS lawsuits. Force the offending parties to cover the defendants costs.

Just another frivolous lawsuit.......
 
kennadog

kennadog

Dog On It!
#9
#9
I know I'm late on this, but I have mixed feelings. While I'm not happy about the cost to the city, I also don't want to make it financially impossible for the average citizen to sue their government. I guess frivolous is in the eye of the beholder. Judges could decide frivolous, but I still think anybody should be able to challenge a decision of their government in court, even if they have no money.

The real problem is many citizens can't, because they can't afford an attorney.
 
Warhawk

Warhawk

Give blood and save a life!
Staff member
#11
#11
John Galt said:
It's over. My twitter is exploding with this - funny it hasn't made it to this board yet. The suit was finally rejected today.

One of the many related tweets:

Tony Bizjak ‏@TonyBizjak 21m21 minutes ago
Judge on secret subsidy allegation: "Plaintiffs arguments amount to nothing more than speculation, ... taking statements out of context."
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Because I have been so crazy busy at work today I haven't checked twitter!
 
Gliesian

Gliesian

Bench
#14
#14
Looks like it's not over after all. Just heard on radio that the city now owes 80+ million to Goldman Sachs due to the delay caused by this lawsuit. The interest rates on the bonds have changed (I think) and you have to wonder if Goldman Sachs is behind this. A man calling Grant Napier actually got cut off when he was trying to explain this conspiracy. I rewound my radio app just to make sure it wasn't me, and sure enough, KHTK had cut the caller off. Did anyone else hear this?

Edit: On second thought, the fed will never raise interest rates. They always say they will, but never do :rolleyes:
Also, not sure if lawsuit was made before the bonds were purchased.
 
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whozit

whozit

Starter
#15
#15
Gliesian said:
Looks like it's not over after all. Just heard on radio that the city now owes 80+ million to Goldman Sachs due to the delay caused by this lawsuit. The interest rates on the bonds have changed (I think) and you have to wonder if Goldman Sachs is behind this. A man calling Grant Napier actually got cut off when he was trying to explain this conspiracy. I rewound my radio app just to make sure it wasn't me, and sure enough, KHTK had cut the caller off. Did anyone else hear this?

Edit: On second thought, the fed will never raise interest rates. They always say they will, but never do :rolleyes:
Also, not sure if lawsuit was made before the bonds were purchased.
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My impression from the tweets stating that the lawsuit cost the city 80 million was pretty much a spin job to make the opponents look as bad as possible. Did the lawsuit cost the City money? Yes. Was it a frivolous and stupid lawsuit? Yes. 80 million? I highly doubt it.
 
hrdboild

hrdboild

Moloch in whom I dream Angels!
Staff member
#16
#16
Was the project delayed though? It's not like they've been waiting all this time for the lawsuit to be resolved. Construction has been humming along toward the planned opening date.
 
Gliesian

Gliesian

Bench
#17
#17
whozit said:
My impression from the tweets stating that the lawsuit cost the city 80 million was pretty much a spin job to make the opponents look as bad as possible. Did the lawsuit cost the City money? Yes. Was it a frivolous and stupid lawsuit? Yes. 80 million? I highly doubt it.
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I think you're right- they should know that interest rates won't increase by that much. I highly doubt the difference in bond debts will be 80. The lawsuit itself tho, I have no idea how much that cost the city. 4 million maybe?
 
Gliesian

Gliesian

Bench
#18
#18
hrdboild said:
Was the project delayed though? It's not like they've been waiting all this time for the lawsuit to be resolved. Construction has been humming along toward the planned opening date.
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No, and the city had said it would sell the bonds no matter the outcome of the lawsuit.
 
C

carmichaeldave

Bench
#19
#19
The bonds could not be sold while there was pending litigation. Thus the delay.

The difference in bonds from when they WERE going to sell (had there been no litigation) to when they ARE going to sell them will equal to approximately 70-80 million more over the life of the loan. That's where the figure comes from.

So beyond legal fees and tying up city employees and judges, yes, Cathcart, Gonzalez, Camacho, Anderson, and Soluri cost the city that money.
 
hrdboild

hrdboild

Moloch in whom I dream Angels!
Staff member
#20
#20
Naturally interest rates go up, I can see that. But 80 million still seems high for increased interest rates on about 250 million in bonds. That's 30 percent of the principal.

Also, according to this report from March of this year, interest rates have actually gone down about 1.7% in the last year.
 
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whozit

whozit

Starter
#22
#22
carmichaeldave said:
250 in bonds. But paid out over 30 years? Its a lot of money.
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Yes it is. But they were going to buy the 250 million then or now. If the rates are the same, so should the overall payments.

I wonder if the argument could be made that by delaying the purchase of the bonds could be a plus since the servicing of the debt will begin closer to the opening of the arena. An operational arena should cause utilization of parking assets to increase therefor those assets should be producing more revenue to pay the debt. If the bonds had been issued earlier, they would have been being paid for by under-utilized assets. Then again the details of the deal are in the recesses of my mind so I could be way more off base than I usually am.
 
John Galt

John Galt

Starter
#24
#24
The bond interest rate game could have played out the other direction so I'm not sure it is fair to pin that on STOP. What if the interest rate happened to be more favorable now than when the city would have otherwise issued the bonds?

I hate the STOP lawyers - I think they are the most cynical kind of crooks to milk legal fees out of this lost cause. But I don't think it is made more egregious by the gyrations of the market bond rate. That's just unlucky and could have gone either way.
 
Warhawk

Warhawk

Give blood and save a life!
Staff member
#25
#25
Actually, it was forecast that interest rates were going to rise prior to issuance of bonds - the city was very concerned about trying to get them issued ASAP to save money.

From a Bee article by Breton in April:

The fear among city officials has been that while this lawsuit dragged on, the city couldn’t issue bonds to pay for its share of the arena. If interest rates rise by 1 percent this summer, as some economists predict, it could increase the city’s debt load. That would mean Sacramento taxpayers would have to pay about $80 million extra in finance chargers over the 30 years to pay off the notes.

Sacramento City Treasurer Russ Fehr said Friday that delays are already preventing the city from saving millions of dollars in estimated arena costs.

“We have an opportunity right now to lock in this deal and sell the bonds at an interest rate that could cost the city millions less than the (financing) model we presented to the City Council last May,” Fehr said.

If he could take bonds to market now, Fehr said the city’s annual debt service could be cut from an estimated $22 million a year to between $17 million and $18 million.

Read more here: http://www.sacbee.com/news/local/news-columns-blogs/marcos-breton/article18298874.html#storylink=cpy
 
Gliesian

Gliesian

Bench
#26
#26
Just to reiterate, I've been following the federal reserve for years. A couple of times a year Ben Bernanke or now Janet Yellen always say, "the economy is doing so great we can finally raise interest rates!". Except this is not the case, because the economy is NOT great. The fed can't raise interest rates because the cheap money that flows through the banks keeps our economy afloat. I'm not going to worry about a rate hike.
 
hrdboild

hrdboild

Moloch in whom I dream Angels!
Staff member
#27
#27
Warhawk said:
Actually, it was forecast that interest rates were going to rise prior to issuance of bonds - the city was very concerned about trying to get them issued ASAP to save money.

From a Bee article by Breton in April:

The fear among city officials has been that while this lawsuit dragged on, the city couldn’t issue bonds to pay for its share of the arena. If interest rates rise by 1 percent this summer, as some economists predict, it could increase the city’s debt load. That would mean Sacramento taxpayers would have to pay about $80 million extra in finance chargers over the 30 years to pay off the notes.

Sacramento City Treasurer Russ Fehr said Friday that delays are already preventing the city from saving millions of dollars in estimated arena costs.

“We have an opportunity right now to lock in this deal and sell the bonds at an interest rate that could cost the city millions less than the (financing) model we presented to the City Council last May,” Fehr said.

If he could take bonds to market now, Fehr said the city’s annual debt service could be cut from an estimated $22 million a year to between $17 million and $18 million.

Read more here: http://www.sacbee.com/news/local/news-columns-blogs/marcos-breton/article18298874.html#storylink=cpy
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...which means that the lawsuit may actually end up saving the city money over the course of the loan. Had they issued the bonds last year, they would have been locked into a higher interest rate than they would by issuing them right now.
 
Capt. Factorial

Capt. Factorial

ceterum censeo delendum esse Argentum
Staff member
#28
#28
hrdboild said:
...which means that the lawsuit may actually end up saving the city money over the course of the loan. Had they issued the bonds last year, they would have been locked into a higher interest rate than they would by issuing them right now.
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That's assuming that the city would have issued the bonds immediately, and with forecasts at the time for interest rates to fall, it's not obvious that they would have. Your quoted article from April says that if the city could have issued bonds in April, annual debt service would be between $17-18M. Had the plaintiffs dropped their meritless lawsuit in April, it would have saved the city up to $2.3M per year over the lifetime of the bonds:

http://www.sacbee.com/news/local/city-arena/article28598230.html

Fehr said municipal bond rates have increased slightly in the past few months, but the city still expects to pay lower interest rates than it forecast in May 2014 when the City Council approved the arena deal with the Kings. The city had expected annual debt service on the bonds would come to $21.9 million. Now the city can expect to pay $19.3 million or less, Fehr said.
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It was pointed out at the time that if the nuisance lawsuit were dropped, it would likely save the city millions of dollars. Now we see that the total is about $80M. But the nuisance plaintiffs, under the guise of being caretakers of the city's money, refused to drop their nuisance lawsuit and as such they turned out to be incredibly lousy caretakers of the city's money.
 
hrdboild

hrdboild

Moloch in whom I dream Angels!
Staff member
#29
#29
Capt. Factorial said:
That's assuming that the city would have issued the bonds immediately, and with forecasts at the time for interest rates to fall, it's not obvious that they would have. Your quoted article from April says that if the city could have issued bonds in April, annual debt service would be between $17-18M. Had the plaintiffs dropped their meritless lawsuit in April, it would have saved the city up to $2.3M per year over the lifetime of the bonds:

http://www.sacbee.com/news/local/city-arena/article28598230.html



It was pointed out at the time that if the nuisance lawsuit were dropped, it would likely save the city millions of dollars. Now we see that the total is about $80M. But the nuisance plaintiffs, under the guise of being caretakers of the city's money, refused to drop their nuisance lawsuit and as such they turned out to be incredibly lousy caretakers of the city's money.
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The $80 million dollar figure though is assuming that the interest rate will have risen 1% from the time the time bonds would have been issued to the time that bonds will now be issued. If the interest rate has actually fallen more than 1% since the time when the lawsuit was initially filed, how can we say for sure that the city would have waited until the ideal moment to issue the bonds? With construction already well underway, isn't it just as likely they would have been in a hurry to issue the bonds immediately upon approval? And even if interests rates do rise 1% between April and the issuing of the bonds (which would exceed most estimates by quite a bit) they still may not have cost the city anything.

I'm not trying to defend the erroneous lawsuit by any means, but to say that they have "already cost the city of Sacramento $80 million dollars" is applying a very selective version of the facts. It would require that we believe (1) The city knew interest rates were going to drop (2) The city was prepared to wait a substantial length of time without any pending litigation (3) The city would correctly identify the right time to issue the bonds before interest rates went up again (4) Interest rates between April and now have increased 1% which outpaces the predictions made earlier this year:

Jennifer Vail, an interest-rate expert at Minneapolis-based U.S. Bank, said she believes rates will rise between 0.75 percent to 1 percent by year’s end. Sung Won Sohn, an economist at California State University’s Channel Islands campus, said bond rates are already starting to creep up as the economy improves and the market anticipates the Federal Reserve’s actions.

Sohn, however, said it’s very unlikely the rates will go up in one fell swoop. “I don’t think it will go up very fast,” he said.


Read more here: http://www.sacbee.com/news/local/city-arena/article12879443.html#storylink=cpy
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I suppose it's fair to say that the lawsuit may have a higher price tag for the city than just litigation costs, but the $80 million figure seems particularly unfair. The actual real-world cost may end up being half of that spread over 36 years which in effect is less than a million a year.
 
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