The Sacramento City Council voted 7-2 to start eminent domain proceedings that would allow it to take over a piece of private property in the Downtown Plaza in order to start building an entertainment and sports complex.
The motion passed Tuesday night authorized city attorney James Sanchez to start the eminent domain process, which would allow it buy the former Macy's East building.
"Eminent domain is usually used when negotiations fail," Eminent Domain Attorney Gary Livaich said. "And a third party, a jury, has to decide what the value of the property is."
The majority of the Downtown Plaza Mall has been purchased by the King's ownership group already, but an agreement hasn't been reached yet for the property at 600 K St. The land is owned by CalPERS, and U.S. Bank has a lease on the property. The issue would only go to court if there's no agreement reached and CalPERS challenges the eminent domain.
In a letter sent to the city, CalPERS said it is not objecting the use of eminent domain. But U.S. Bank is; an attorney with the bank has not explained why.
In order for the city to claim that it has eminent domain over the Macy's East property, Livaich said the city must follow two rules: 1) the property must be taken for public use and 2) the land owner must be compensated. Livaich said it seems the city has a case to use eminent domain.
Recent examples of city's using eminent domain for arena builds include Brooklyn for the Barclays Center and Arlington, Texas, for AT&T Stadium, where the Dallas Cowboys play. Washington D.C. is also considering using the tactic to build a soccer stadium.
The city and the Kings' ownership group is under a strict schedule by the NBA. It outlines deadlines for planning and building the downtown arena, including a completion deadline of 2017. If the deadlines are not met, the NBA could potentially relocate the Sacramento Kings.
Council members Kevin McCarty and Darrell Fong voted against the motion.
UPDATE: Wednesday, Jan. 8, 2014 4:40 p.m.
CalPERS released the following statement in response to the City of Sacramento using eminent domain to acquire the former Macy's East building:
"CalPERS has no objection to the City's right to acquire the property through eminent domain. We recognize the significance of the City's downtown redevelopment efforts and are eager to find a resolution that is in the best interests of everyone involved - including our members, the City of Sacramento and the tenant of the property."