Sac Council approves pre-development money, letters highlight Maloof hesitation

6:46 AM, Apr 4, 2012   |    comments
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SACRAMENTO, CA - The Sacramento City Council voted to move ahead with the pre-development site plan for a new Entertainment and Sports Complex for downtown at Tuesday night's meeting, despite growing concerns over the Maloofs' willingness to be partners.

Council members voted 7 to 2 to pass the vote.

Pre-development of the site will cost $13 million, which will pay for the development of a site plan for the ESC and preparation for an environmental impact report.

The city would pay for 50 percent of the pre-development costs, and the Kings and AEG will each pay for 25 percent.

Last week, the Maloofs announced they don't believe they should pay for pre-development costs to build the ESC; their share would be $3.26 million.

The Maloofs explained the Kings will only be tenants and shouldn't have to pay pre-development costs. City officials, however, maintain that all parties agreed to those terms in Orlando.

"If this deal falls apart, it shouldn't be because the city isn't standing up for what we said we would do," said Councilmember Angelique Ashby during the meeting.

Councilmember Kevin McCarty added, "When you have a framework with all of these moving pieces, why do you move forward and spend money when the framework at the end of the day might not be there?"

Letters obtained by News10 show that the Maloofs are hesitant with the deal. The letters are correspondence between Kings' attorney Scott Zolke and Assistant City Manager John Dangberg.

Here are some of the highlights from the documents passed back and forth:

1. March 5 written by Zolke - "We look forward to working with the city and the other parties involved in negotiation definitive agreements and addressing the unresolved issues."

2. A later document alludes to a March 20 meeting - this is the first time Kings' concerns were put on the table.

3. March 27, 2012, written by Dangberg - "As you know, on February 27, 2012 in Orlando Florida, the Kings, NBA, AEG and City representatives reached an agreement on the terms for moving forward with the ESC project."

That statement is part of an 88-page document that outlines progress of the arena project; essentially, it said everything is on track, including environmental process.

4. March 28, 2012, written by Zolke - "There was never an agreement reached during the February 27, 2012 meeting in Orlando. In fact... unresolved issues regarding the ESC project remained."

5. April 2, 2012, written by Zolke - "While we appreciate your optimism, it appears those feasibility obstacles remain, and in certain aspects have increased."

"You stated that the "ESC project has strong political support throughout the region," but you failed to comment on the initiative drive launched by a citizens' group now called Sacramento Taxpayers Opposed to Pork ("STOP") intending to stop the City from funding the ESC."

"The fact that this initiative drive is occurring makes it impossible for the City to provide current assurances that its funding plan is feasible."

"...ambiguous references to potential revenue streams from land sales. What is clear, is that the City has yet to solidify a financing plan."

"The issues we have identified likely will prevent the City from meeting its timeline, and thus pose imminent obstacles to the new arena being ready for the 2015-2016 NBA season."

Zolke's letters also raised the following concerns:

  • Environmental process could easily be delayed
    - noting a consultant note, "there remain some site planning challenges that are yet to be resolved."
  • Concerned about potential appeal to Supreme Court ruling on railyard environmental impact reviews
  • Traffic improvements suggested by CalTrans that do not consider traffic impacts based on ESC events
  • Historical issues that are likely to arise with railyard buildings

News10/KXTV

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