News Column

Judge rejects injunction that would have blocked arena project

July 24, 2014

By Dale Kasler and Ryan Lillis, The Sacramento Bee

July 24--A judge today tentatively rejected a citizen group's attempt to block construction of the new Sacramento Kings arena.

The tentative ruling by Sacramento Superior Court Judge Timothy Frawley removes what is possibly the last legal barrier before the $477 million project can begin at Downtown Plaza. Frawley will hold a hearing on the matter Friday, when he is expected to make a final ruling on the group's request for an injunction that would have put the project in limbo.

The Kings, who own the mall, have said they expect to begin demolition sometime before the end of the month, shortly after the team closes on its financing for its share of the project.

Kings spokeswoman Laura Braden said the team wouldn't comment on Frawley's ruling until it becomes final.

A group led by Adriana Saltonstall, a one-time Caltrans director, sued the city in late May under the California Environmental Quality Act. The suit says the arena project would create enormous environmental problems in the central city and could even lead to post-game riots in the streets.

The citizens have been facing an uphill battle. Under a state law designed specifically for the arena, SB 743, the group would have to show "imminent threat to the public health and safety," or evidence of peril to Native American artifacts, to get an injunction blocking the project.

Frawley said the citizens couldn't prove their case.

"Petitioners make only passing arguments, unsupported with citation to authority or evidence, that construction of the downtown arena presents an 'imminent threat to the public health and safety' or would adversely affect 'unforeseen important' historical/archaeological artificats or ecological values," Frawley wrote.

The citizens' group attacked SB 743 as unconstitutional. Frawley rejected that argument as well.

In court papers, city officials and the Kings had warned that an injunction could cause extraordinary delays and possibly imperil the whole project, which is supposed to open in October 2016. The cost of the delay could top $100 million, the team said.

What's more, if the building isn't done by 2017, team officials said the NBA could exercise its right to buy the Kings and move them out of town.

The citizens' group was unmoved by that argument, calling it an empty threat. "The citizens double dare the city to produce real evidence that the NBA will yank the Kings if the subject corporate arena is not built by a certain time," lawyer Kelly Smith said in papers filed last week.

Former NBA Commissioner David Stern first revealed the possibility that the team could be moved out of town in an interview last year with The Sacramento Bee.

The group's lawyer was unavailable for comment on Thursday. A second group has filed its own CEQA challenge against the arena project, but hasn't yet sought an injunction.

Meanwhile, City Treasurer Russ Fehr said Standard & Poor's Ratings Services increased the city's credit rating for lease revenue bonds -- the kind of financing that will be used for the arena. Fehr said the improvement would lead to a lower interest rate for the arena bonds and would likely save the city "hundreds of thousands of dollars" every year in its repayment of the financing.

The city's credit rating for lease revenue bonds improved from A to A-plus.

The city can't issue the arena bonds until the city resolves the CEQA challenges, a lawsuit resolving the purchase price for a building at Downtown Plaza, and the project contractor delivers a guaranteed maximum price. Because those hurdles won't be resolved until next year, the city expects soon to enter into a contract that guarantees the bonds will be issued.

The Kings are contributing $222 million to the project and the city $255 million.



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Source: Sacramento Bee (CA)

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