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City of Sacramento asks Anaheim to end negotiations with Kings

by Suzanne Hurt, published on March 28, 2011 at 7:22 PM

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Sacramento officials asked the city of Anaheim Monday to stop all negotiations with the Sacramento Kings and drop plans to issue $75 million in lease revenue bonds to entice the team to move.

Otherwise, Sacramento expects Anaheim and the Anaheim Public Finance Authority to contractually require the Kings' owners to first repay Sacramento $77 million for lease revenue bonds issued here in 1997, according to a letter emailed late Monday afternoon to Anaheim City Manager Tom Wood.

"I am deeply concerned about the potential for Anaheim's actions causing irreparable harm to the city of Sacramento," Sacramento Assistant City Manager John Dangberg said in the letter. "As the Anaheim city manager, you certainly understand the financial and budgetary implications for Sacramento were the Kings to relocate without satisfying their approximately $77 million obligation to pay off the city's bonds."

The letter was issued on a day when Sacramento city staff were off work for the César Chavéz holiday. Dangberg was not available to comment.

A public hearing and vote is scheduled before the Anaheim City Council at 5 p.m. Tuesday. The only two items on the agenda involve a resolution to approve Anaheim Public Financing Authority lease revenue bonds for improvements and working capital for the Honda Center – an arena owned by the city of Anaheim.

Billionaire Henry Samueli owns Anaheim Arena Management, which manages the arena, and the Anaheim Ducks hockey team.

The financing authority is scheduled to meet immediately after the council adjourns for a vote on a consent calendar item authorizing issuance of the bonds.

The Kings agreed to pay off outstanding bonds in Sacramento if it moved to another city before 2027, according to Dangberg’s letter.

A move by the Kings would lead to "blighting impacts" for Sacramento, Dangberg wrote, adding that city officials are working on another letter addressing what they see as an inadequate review of the environmental impacts of projects Anaheim is now considering funding. Legal challenges to public projects are sometimes filed over claims involving environmental impact concerns.

Anaheim has failed to turn over all records relating to the Kings, the National Basketball Association and the Maloofs as requested in a public records act filed by Sacramento March 4, the letter stated.

The letter was sent to Anaheim at 4 p.m. Copies of the letter were also emailed to the Sacramento City Council, Mayor Kevin Johnson, the Anaheim City Council, Anaheim Mayor Tom Tait, the Anaheim city clerk, State Senate President Pro Tempore Darrell Steinberg of Sacramento, The Sacramento Bee and The Orange County Register.

Monday evening, Mayor Kevin Johnson's office issued a statement reiterating his expectation that the Maloofs will repay their loan from Sacramento.

"The mayor continues his laser focus on fighting for what’s best for Sacramento. First and foremost, that means doing everything we can to keep the Kings, and all the economic and community benefits they provide," mayoral spokesman Joaquin McPeek said in the statement. "But it also means taking basic precautionary measures to protect taxpayers in case the team does relocate." 

 

Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

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March 28, 2011 | 10:01 PM
Well this ought to be interesting. I wish I could attend Anaheim’s council session on Tuesday.
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March 29, 2011 | 5:16 AM
One needs to know when enough is enough. Evidently the gentlepersons running the city have not divined this.
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edited on  March 29, 2011 | 9:10 AM
And the Maloofs are mad as heck responding .the letter was below the belt, completely wrong, uncalled for and "you better be careful. Don't mess around with our businesss" .According to the news this morning Anaheim still wants to go ahead with their plans to get the Kings... And after the letter the Kings want to leave even more….. This and the crash tax, no city manager, budget woes Sacramento officials need to step back and evauate their image because world class is looking far fetch. Quite frankly our image is not looking good and I can't see another NBA team wanting to come to Sac with these shenanigans
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March 29, 2011 | 11:24 AM
rhonda, you are 100% correct. instead of building a "world class city" the mayor and the council are showing they are "world class children". our local government is showing the world how unprofessional they really are.
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March 29, 2011 | 9:16 PM
Rich, I agree!!!!! 100%
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March 29, 2011 | 11:37 AM
This is a desperate act from a city that knows the team is gone. It's amusing that the letter chooses to ignore the fact that the Maloof's have not missed payments on the arena and that every article related to the forthcoming move in the Orange County Register has referenced the $77 million loan payment owed to the City of Sacramento. It's not like the Maloofs have made an effort to hide the fact. Yet based upon fear, the City of Sacramento is poised to hire outside counsel to ensure payment (something the city attorney should handle) and send this letter in a laughable attempt to intimidate the Anaheim City Council.
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March 29, 2011 | 1:17 PM
Off base by a mile. The Samueli deals gives the Maloofs $50 million of which $30 million goes to the NBA/Lakers/Clippers...leaving $20 million, not enough to pay off the $70 million note on Arco. The Maloofs are strapped. Their only real option is to default on Arco leaving the City owing the bondholders. The City is strapped. Arco's not worth anywhere near the bond amount AND isn't there a senior NBA loan in the Arco mix somewhere? No, newguy, this is a mess that needs legal perspicacity, not a city attorney.
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March 29, 2011 | 1:45 PM
You should read this article... http://www.ocregister.com/sports/city-293869-million-nba.html
The $50 million is the public portion. It's also speculated that Samueli will give the Maloof's "a substantial personal loan" that would apparently be used to pay off the City of Sacramento.

I have no doubt that Henry Samueli will own the team in a few years, but I also think its disingenuous for the City of Sacramento to claim that they will not be paid.

However, it is not the concern of the City of Anaheim and threatening that city or trying to get Sen. Steinberg to run a bill blocking the move is simply like a child throwing a temper tantrum.

If the Maloof's default on the payment, Sacramento can sue them for breach of contract and it will be decided in court. Either way, the team is gone.
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March 29, 2011 | 6:34 PM
this what we get. trusting a bunch of sleaze balls and greedy jerks for a stupid NBA team-
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