NBA lawyer, city/county consultant work toward arena deal

[G_M]

http://www.sacbee.com/content/news/story/14279040p-15087792c.html


NBA lawyer, city/county consultant work toward arena deal

By Terri Hardy and Mary Lynne Vellinga -- Bee Staff Writers

Published 8:25 pm PDT Monday, July 17, 2006

A high-ranking official for the National Basketball Association is negotiating directly with a consultant for Sacramento city and county in a last-ditch effort to craft a financing deal for a new Kings arena. Officials hope the increased involvement of NBA lawyer Harvey Benjamin, one of the league's top executives, will prod the Maloof family, owners of the Kings, into an agreement this week.

City and county officials are pressing for agreement on a measure that would appear on the November ballot. Both sides agree that an arena would cost about $500 million, said participants in the talks. One of the biggest remaining issues, however, is how much the Maloofs would contribute. City and county officials said they have talked about a contribution from the family of roughly 20 percent to 25 percent.

"We're not talking 50 percent, and we're not talking 10 percent," said Sacramento County Supervisor Roger Dickinson.

On Saturday, Benjamin assumed the role of lead negotiator for the Maloof family, said participants in the negotiations.At the same time, city and county officials tapped consultant Dan Barrett to represent them. Benjamin and Barrett, both arena finance experts, are talking via phone and e-mail.

It is unclear how Benjamin became the Maloofs' point man - whether the family sought him out, or if NBA Commissioner David Stern wanted him to take the role. Benjamin did not respond to a Bee request for comment Monday.

Sacramento city and county officials welcomed Benjamin's increased involvement. A delegation of local leaders traveled to New York City on July 7 to ask the NBA to help resuscitate talks with the Maloofs.

Two days of intense talks in Las Vegas followed but produced no agreement. Nonetheless, local officials said their efforts captured the attention of the NBA.

"This is why we went to New York; that trip has paid off well," said Paul Hahn, the county's economic development director. Benjamin, he said, "has been somebody who is fair and honest in presenting our viewpoint to the team."

It isn't unusual for the NBA to play a major role in drafting an arena deal. The league is financed by team owners and is charged with representing their interests.

"They're not neutral third parties, but it's a view from a different angle, and it can be helpful," Dickinson said.

NBA Commissioner Stern has been involved to some degree in the Kings arena talks for more than two years, and league representatives attended talks in Sacramento earlier this year.

"The NBA has a vested interest in trying to make sure we do everything we can to get something done," said Kings owner Joe Maloof.

He called Benjamin a "brilliant guy."

"He knows the deal, he's been involved in other deals throughout the league, and we have a lot of confidence in him," Maloof said.

However, Maloof stressed, his family remains in charge. "We're still very involved; we're still going to make the final decision."

That decision needs to come quickly if the public is going to vote on an arena package in November. The idea is to ask for a quarter-cent sales tax for 10 to 15 years, using about half the money for an arena and the other half for projects chosen by cities and the county.

To get the issue on the November ballot, language must be approved by the Board of Supervisors by early August. Dickinson said Aug. 2 is the only chance supervisors will have to vote on the measure, because of planned vacations.

In order to get the measure before them at that time, it must be introduced to the board at its July 25 meeting.

It is unclear if the Kings' outstanding loan from the city, which now stands at nearly $71 million, will be counted toward their contribution to a new arena. The Maloofs have maintained they would pay the loan back.

In 1997, the Sacramento City Council issued former Kings owner Jim Thomas two loans: $73.7 million to shore up the team's finances and $8.5 million to help repay the first loan back. When the team was sold to Joe and Gavin Maloof, they acquired the loan and have made all scheduled payments. In April 2005, the Maloofs made a surprise $12 million payment.

Some local activists are gearing up to oppose any arena deal that includes taxpayer money.

People United, a grass-roots group including union activists, environmentalists and affordable housing advocates, has scheduled a press conference for today at 10 a.m. in front of the County Administration Building at 700 H St.Spokesman Dave Tamayo said politicians should have sought more public input and been more open during negotiations.

"We have an issue with scarce taxpayer dollars being used to underwrite an arena," Tamayo said. "From a public investment standpoint, there are a great many needs that are being unmet."

 

[ShatteredVision]

Arenas and other needs are funded separately and I doubt that funding for an arena will affect spending elsewhere...

 

[VF21]

People United - union activists, environmentalsits and affordable housing advocates.

I have nothing more to say...

 

[D-Mass]

People United - union activists, environmentalsits and affordable housing advocates.

I have nothing more to say...

Those three things aren't always bad.

Then again, I guess you didn't say they were...

 

[JB_kings]

There are some groups that would love to use this issue to have their own agenda heard. It's not so much about fighting for or against a new arena as it is an opportunity to be heard. You saw it with the city council meetings on the arena where these groups came out of the woodwork to talk about anything but building an arena. There are a number of dedicated individuals that regularly attend council meetings and speak from their heart on what they truly believe. They are always there no matter how much press attends. Then there are those that are opportunistic and self promoting. You might see a lot of them very soon.

 

[VF21]

Might? I think it's a lead-pipe cinch we'll be seeing all kinds of "special interest" groups who each proclaim they're speaking for the "people."

 

[kennadog]

What I say to them is nothing is stopping them from putting forth their own proposal for funding all those "other" important needs. What's holding them up?

 

[BigWaxer]

Hi VF hope you give me a tad leeway here on a politics issue but understand if you have to wax my post. Just pointing out the faults of these groups.

Environmentalists? What??? So they would rather have the toxic dump of the rail yard as opposed to it being cleaned up? Glad they are looking out for our environment.

Affordable housing? What??? So they don't want to see the additional growth which will bring in additional tax revenues to help support their housing programs.

Union Activists? What??? Who do you think will be making this building and infrastructure. ALL Your union workers!!! Glad they are looking out for their own.

 

[kennadog]

Waxer, I could call myself any of those things. I've worked in affordable housing for over 15 years. I have no clue what those people see that is so terrible about this. The city can require affordable housing in a redevelopment area. As a matter of fact, any housing developers in redevelopment areas have to either include some affordable housing in their development or give the RDA money to help build it somewhere else. Its all part of the housing element portion of the general plan. If you have a beef, that's where you fight that battle.

Having affordable housing in downtown has little to do with whether or not to build an arena.

Environmentalists should be thrilled that the venue will be near mass transit and the whole superfund site will be turned into a beautiful area right at the heart of downtown, instead of farther out and adding to sprawl.

And you are right, what could union folks be thinking? The arena construction will provide work for quite a while along with the rest of the railyard development. There will also ultimately be jobs in the railyards (not just the arena) where there are no jobs right now.

I agree, its any excuse to get your personal agenda out in public. What is the matter with people who cannot be anything but anti-whatever isn't their pet project/agenda?

 

[Wert]

Environmentalists should be thrilled that the venue will be near mass transit and the whole superfund site will be turned into a beautiful area right at the heart of downtown, instead of farther out and adding to sprawl.

I could be wrong, but isn't planning for mixed use of the rail yards continuing even if there isn't an arena plan in place?

Perhaps the specific addition of the arena to an area that's already slated for development (railyards) carries some specific environmental concerns?

 

[Kingsgurl]

I could be wrong, but isn't planning for mixed use of the rail yards continuing even if there isn't an arena plan in place?

Perhaps the specific addition of the arena to an area that's already slated for development (railyards) carries some specific environmental concerns?

Just out of curiosity, how is the rest of the rail-yard re-developement being financed? Is the city on the hook for any of the clean-up, the building of the Rail Depot, etc?

I'm not an environmental engineer, so I'm hard pressed to come up with what sort of specific concerns would be endemic to only the Arena portion? Spilled beer? Noise pollution? What did you have in mind?
I do know some engineers. I'll ask them.

 

[Wert]

Just out of curiosity, how is the rest of the rail-yard re-developement being financed? Is the city on the hook for any of the clean-up, the building of the Rail Depot, etc?

That's a really good question.

I'm not an environmental engineer, so I'm hard pressed to come up with what sort of specific concerns would be endemic to only the Arena portion? Spilled beer? Noise pollution? What did you have in mind?

I didn't really have anything specific in mind which is why I phrased that comment in the form of a question.

As in "Maybe these groups have objections we haven't heard yet?"

I suppose that one could speculate (and perhaps be quite wrong!) as to what certain groups might object to.

Having more people flowing in an out of an area in a smaller time frame and on a more consistent basis (as would happen with large events at a good size arena) could conceivably cause issues not had by a purely mixed use area. Traffic is already a nightmare at Natomas, and the hope is that they could do better at the rail yards even though the surrounding area in the city seems pretty constricted. More folks means more cars/pollution/noise and likely more need for well thought out infrastructure. Noise seems a small complaint until one realizes that the mixed used nature of this beast means that there's likely to be residents living very close by. I'm open to the notion that good planning here could minimize the concerns that certain groups might bring up. Would be interesting to see how other cities handle those sort of issues.

And before folks are quick to beat me up here, note that I don't claim any of the above as my issues, but rather just things I could potentially see being brought up by others.

I'm sure certain groups will find stuff to complain about (be they environmentalists or whatever). Whether or not their concerns are actually valid or carry any weight remains to be seen.

I don't think it's fair to brush aside concerns and I think it's equally unfair to give such concerns undue weight. There has to be a middle ground where such things can be addressed in a fair way without playing favorites or unduly delaying a plan to the point that construction costs rise to the point of making things impractical.

I don't think those sort of issues are necessarily insoluble at all, but the clock isn't exactly working for us at this point.

 

[Warhawk]

That's a really good question.

I didn't really have anything specific in mind which is why I phrased that comment in the form of a question.

As in "Maybe these groups have objections we haven't heard yet?"

But with more people flowing in an out of an area in a smaller time frame and on a more consistent basis (as would happen with large events at a good size arena) could conceivably cause issues not had by a purely mixed use area I'd think. Traffic is already a nightmare at Natomas, and I'd hope they could do better at the rail yards even though the surrounding area in the city seems pretty constricted. More folks means more cars/pollution/noise and likely more need for well thought out infrastructure. Noise seems a small complaint until one realizes that the mixed used nature of this beast means that there's likely to be residents living very close by. Would be interesting to see how other cities handle those sorts of issues.

And before folks are quick to beat me up here, note that I don't claim any of the above as my issues, but rather just things I could potentially see being brought up by others.

I'm sure certain groups will find stuff to complain about (be they environmentalists or whatever). Whether or not their concerns are actually valid or carry any weight remains to be seen.

I don't think it's fair to brush aside concerns and I think it's equally unfair to give such concerns undue weight. There has to be a middle ground where such things can be addressed in a fair way without playing favorites or unduly delaying a plan to the point that construction costs rise to the point of making things impractical.

I don't think those sort of issues are necessarily insoluble at all, but the clock isn't exactly working for us at this point.

Well put.

There is housing springing up around the existing ARCO - in fact my wife has a friend living there and they seem to have no problems at all with arena traffic (compressed into relatively small time frames on a schedule known ahead of time).

As a civil engineer, I have seen environmental "concerns" that are justifiable and also completely loony and raised just to stop a project because no other avenues are available for their "displeasure".

That being said, unless the specific complaints/concerns are made public and soon, I have to assume that the "environmental" concerns are posturing from a group with no other bullets in their gun.

 

[Warhawk]

That decision needs to come quickly if the public is going to vote on an arena package in November. The idea is to ask for a quarter-cent sales tax for 10 to 15 years, using about half the money for an arena and the other half for projects chosen by cities and the county.

I think this is one of the points that hasn't been discussed enough. Callers to radio shows and letters to the paper lament the lack of other "good" that could be done with "this" money (parks, facilities, etc).

Here you go.

Also, as Kennadog (IIRC) has said - put your own ballot proposition together if you feel that strongly about it. Nothing is stopping you if you think money should be raised for specific projects.

I also had to laugh at the radio last night with a caller saying that no tax should go to an arena because it wasn't a money-maker for the city/county, but then he listed parks as one use he'd like to see for "these" funds. Hello? I don't see any of my local parks turning a profit. I don't see roads running in the black (yes, I know good infrastructure leads to more businesses considering coming to an area, but can't the same arguement be made for a new arena drawing more business to an area?). Silly me, those decorative center medians had better starts turning out greenbacks pretty soon to pay for themselves.

Not every item/facility/project needs to directly turn a profit to be a worthwhile project to benefit the city/county.

 

[Wert]

That being said, unless the specific complaints/concerns are made public and soon, I have to assume that the "environmental" concerns are posturing from a group with no other bullets in their gun.

Wouldn't it be prudent to address the possibility that it might not be possible for groups to have well formed objections/concerns without first having a good idea what the final plan might be? In an ideal world, such concerns would be dealt with as part of the process, but with the clock ticking down, I don't know if that's really as practical at this point.

With a final plan perhaps being rushed into existence to meet the ballot deadline, it would seem that groups would have to guess about potential concerns that might not even be an issue in a final plan. (or conversely, there might be issues brought up by a final plan that were not even considered previously)

Which could lead to the possibility of lawsuits being filed after the fact concerning issues that could have (should have!) been addressed during the planning leading up to a finalized plan.

So I'm not sure if I'd necessarily be dismissive toward concerns brought up later in the process, especially if the lateness of those concerns is exacerbated by the process itself.

 

[BigWaxer]

Okay some research on the rail yards. I have said this before, but if the railyards are the only choice for land I think this will a big hurdle.

A 2002 Bee story said that
http://www.sacbee.com/content/news/arena/story/9763858p-10686671c.html

Most of the yard is off-limits to development because it is on the state's "superfund" list of most polluted sites in California. UP can sell or lease land once the state Department of Toxic Substances Control has certified the property as clean.

The state page:
http://www.envirostor.dtsc.ca.gov/public/profile_report.asp?global_id=34400009
Needs to be certified by 2011.

Won't even need to turn off the lights, everyone will be glowing green as soon as they enter

Oh and I have some serious issues but man we need a political forum

 

[Wert]

The state page:
http://www.envirostor.dtsc.ca.gov/public/profile_report.asp?global_id=34400009
Needs to be certified by 2011.

Very interesting information there.

Does this mean that the folks behind the mixed use plan (setting the arena issues aside) don't plan on making their development a reality until 2011?

And the article mentions the possibility of them finding even worse pollution as part of the cleanup process which could cause further issues. But of course the possible upside is so great that developers are willing to gamble a bit on that I suppose.

 

[BigWaxer]

Ya in that Bee article they mentioned possible land profits of up to 960mill. Lots of upside and that was in 2002

 

[Warhawk]

One reason the railyards site is attractive financially is they can use redevelopment money there, IIRC. They cannot in Natomas. Makes a big difference.

 

[kennadog]

Redevelopment money = public funds. And yes, they can and will be used in any part of the city county redevelopment areas.

When Roger Dickinson was on KHTK, he said a good part of the railyards has all ready been cleaned up and cleared for development and the rest would almost surely be cleaned up by the time the arena began construction (according to the current timeline). I think he said the site of the proposed arena was in the area already cleared, but I can't remember for sure.

 

[BigWaxer]

Cool I wasn't trying to post "DOOMSDAY" info just what I found at the sites. That yard scares me as far as what they can/cannot do.

Also state says they will continue to be there testing until 2032. UP seems to be obligated to foot the bill for it all but.....

 

[kennadog]

I'm quite sure UP is liable for costs. Truthfully, there's a good chance that will be some of the cleanest land in downtown when they're done. Do you have any idea what is under your house? I'll guarantee you, no where near this level of testing was done. For example, if your house sits on land used for agriculture for a long time, there could be herbicide, pesticide and fertilizer residue still there. (Depends on the crops and when, of course.)

 

[BigWaxer]

With a final plan perhaps being rushed into existence to meet the ballot deadline, it would seem that groups would have to guess about potential concerns that might not even be an issue in a final plan. (or conversely, there might be issues brought up by a final plan that were not even considered previously)

Which could lead to the possibility of lawsuits being filed after the fact concerning issues that could have (should have!) been addressed during the planning leading up to a finalized plan.

I agree with a lot of your thinking... But this part... This is CA it doesn't matter how quick/slow what is said, law suits will be filed no matter what.

 

[kennadog]

I agree with a lot of your thinking... But this part... This is CA it doesn't matter how quick/slow what is said, law suits will be filed no matter what.

You can bet on it. I can't tell you how much more expensive "affordable" housing is made (my field) by the NIMBY's who file ridiculous lawsuits, making the stupidest claims. I had one judge just read the riot act to one city group.

EDIT: I don't mean to say that some groups don't raise legitimate issues, but the amount of wasteful lawsuits filed is incredible.

 

[Arena Skeptic]

The two biggest questions I have:

1) If we're raising taxes using some ballot measure and it's a "general purpose" tax hike, and another measure that specifies that we're building an arena, how can proponents not claim that the two measures are not linked, thus making the tax hike a special tax and triggering the 2/3 vote requirement? I think you can look for someone (SCTRL and PUBS) to sue over that one, especially given the number of times Fong, Steinberg and Dickinson have said on camera that the two measures ARE linked. In past cases, the courts have not looked positively on this tactic (look for Proposition 218 on Google for more information).

2) If Sac County is paying $375 million, plus overruns (DO NOT discount that; overruns can easily reach $100 million in a project like this) and the Maloofs are paying, say, $125 million, how can one argue that the Maloofs do not own the arena if they control 100% of the revenue, plus the signage rights? In other words, if you (Wert, Kennadog and VF21, out of the goodness of your hearts) give me $10 million to start a new business, and I get to control all the revenues ("I choose to give them to me!"), then how can you argue that you (W, K and V) did NOT just GIVE me $10 million?

Yesterday, I followed along the conversation, and someone finally asked people, "What measures would you vote against?". In other words, are there terms that make you push the "No" and "No" buttons? I stated, 30%, Maloofs pay for overruns, revenues are divided according to ownership percentage, and noted that anything under a 40% Maloof contribution would not get past voters, which has the effect of making me MORE generous than what I perceive to be the "average voter."

So: It sounds like most sacking's readers will vote for 80% County ownership, Maloofs get 100% of revenues plus signage rights, and there's a possibility that the original loan is forgiven (that part, I admit, is speculation; the rest is not, but it's good to include here because WOULD you vote for it EVEN IF it contained debt forgiveness?).

Would you vote for 100%, plus overruns, plus debt forgiveness, plus they get all revenues?

1) 80% + overruns + forgiveness + revenues?

2) 80%, no overruns, they get all the revenues?

I'd vote for 30%, Maloofs pay overruns, we control revenues based on our final percentage of investment (after overruns, which actually helps the Maloofs, including signage revenues).

I suspect 2) is about what it'll look like, and I think it's reckless. Someone would have to talk pretty fast to get me to back that. It's an excellent example of what I will not vote for.

Where do you, personally, draw the line? What makes YOU say, "Wow, is this ever irresponsible!!", and vote against, even though you know you just voted "Goodbye" and "Seeya"?

 

[VF21]

Where do I draw the line?

Personally, I'm going to wait until I see what they come up with before I pass judgment. The rest is just useless speculation at this point and not really germane to the discussion IMHO.

You're pulling figures out of the air and making judgments on things that they're still trying to reach agreement on. While you may suspect something might happen, asking people to decide on "what if" is what's truly reckless. It puts the wrong image out to people, who may not understand these are YOUR hypotheticals and your hypotheticals only.

Responsible discussion would, it seems to me, require that we not play "what if" on something this important if the chances for misinterpretation are this great.

 

[NewMonkey]

I'd vote for 30%, Maloofs pay overruns, we control revenues based on our final percentage of investment (after overruns, which actually helps the Maloofs, including signage revenues).

I suspect 2) is about what it'll look like, and I think it's reckless. Someone would have to talk pretty fast to get me to back that. It's an excellent example of what I will not vote for.

Where do you, personally, draw the line? What makes YOU say, "Wow, is this ever irresponsible!!", and vote against, even though you know you just voted "Goodbye" and "Seeya"?

I'd vote (just barely) for 20% Maloof contribution, cost overruns split proportionately, local government gets 50% of arena revenues. Original loan to Kings must be repaid, separate from this deal.

 

[Arena Skeptic]

VF,

It's not reckless speculation at all. A number of articles have indicated it's about 20-25%, about $500 million, County pays overruns, Maloofs get 100% of the arena stream, including the signage rights.

I know we're not on the same page as each other on this, but you can't be serious when you imply I'm pulling those numbers out of thin air. Unless, of course, "published reports" is the same as "thin air," in which case, you'd have me.

I'll even add that, 2-3 years ago, when talking with my council rep, Robby Waters, he indicated that the Maloofs were also trying to, at the time (and I cannot stress this enough: AT THE TIME), get veto power over what businesses would be allowed within a "sphere of influence" (2 blocks? 1/2 mile? I just don't know) of the new arena. So, in other words, if I wanted to open a bike shop inside that sphere of influence, to capitalize on all that traffic an arena would allegedly generate, the Maloofs would be given veto power.

Hopefully, the new proposal will not include it, but just be aware, according to Waters, they did ask for that at least once.

 

[Warhawk]

This discussion is pretty pointless since it doesn't really matter. If it makes it to the ballot, then we'll have specifics to discuss. We won't have options, just a yes or no vote.

Why don't we just wait and see what develops and hope we at least get something to vote on....

 

[kupman]

Where do I draw the line?

Personally, I'm going to wait until I see what they come up with before I pass judgment. The rest is just useless speculation at this point and not really germane to the discussion IMHO.

No Kidding...can people (arenaskeptic, people united, wert etc.) just wait until an actual proposal has been made public before they start raining on our parade. I know that there are those in the community that are just chopping at the bit to bring disappointment our way - it must be great entertainment - but how about a little patience?