Newest articles on The Sacramento Press tagged as "john dangberg"

Will leasing city garages ruin parking validation?

2012-01-20T18:50:13Z

As the city pursues a potential lessee for the city’s parking inventory, there is an important question to ask: Could the city parking validation program end? If it does, is there a risk of damaging existing businesses – some of which have struggled in the downtown area for years?

According to city parking services manager Howard Chan, Sacramento currently validates parking at city-owned garages for many local businesses and venues, providing an incentive to business owners: They buy the parking at a discount, and they have something to offer patrons as a courtesy.

Merchants buy discounted parking tickets worth $5 of parking for 50 cents each, and the validation is good in any of nine city-owned downtown and Old Sacramento parking garages.

Depending on which garage a shopper uses, that comes out to about two hours of free parking.

In the downtown area, 116 businesses took part in the parking validation program in 2011, according to Chan, bringing in roughly $100,000 in revenue to the city.

Tony Sheppard, co-director of the annual Sacramento Film and Music Festival, said several arts and cultural events that are hosted at venues like the Crest Theatre might be threatened if patrons were not offered validated parking.

“It’s difficult with some arts and cultural events to get people to come from long distances,” Sheppard said Thursday.

“Depending on the time of day, or day of the week, the cost of parking changes,” Sheppard said. “If parking rates go up, validation becomes even more important.”

In an economy where businesses struggle and many come and go, parking validation can be an important incentive for shoppers to go downtown.

If downtown loses the benefit of parking validation, are we championing the cause of one business – an arena for the Kings – at the expense of others downtown?

Assistant City Manager John Dangberg said it’s premature to ask that question.

“In a parking monetization, you go through a lengthy discussion period on the concession agreement,” Dangberg said. “It deals with everything from rates to special events to non-competition – all those get wrapped up in the agreement.”

Once the city gets into those discussions, Dangberg said, then details such as parking validation programs are considered.

Dangberg said, however, that it’s important to remember that any concession agreement is subject to existing agreements – such as parking validation contracts some businesses have with the city already.

“Those are legally binding contracts,” Dangberg said. “They don’t just go away.”

Lisa Martinez, spokeswoman for the Downtown Sacramento Partnership, said Thursday that the DSP is concerned with maintaining strong customer service for the businesses in the downtown core.

“Parking validation is something that supports the businesses and provides a perk for customers,” Martinez said.

Martinez agreed with Dangberg that it’s too early in the process to know what impact – if any – a parking lessee might have on parking validation programs in the city, but it’s a good idea for business owners to stay aware of the situation.

“There will be opportunity for businesses to weigh in on the process,” Martinez said, “and we encourage them to do that. We’ve also been advocating for (city officials) to consider all the impacts on a private business owner.”

Raelene Trumm, general manager for Westfield Downtown Plaza, said that if the city leases its parking inventory – which would include the parking garage at Downtown Plaza – it would have no real impact on the mall.

“It doesn’t affect us at all,” Trumm said. “We’re covered under contract with the city (for parking validation) until about 2055.”

Trumm said that any change in parking operations at the city level would need to incorporate the plaza’s legally binding contract.

Not all plaza businesses have parking validation as part of their lease, Trumm said, but most permanent tenants in the mall do participate in the validation program.

Other local business owners who take advantage of the city’s validation program say losing it might make a difference in their business.

Nathan Sorgenfrie, a staff member at Chef's Mercantile in Old Sacramento, said that roughly half of the people who come into the store want parking validation – although not all customers knows it is available until it’s offered to them.

“We ask everyone,” Sorgenfrie said Thursday, “and some are surprised by it. But only the first time. When they come back, they usually ask right away.”

Sorgenfrie said that he doesn’t think parking validation is really what drives people to visit Old Sacramento – but it could be the reason they return for a future visit.

Connie Carlson, manager at G. Willikers Toy Emporium in Old Sacramento said her store gives out at least 100 validations a month during busy months – but not every month is that busy, and not every customer needs parking validation.

“I think losing (validation) would make some difference,” Carlson said, “but over time it would be forgotten. It’s a small percentage of our customers.”

While the city is going through the “request for qualifications” process, Dangberg said his office is compiling questions received from interested parties about the city’s parking inventory.

Interestingly, none of the questions received to date address parking validation programs.

It may be too soon to tell what the city’s parking validation program will look like if the city finds a lessee parking operator.

“The question should still be asked,” Sheppard said. “It should at least be on the radar.”

Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.

City Council to vote on $550,000 in consultant fees for arena financing

2011-09-27T01:17:07Z

The City Council will consider approving $550,000 in fees Tuesday to bring in experts on sports finance, parking, investment banking and municipal finance to help dig through the details of a complex – and uncertain – arena financing plan.

At the Sept. 13 council meeting, City Manager John Shirey told council members that, in order to “proceed with due diligence” on the proposed arena project, the city would need the help of outside professional services.

“The City Council and the public deserve to have good information in order to make good decisions,” Assistant City Manager John Dangberg said Monday.

Members of the arena focus group, Think Big Sacramento, presented a much-anticipated 100-Day Report to the City Council on Sept. 13 that outlined a “menu” of financing options for the proposed entertainment and sports complex.

Although the report covered nearly 60 possible funding streams, it left many questions unanswered about specifics of the financing.

To get the needed answers, Shirey, Dangberg and city staff are turning to consultants – industry-specific experts in specialized fields related to arena financing and contract negotiation.

“We are in the process of trying to make a very big decision on a large piece of public infrastructure that will have lasting impact on the city if it goes forward,” Dangberg said.

If the City Council directs the city manager to negotiate the proposed contracts, Dangberg – who is taking the lead on the project for the City Manager’s office – and the consultants will have a lot of work ahead of them, Dangberg said.

“We will study the revenue and finance option streams that were identified in the Think Big (100-day) report,” Dangberg said, “including legal and policy issues and the capacity to carry debt.”

Consultants will also analyze the value of city parking assets and determine if the city can leverage those into a significant contribution to the project as outlined in the Think Big report.

Dangeberg said they will concurrently start discussing the “framework” for a feasible project with the ICON-Taylor group and the NBA.

The proposed consultant contracts total $550,000, including $75,000 for contingencies. The terms of the contracts will vary from two to six months, depending on the nature of the contract, Dangberg said.

One of the consultant contracts being recommended to the City Council is a $125,000 contract with Barrett Sports Group.

Barrett’s expertise is exclusively in sports finance consulting, Dangberg said, and the firm has been evaluating the sports complex proposal and providing advice to city staff since late June.

“The history and knowledge that (Barrett) has on the project is so valuable,” Dangberg said. “They have specific and specialized knowledge of this particular project, so it wouldn’t make sense to bring anyone else in at this point.”

Other consultants have not been selected yet.

$180,000 of the total funding will come from the city’s Parking Fund and the remaining $375,000 will come from the Capitol Improvement Project (CIP) Fund balance, according to city staff. The CIP fund is money left over from capital improvement projects that is made available for one-time uses.

One time funding is not something generally used to add staff or programs because it is not ongoing funding, city spokeswoman Amy Williams said Monday.

“Our guiding principal has always been protecting the taxpayers,” Jeremiah Jackson, Think Big Sacramento project manager, said Monday. “That’s what these consultants are being hired to do.”

“When you buy a house, you hire experts like roof inspectors, pest inspectors and home inspectors to make sure that you get what you’re paying for,” Jackson said. “If you don’t get experts then you’re negotiating from blindness.”

Jackson said that, when dealing with groups like the NBA and the Sacramento Kings’ owners who will have experts in their corners, it makes sense for the city to have experts in its corner too.

“We have great city staff, but they don’t do big stadium deals day in and day out,” Jackson said. “If we can bring in (people) who have that experience, we’re doing the smart thing.”

R.E. Graswich, special assistant to the mayor, said Monday that, from the mayor’s standpoint, the proposed entertainment and sports complex is a project worth 4,100 jobs and $7 billion in economic activity over 30 years.

“Is it worth the $550,000 to get to that point?” Graswich added. “We think so.”

The City Council will meet at 6 p.m. Tuesday in council chambers at City Hall, 925 I St.

Melissa Corker is a Staff Reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.

City Council receives, reviews arena reports

2011-09-14T05:58:28Z

City staff and Think Big Sacramento representatives presented the City Council with technical and financial option reports on the proposed entertainment and sports complex Tuesday, and asked council to direct them where to go next.

“We have a lot of work to do in the next six months,” said City Manager John Shirey, “and we need both internal and external resources to do it.”

To keep things moving forward, though, Shirey told council members that he plans to deliver three things: “a game plan with a timeline, a list of the consultant work we need and a list of how we’ll pay for those things.”

Although the technical report presented Tuesday included more detail than previous reports, Shirey said it will take some time to “dig deeper and determine if the project is really feasible.”

Shirey said he and his staff will need “special help” from outside resources to do that digging. That means turning to consultants, investment bankers and outside council for the “due diligence” necessary to thoroughly review the entertainment sports complex proposal, Shirey said.

One of the aspects of the ESC project discussed Tuesday was the potential for re-use of the current Power Balance Pavillion site in Natomas.

“Natomas re-use possibilities present tremendous opportunity,” said Rachel Hazlewood, Economic Development Department senior project manager. “We need to develop a plan of action to bring (the space) to its highest and best use.”

Hazlewood said that, because the building moratorium in Natomas will be lifted in 2013, the large site may allow for multiple users and will require rezoning – aspects of the “total arena plan” that need to be considered.

“We will need to identify potential business prospects and get the site shovel-ready for development,” Hazlewood said, “before we can re-use the Natomas site for something other than the arena that is already there.”

Arena finance expert Dan Barrett outlined the recently released Nexus report of finance “menu” options.

Barrett told council members that a public-private partnership is essential to the success of the project.

“When you structure a deal like this, it has to work for all parties,” Barrett said. “It’s clear that the public cannot fund this facility on its own, and the team cannot fund it on its own.”

Barrett said that parking income potential discussed in the Nexus report is “not a standalone financing solution,” and the Kings’ loan has to be part of the solution.

“The $387 million cost (in the initial feasibility report) may change,” said John Dangberg, assistant city manager.

Dangberg noted that infrastructure costs are not included in the estimated $387 million cost of the facility.

Dangberg urged council members to direct staff to look at financial, legal and practical aspects of the project.

“As we come up with a definitive financing plan,” Dangberg said, “we want to include enough resources to cover the real cost of the project as it becomes clearer.”

Barrett said it will be important for council members to explore parking opportunities “aggressively,” and to “critically evaluate” other public funding options.

“We’ll work together with you and staff to prepare a definitive financing plan by the end of December,” Barrett said.

Although Mayor Kevin Johnson acknowledged that the reports presented to council were preliminary reports and not a “final proposal” for a new complex, he said they were a good place to start.

“We did our best to protect taxpayers with this plan,” Johnson said. “This is about jobs – 4,100 jobs – for our region.”

Johnson said the project is in “a very critical stage,” and he hopes City Council and the Think Big committee can finalize as much as possible by January so the city can be in the best position possible by the March deadline.

Councilman Rob Fong said he supports the arena project and that there needs to be “a closer look” taken at all of the financing options suggested in the Nexus report.

“It’s really important that we thoroughly vet what we are hearing,” Fong said. “We have to make sure the general fund is held harmless, and figure out if there’s a way for us to go forward with the project”

For Think Big, the challenge remains to keep going “until we reach a point where we know for sure that we can do this – or that we can’t,” Fong said.

The City Council asked staff to take the reports back for more review. Council will discuss arena options further at its next meeting, on Sept. 20.

Melissa Corker is a Staff Reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.

City officials merging plans for arena, transit center

2011-07-14T01:22:16Z

Sacramento officials believe a new arena can be integrated with a future regional transit center in the historic downtown railyards – making this one of the country's most eco-friendly sports and entertainment facilities, Assistant City Manager John Dangberg said Tuesday.

At Tuesday night's City Council meeting, Dangberg gave council members a status report nearly halfway into a 100-day technical review of a proposed arena. The $387 million project is on an expedited schedule to be in operation by May 2015.

One of the most critical issues being reviewed is the need to coordinate construction of an arena with the previously planned transit center. Both structures would be built on a site constrained by railroad tracks to the north, the freeway to the west, I Street to the south and downtown buildings to the east.

Building two "very intense pieces of infrastructure" on the 33-acre site poses challenges, partly because they are both so big, Dangberg said.

"We believe we can integrate these two," he said. "If and when we successfully do that, we have the opportunity to create one of the most sustainable, green, interesting entertainment and sports facilities in the country, if we can successfully integrate these uses and have transit right there at the facility and many modes of transit right there," Dangberg said.

The city has set up technical review teams that are focused on the site itself. The teams are looking at transportation and transit issues, community development issues, economic development and how to reuse the Power Balance Pavilion site.

A town hall meeting on the future of the Natomas site is scheduled for Aug. 11, at a time and place to be announced.

Mayor Kevin Johnson's office and his arena committee, Think BIG Sacramento, are working on financing options with support from a consultant, Barrett Sports Group, and a finance team made up of staff from the city treasurer's office and Goldman Sachs.

The city is also looking at urban design issues with the goal of preserving and playing up historic assets at the site, such as the Sacramento Valley Station historic train depot, the Railway Express Agency Building and the historic Southern Pacific Railroad central shops.

City staff wants to create a legacy project that uses urban design elements to connect to those assets and new opportunities for downtown revitalization, he said.

"We have a very, very rich history on the site as the terminus of the Transcontinental (Railroad). And we need to treat it in a very special way that creates a development that is uniquely Sacramento and distinctly Sacramento," Dangberg said.

"It is not another disposable arena that we see in so many cities, but something that will be here for many, many decades or a hundred years as our central shops have remained in place and really a permanent part of our urban fabric and history,” he added.

For example, city staff wants to keep key site lines between the central shops and the depot and take other steps to ensure historical compatibility throughout the project, he added.

A downtown location without a large addition of surface parking on-site will allow the city and businesses to create a "street-to-seat" experience. By using existing parking located away from the site, people will see restaurants, bars, shops and establishments with entertainment on their way to the facility. This would provide more opportunities to stay downtown before and after games and other events. This is expected to help revitalize and activate downtown, a key element of the project, he said.

"If we don't achieve that with the amount of investment that we're putting into this, we might as well not bother putting it in the downtown," Dangberg said.

City staff will present the 100-day technical review on Sept. 13, rather than Sept. 6, because of the Labor Day holiday.

At that time, staff will discuss predevelopment costs the city will incur and provide a critical path and preliminary schedule to the City Council. Dangberg also has been talking with the city attorney about the process to select a development team. Think BIG Sacramento will provide a list of financing options.

Johnson's chief of staff, Kunal Merchant, gave a presentation on the mayor's arena committee, Think BIG Sacramento, and an update on the group's work.

Think BIG Sacramento is a 72-person committee brought together to facilitate arena development before the National Basketball Association's March 1, 2012, deadline for teams to file for relocation next year, he said.

An estimated 3,700 temporary construction jobs and 400 jobs for facility operation are expected to be created by the project, he said.

However, Sacramento resident Mac Worthy, one of two people who provided public comments on the issue at City Hall Tuesday, called into question the number of jobs the project would bring and predicted civil unrest if more people don't get jobs and improve their living conditions soon.

"We need jobs here. This thing ain't going to give us no jobs," he said. "The next two years (are) going to be the critical part, here…. Wake up, people. People (are) tired of being down, without a roof over their head, without enough money to go to the grocery store and buy food, can't even buy gas."

Think BIG Sacramento will host a four-county bus tour and town hall meeting Thursday to tell regional residents about the possible benefits of a new arena. A "Capitol Corridor Impact Report" will also be released.

The tour will start at 10 a.m. at the California Welcome Center, 2085 Vine St. in El Dorado Hills, then make stops in Davis and Roseville. A town hall meeting at 3:30 p.m. at Vision Service Plan, 3333 Quality Drive in Rancho Cordova, will be the last stop, according to a press advisory sent out Wednesday afternoon.

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

Mayor to address NBA; city still in dark about arena's future

2011-04-01T03:03:43Z

The Sacramento Kings’ owners won’t be the only ones talking about their possible departure with the National Basketball Association next month. Sacramento Mayor Kevin Johnson will be there, too, the mayor said Thursday.

Johnson announced he has been granted permission to address the NBA Board of Governors at their meeting in mid-April – just days before the Kings’ deadline to file a relocation request.

He expects to take “a contingent of Sacramentans” to New York with him to help explain that Sacramento would like to continue its partnership with the Kings and is seriously pursuing construction of a new arena, he blogged Thursday evening.

“They will want to know about possibilities of a new arena in Sacramento, and whether after all these years, our community can finally deliver,” he wrote. “But the bottom line is, the opportunity to speak straight to the NBA is a huge step for our community.”

With the Sacramento Kings' departure looming over the region, the city is facing at least two possibilities that depend on whether the team pays off a $77 million debt or defaults.

City officials have not yet been able to discuss a possible compromise with the Maloofs, who own a majority stake in the Kings.

There has been little dialogue between the Maloofs and the city regarding the team's plans to resolve the debt and the arena's future if the Kings leave. However, the Maloofs did indicate this week to Mayor Kevin Johnson they'd repay the debt.

"We are encouraged that they've said they will do what's in the best interests of the city," Assistant City Manager John Dangberg said Thursday.

Two outcomes are outlined in agreements established between the city and the Kings in 1997, when the city sold $73,725,000 in lease revenue bonds to refinance the Kings' debt on Arco Arena, recently renamed Power Balance Pavilion. The city then bought the arena from the Kings and set the team up on a 30-year plan to repay the debt through lease payments made to the city.

Two Possible Outcomes

The Maloofs bought a majority share of the Kings in 1999 and in acquiring the Kings also acquired the debt.

Under those agreements, if the Kings leave now, they must pay off a $77 million debt – which includes a roughly $10 million early payment penalty – and Maloof Sports and Entertainment will then own the city's aging arena.

But if the Maloofs default on the debt, that leaves the city to pay back the bond holders. If that were to happen, the city of Sacramento would get a $25 million stake in the team and retain full ownership of the arena, a practice facility and 85 acres of land there.

The city would owe about $67 million if it doesn't make an early payoff within the next seven years. The city would hire an arena operator to manage Power Balance Pavilion and bring concerts, shows and other events there, rather than operate the arena, Dangberg said.

"The city doesn't have the capacity to operate the facility," he said.

The Maloofs could still turn over operation of the facility to the city if they pay off their debt and continue to own the arena after leaving Sacramento. City officials hope the Maloofs would give the city control over operations there, Dangberg said.

"Our assumption is they would continue to operate the facility. That's not an obligation or a guarantee," he said. "So that's what we are eager to sit down and discuss with them – the future operation of that facility."

However, countless compromises could be negotiated between the city and the Kings.

Other Scenarios

The city could retain arena ownership, and the Kings could offer to pay cash for the difference between the value of the arena, which the city has not had appraised, and land and their $77 million debt. If the city operates the arena or hires an arena operator, the city would receive revenue needed to continue paying the debt service on the bonds, Sacramento City Councilman Steve Cohn said.

In another scenario, the Kings could pay back the $77 million and then sell the property to someone who wants to use the facility or land for a purpose other than an arena, he said.

Cohn and other city officials have said the Kings have made every payment on their loan since 1997.

“Right now, I just want to emphasize, we have no reason to believe they are going to default,” Cohn said.

The city hasn't spent money to get the value of the arena and land appraised, which is "a lengthy process," Dangberg said.

Within the last few days, the Assessment Appeals Board for Sacramento County lowered a 2008/2009 assessed value of Arco Arena and the land it sits on, which impacts its current assessment, said Assistant County Assessor John Solie.

The board expects the assessed value of the parcel will be $33 million - $35 million for 2010/11, he said. Three other involved parcels are assessed at a total of $5,185,000.

In late February, the Kings asked for an extension on the NBA's March 1 deadline for relocation requests for next season.

On Tuesday, the Anaheim City Council made a Kings move easier by agreeing to issue $75 million in bonds – $25 million to improve the Honda Center and build a practice facility and $50 million for a loan to the Kings.

Anaheim Arena Management, which operates the Anaheim-owned Honda Center, could not be reached for comment on a contract with the Kings.

The NBA granted the extension, giving the team until April 18 to file a request for relocation. However, the April 18 deadline may be to seek approval to study relocation.

It remains unclear whether the Kings will request relocation before or during a meeting of the NBA Board of Governors April 14 or 15, or later.

The relocation request may be a two-step process involving two separate NBA Board of Governor meetings. At the April meeting, the Kings may first announce they're pursuing relocation to Anaheim and ask for permission to explore the opportunity.

They may request relocation later. That request would likely be voted on in a different meeting.

Neither the NBA nor the Kings would discuss the timing or the process for the Kings' relocation request and the NBA Board of Governors' vote on that request.

"The Kings have not applied at this point, so there is no timeframe," Tim Frank, senior vice president for NBA basketball communications, said in an email Thursday.

"As far as the board meeting, all we know at this point is that Kings ownership wants to discuss this situation with the board. There is no other information I have at this time," he added. "I have no idea what will happen until we see if they apply or not."

Staff reporter Kathleen Haley contributed to this report. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @Suzanne Hurt.

Sacramento wants Kings promise, NBA backing

2011-03-31T02:50:26Z

The city of Sacramento fired off another round of letters Wednesday in an attempt to stop the Sacramento Kings from moving or at least get assurances in writing that they'll repay a $77 million loan from the city.

A day after the Anaheim City Council approved issuing $75 million in lease revenue bonds to entice the team to relocate, Sacramento officials sent a letter to the King s requesting the team's owners promise in writing to repay Sacramento.

Assistant City Manager John Dangberg also sent a letter to National Basketball Association Commissioner David Stern and the NBA Board of Governors. Dangberg wrote that the city is asking the board to make its approval of the team's relocation contingent upon the Kings paying its debt.

"In recent weeks, the Kings have taken steps and made statements that indicate it would be prudent and appropriate for the city to request that the Kings now put in writing the assurance" owner George Maloof has made publicly, but not to the city, Dangberg said in the letter.

None of the Maloofs wished to comment Wednesday. But on Tuesday, Kings owner Joe Maloof issued a statement to the media calling the loan from Sacramento a "non-issue."

"We’ve always paid our financial obligations in the past, we’re going to do it in the present and we’re going to do it in the future," Maloof said in the statement. "Whatever the future holds to ensure the long-term viability of the team, the city of Sacramento will be paid in full.”

Sacramento Mayor Kevin Johnson also said Tuesday that the Maloofs personally assured him on Monday they would pay off their debt.

The city could sue the Kings for breach of contract if they fail to pay off the debt and any other outstanding obligations. But city officials are making these requests in an effort to follow standard business protocol as the team’s owners make a serious effort to leave, city spokesman Maurice Chaney said.

“I think we just want to take some reasonable precautions to protect the taxpayers of Sacramento,” he said. “The Maloofs have been very great owners. The comments they made are encouraging.”

NBA representatives could not be reached for comment Wednesday afternoon.

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

Johnson: Maloofs say they'll pay loan

2011-03-29T23:32:44Z

Sacramento Mayor Kevin Johnson said the Maloofs told him Monday they would pay back the $77 million in lease revenue bonds they borrowed from the city in 1997.

Johnson told reporters about his conversation with the Maloofs at a press conference in North Highlands Tuesday.

Assistant City Manager John Dangberg sent a letter to the city of Anaheim Monday asking officials to stop negotiating with the Kings to be their new host city. If Anaheim won’t stop talks with the Kings, then Sacramento wants Anaheim to require the Kings to pay their debt to Sacramento, the letter said.

“The Maloofs have told me, time and time again, that they are going to fulfill the obligation and pay back the loan,” Johnson said.

They have consistently made their loan payments, he said.

However, the city sent its letter to Anaheim with taxpayers in mind, he said. The city is looking for “written assurance” that the Maloofs won’t ignore the loan.

“We need to make sure that our interests – the interests of the taxpayers – are protected,” Johnson said.

Kathleen Haley is a staff reporter for The Sacramento Press.

City of Sacramento asks Anaheim to end negotiations with Kings

2011-03-29T02:22:39Z

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.

Green waste debate to resume

2011-02-26T02:04:51Z

A city staff proposal to eventually stop loose-in-the-street green waste pickup and move to container pickup will not work for all city residents, Interim City Manager Gus Vina said in an interview Thursday.

In tree-laden areas such as Midtown, a container is not adequate to hold all of the fallen leaves, Vina said, explaining why he pulled the green waste issue from the City Council’s agenda on Tuesday.

“I want to make sure I’ve challenged staff enough on creativity and the solutions that are possible,” Vina said.

The plan that Vina delayed would have encouraged moving away from loose-in-the street pickup and raised rates for residents who continue that method of pickup. Assistant City Manager John Dangberg said the green waste issue will be on the City Council agenda again within a couple weeks.

The city uses two systems for green waste pickup because of a law that was passed in 1977. Measure A states that the city cannot compel residents to put their green waste in containers. Therefore, the city must continue to provide loose-in-the-street pickup.

The proposal that was pulled from the council agenda Tuesday asked the City Council to take steps to eventually overturn Measure A. This would allow the city to enforce containerized pickup as the sole method.

Voters would have to approve a counter-measure that would abolish Measure A.

City staff had planned to ask the council on Tuesday to consider draft language for a counter-measure “for use if the City Council determines at a subsequent time to call such a measure to the ballot,” the Feb. 22 staff report said.

But Vina said Thursday that changing the measure doesn’t solve the green waste problem for people living “in heavy areas where a container doesn’t do it.”

“Land Park and Midtown are good examples,” he said Friday. “Basically, we have lots of trees, and in older areas, the trees are big.”

The proposal also included major rate increases for people who choose loose-in-the-street pickup over containers as long as Measure A is still in effect. A resident who chooses loose-in-the-street pickup now pays a fee of $13.71 per month. One of the ideas suggested in the proposal would raise the rate to about $40 per month.

City staff explained in the proposal that the number of loose-in-the-street customers has declined over time – the 103,787 container customers far surpass the 12,121 loose-in-the-street customers. The number of loose-in-the-street customers no longer pay enough in fees to pay for the cost of the service, the report said.

“The current loose-in-the-street rate of $13.71 was sufficient to recover the full cost when 57,000 customers were putting their green waste in the street,” according to the report. “With only 12,121 loose-in-the-street customers remaining paying the same rate, there is now insufficient funding to cover the cost of the service.”

Because there are no longer enough customers to keep the rate at $13.71 per month, city staff say the rate should be raised.

Green waste pickup is a recurring point of contention between the Utilities Department, which favors containers, and some residents, who want to keep their loose-in-the-street pickup.

The department’s position, which is included in the staff report, is that the containers are cheaper and better for the environment than loose-in-the-street pickup. It takes two vehicles to do loose-in-the-street pickup, while only one is needed for containers, according to the department. Reducing the number of vehicles helps prevent pollution, the department points out.

Read the Feb. 22 green waste proposal that Vina withdrew from the council’s agenda here.

Kathleen Haley is a staff reporter for The Sacramento Press.

Railyards growth should start small, experts say

2011-01-29T01:38:02Z

The next stage of growth for Sacramento's historic railyards should continue to connect the site with surrounding areas, allowing for smaller-scale development of neighborhoods linked by public transit and an open-space network, urban development experts said Friday at City Hall.

An eight-person panel of development and design experts presented recommendations for downtown railyards development to the city.

They were brought to Sacramento through a fellowship program sponsored by the Urban Land Institute's Daniel Rose Center for Public Leadership in Land Use. The panelists spent three days working in Sacramento and touring the railyards before making the recommendations.

The city and the railyards’ former owner, Thomas Enterprises, pulled together $225 million in local, state and federal funding to build infrastructure including streets, bridges and relocated train tracks. Site cleanup and completed environmental reviews have helped ready the site for construction.

As one of the country's largest infill projects, redeveloping the roughly 240-acre site will take years and must be market-driven. The city may own only 33 acres of that site. Yet as "good stewards," city officials and staff must now help reshape the development vision to plan for new economic realities and allow incremental growth, said panel co-chair Con Howe, managing director of CityView Los Angeles Fund and Los Angeles' former planning director.

"Owners and developers come and go," Howe said. "But the city will be the steward ... for a very long time."

The plan for the site should be integrated with plans for the River District, Sacramento and American riverfronts, the central business district, residential neighborhoods such as Midtown, open space and transportation networks, panelists said.

Sacramento's 2030 general plan does that to a small degree. But specific plans for each area are far more detailed.

"We think it's essential you look at the city ... and start to think about all these resources you could be connecting ... so the whole is greater than the sum of its parts," said Robert Lane, senior fellow for urban design at the Regional Plan Association in New York.

The plan should view the railyards as a transit district, rather than just a site containing a transit center, they said.

The panelists recognized that all cities must work in an economic climate where there's a lack of both public funding and private investment. They recommended linking public and private investments to build small neighborhoods that are each complete as a place.

The most expensive way to start would be from the inside out, starting with development of the historic central railroad shops. An alternative would be to allow more natural growth from the city to move into the site, said Frank Cannon, president of Union Station Neighborhood Company in Denver.

Denver provides a good example of how long redevelopment of a large former railyard can take. It's taken at least 30 years, three mayoral administrations and multiple property owners to develop its 200-acre freight yard. After consolidating rail corridors, reclaiming riverfront, building streets and other infrastructure and investing in a multi-modal transit facility, the area is now one of Denver's most desirable, Cannon said.

The city should also start finding ways to expose residents and visitors to the historic site and create a sense of place there, they said.

The site hasn't been open to the public for decades, so most Sacramentans don't have a true sense of the history and size of the railyards and its Central Shops.

John Hodgson, former chair of the ULI Sacramento District Council, said he was "blown away" when he toured the site for the first time last summer after living here for about 40 years.

While long-term plans could include public markets and the future railroad museum, the city should create low-cost uses that will get people to the site and excite them about future development possibilities, said Marlene Gafrick, director of Houston's Planning and Development Department.

Interim uses could include street festivals, sports, arts, culture, wellness and educational events inside and outside the central shops, she said.

Representatives of Thomas Enterprises and Inland American Real Estate Trust, which now owns 203 acres of railyards, attended the presentation.

Mayor Kevin Johnson was among four mayors chosen as the center's 2010/2011 fellows. The other cities are Detroit, Houston and Charlotte, N.C.

Johnson's efforts to promote Sacramento and a national buzz about the railyards site helped the city win one of the four spots, city Infill Coordinator Desmond Parrington said later.

Sacramento's fellowship team also includes Assistant City Manager John Dangberg, Sacramento Area Council of Governments Executive Director Mike McKeever and Hodgson, president of The Hodgson Company, a Sacramento land use development and advocacy firm. Each of those three served on a fellowship panel for one of the other cities.

The fellowship program seeks out cities with interesting land-use challenges and provides free assistance.

Johnson and the city's three other fellows will visit Miami in February and Denver in June to learn from land-use issues there. They and city staff will work with panel members to build on and implement the recommendations over the next year.

"It's a very good juncture for us to get that kind of feedback," Parrington said. "It's a good juncture not only because we have a change in the developer, but because of the economy. The plan (by Thomas Enterprises) was developed in the height of the boom. Now we're in the trough. It's a good time to revisit things."

Council to consider arena team qualifications

2011-01-26T06:48:01Z

The Sacramento City Council decided Tuesday to move forward with all four teams vying to develop a new arena for the Sacramento Kings – for at least a little longer.

Following a motion by City Councilman Steve Cohn, all nine members of the council voted unanimously to schedule a hearing in two weeks for the teams to provide their qualifications and financing approaches directly to the council.

In doing so, they decided not to follow a recommendation made Friday by Mayor Kevin Johnson's arena task force that the city start working with just one team, led by Sacramento developer David Taylor and ICON Venue Group, a prominent Colorado sports facility developer.

Several council members said they had more questions that have to be addressed before they could make such a decision. Some initially expressed an interest in giving city staff a 90-day period to evaluate all four teams.

Assistant City Manager John Dangberg suggested a two-week time frame as an alternative and Cohn made the motion. They did so after the ICON-Taylor team and the CORE team indicated they wouldn't continue with the process if all four teams were kept in the game three more months. The Natomas Entertainment Sports Center Partners and the Convergence Team said they would.

"At some point, we really want to have our staff that we hired to work for us" evaluate the teams, City Councilman Kevin McCarty said.

City Councilman Rob Fong urged city staff to engage the Maloofs, who own the Kings, soon to determine what approach they'd support for building a sports and entertainment facility to replace Arco Arena, the Kings' current home.

Johnson led the meeting but remained silent during a public hearing and council discussion lasting more than two hours. He brought the ICON-Taylor team together after the Convergence Team, which then included Taylor, failed to produce a viable project on schedule last year.

ICON President and CEO Tim Romani asked the council to give his team 90 days to study the project's feasibility and to develop a proposal and financing plan.

Romani warned that the Kings are not "locked into" Sacramento, and representing team owners who decide to relocate is "a messy ordeal." He said he'd rather help find a solution so the Kings can stay in Sacramento. Right now, the team is playing in an arena that "pales in comparison to every other arena in the NBA," Romani said.

"It's a critical time for Sacramento if (you) want to keep the Kings," he said. "I can tell you this: I think the time for process is behind you. I think the time for results is right now."

In the second half of March, the Maloofs will have an option to get out of their lease at Arco, task force co-chair Chris Lehane said.

The task force gave the ICON-Taylor team a first-place ranking based on its experience. ICON has built more than 50 sports complexes throughout the world and is especially experienced in building NBA arenas, task force member Tom Friery told the council.

Natomas Chamber of Commerce President Ed Koop and several others from Natomas asked Johnson and the Council to reject the recommendation of the ICON-Taylor team.

About 400 people signed petitions in support of keeping the arena in Natomas. Koop countered comments that no economic development had sprung up around the arena. At least two dozen restaurants, hotels and other businesses have been opened near the arena, Koop said.

"We want the arena. We deserve the arena. And we've got a good plan," he said. "We're pretty confident you're going to (see) that Natomas makes the most sense."

Councilwoman Angelique Ashby, who represents Natomas and downtown, said the Arco site must be redeveloped in a way that would be as beneficial as having a new arena if the project is built downtown. The area's 80,000 residents can't just lose a facility that benefits the local economy so heavily, she said.

In 2006, Sacramento County residents voted against funding a new Kings arena in the downtown railyards. Three of the teams have proposed that site as a possible location.

Fong asked if the city and development teams will consider a new model to finance a new arena, given the state of economy. In most if not all current cases, an entity other than NBA teams build new arenas, however, the teams become the tenants and then benefit from all the revenue that comes in from operating the facility. That income could be used by developers to offset the cost of building the arena, he said later.

Sacramento will have to look at something other than a "classic" funding plan – and the task force recommended the ICON-Taylor team because its members were confident the team would "look outside the box," Lehane said.

The task force and all four teams have acknowledged there must be some public funding for a new arena, but what form that might take isn't agreed on or clear. The task force believes building a new arena downtown makes "the most sense," he said.

"This is ultimately a decision for this body," Lehane said.

ICON-Taylor team favored to build arena

2011-01-22T01:52:52Z

Sacramento developer David Taylor and a prominent Colorado sports facility developer have been pegged as the top contenders in an effort to build the city a new downtown arena.

Mayor Kevin Johnson's arena task force is recommending city officials work with Taylor and ICON Venue Group to determine if building a sports and entertainment center is feasible now and if they're the right team for the project.

In an analysis released Friday, the task force encouraged the city to give the ICON-Taylor team 90 days to study the viability of such a project and to develop a proposal and financing plan. The team was handpicked by Johnson after another team, which then included Taylor, failed to produce a viable project on schedule last year.

Without a detailed proposal for the task force to consider, the ICON-Taylor team's first-place ranking to build an arena in the downtown railyards was based on its experience and credibility. The team's partnership with the historic railyards' new owner, Inland American Real Estate Trust, was also a factor in the selection, according to the analysis.

"While the lack of a development plan could be considered non-responsive in some circumstances, the (ICON-Taylor) team warrants unique consideration owing to its extensive experience and track record, locally, nationally and globally, in the development of major projects, including events centers, under challenging circumstances," the task force said in its analysis.

Task force co-chair Chris Lehane is scheduled to present the analysis to the Sacramento City Council at its Tuesday night meeting.

The task force is recommending the city manager's office take up to 120 days to determine if the team's proposal demonstrates "a real promise of feasibility" and if the Sacramento Kings owners, the Maloofs, or the NBA will commit to stay in Sacramento and work on an acceptable development agreement.

The task force also recommends the City Council consider entering an exclusive negotiating period with the developers to hammer out a final agreement on the project.

Four teams met the task force's Dec. 30 deadline to submit proposals or indicate interest in developing an arena to replace the Kings' current home, Arco Arena, in Natomas.

Detailed proposals were submitted by the Convergence Team, led by Sacramento developer Gerry Kamilos, and Natomas Entertainment Sports Center Partners, led by Mike Corrick of Nacht & Lewis Architects and Rick Millitello, general manager and executive vice president of Skanska USA Building Inc. of Oakland.

Providing proposals with detailed funding plans seemed to work against them, as the task force used those details to rank the teams lower in the analysis.

Natomas ESC Partners, which was ranked fourth, expressed a concern about how a federal moratorium on development in Natomas might affect their proposal during the task force's fact-finding meetings with development teams last week.

The task force said the proposal doesn’t seem to be in the city’s or region’s best interest economically, when compared to building an arena integrated with downtown's future regional transit center. Also, redevelopment of the Arco Arena site should work without a new arena, the task force said.

The Convergence Team, which won the first shot at developing an arena last year, has simplified its proposal, yet its plan remains the most complex.

A California Exposition and State Fair manager told task force members that Cal Expo officials are reluctant to consider even a scaled-down plan to privately develop part of the existing state fair site to help fund a downtown arena.

"The project’s inherent complications likely render it feasible in theory only," the task force said in its analysis.

The CORE team was ranked second by the task force. The team – led by former arena task force member and president of McClellan Park, Larry Kelley, and entrepreneur Ali Mackani – has made a determination of project viability its priority, like the ICON-Taylor team.

The team includes experienced local players such as Kelley, a notable developer, and real estate attorney Mike Kvarme, another former task force member. But the team is lacking a sports facility developer with ICON's expertise, according to the analysis.

The task force recommends the City Council be asked in 90 to 120 days – late April or late May – whether to enter an exclusive negotiating period with the developers.

On Tuesday, the City Council could make a decision to proceed with one or more of the development teams. Because the team's proposals varied so much in terms of detail, city staff members have outlined a set of submission requirements they'd like the team or teams to turn into the city within 90 days. A preliminary financial plan and a signed concurrence agreement with the Kings are among the requirements.

City staff would then take 60 days to review the proposal or proposals, prepare a staff report and return to the council, possibly in July, for consideration of an exclusive negotiating period, said Assistant City Manager John Dangberg.

Inland moves cautiously on railyards

2011-01-05T04:37:14Z

The new owner of the downtown railyards development site on Tuesday night disclosed plans to move slowly on the property.

A consultant for the suburban Chicago real estate investment firm, Inland American Real Estate Trust, said the company has "no immediate plans" to change the land use plan the Sacramento City Council approved for the country's largest infill project under its previous owner, Thomas Enterprises.

In 2011, Inland will concentrate on continuing infrastructure projects including bridge construction and railroad track relocation – the "critical building block" for further development, said Inland spokesman Jared Ficker of California Strategies, a public affairs company.

"We need to stay focused on the current and substantial infrastructure development," he said. "We're going to be focused on that for the next year."

The 13-minute presentation before the City Council was Inland's first public appearance and discussion of its plans for the site since foreclosing on the property near Sacramento Valley Station on Oct. 22. Inland officials including Project Manager Dean Stermer were present but didn't address the council. Thomas Enterprises officials also attended the meeting.

The Oak Brook, Ill., company took ownership of the 203-acre site dubbed the Railyards after Georgia developer Thomas Enterprises defaulted on nearly $194 million in loans in June.

Inland American, one of five real estate investment trusts owned by the Inland Real Estate Group of Companies, created Inland American Sacramento LLC as a single-asset entity and holder of the railyards property. The parent company has diverse real estate assets in every state, with a total value exceeding $25 billion.

Inland will continue working with the city to resolve the transfer of a parcel now owned by the city. Inland will present a series of agreements to help work out the transition in coming weeks, Ficker said.

Since October, Inland has been working with city, state and independent contractors to keep infrastructure construction going on such projects as the Fifth and Sixth street bridges and track relocation and to protect state and federal funding for the work.

About $167 million in state, federal and local funds plus $71 million in private funds from Thomas – a total of $238 million – has been lined up for infrastructure, Assistant City Manager John Dangberg said.

The railyards once drove Sacramento's economy after they were opened in the steam locomotive era by Central Pacific, which later became Southern Pacific. The heart of the railyards were its railroad shops. Those central shops were closed in 1999 after Union Pacific bought Southern Pacific.

Eight central shop buildings were all that remained when Thomas Enterprises bought 238 acres of the historic railyards from Union Pacific in late December 2006. Thomas planned to transform the property into a $6 billion, 21st-century mixed-use district designed to recapture the importance of the former railroad site and double the size of downtown. Thomas was working closely with the city, which expects to build a regional transit center on adjacent land.

Thomas' plans called for more than 12,000 residential units, 2.3 million square feet of office space, 1.4 million square feet of retail, nearly 500,000 square feet of mixed-use space and 46 acres of parks and other open space. The heart of the development was expected to be a cultural center based in rehabbed railroad shops sitting around a large central plaza.

Inland plans to work closely with the California Department of Parks and Recreation to rehab the central shops, Ficker said.

Thomas began cleaning the shops of lead paint, asbestos, metals and other industrial toxins in July 2009. Thomas has completed nearly all soil remediation caused by about 150 years of industrial use on the site. The only work that remains is under railroad tracks and can't be cleaned until the tracks are relocated, Dangberg said.

The track relocation project is expected to be put out for bid this month. A contract must be approved by March to keep $25 million in state Proposition 1B monies already awarded, said Jerry Way, director of the city's transportation department.

Mayor Kevin Johnson thanked Inland officials for all their work so far and asked them to return to the council "sooner rather than later" for council input when they begin considering modifying the land use plan.

"You guys came in and grabbed the bull by the horns and did everything we could have asked for," he said. "We have some ideas we would like to share at the appropriate time."

Photo of Jared Ficker, left, and Dean Stermer by Kathleen Haley. Bridge construction photo by Brandon Darnell. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.

January update on arena plans

2010-10-27T05:15:58Z

Sacramento Mayor Kevin Johnson asked city staff Tuesday night to present new ideas on a sports and entertainment complex in mid-January.

Johnson also said he would reconvene his Sacramento First task force, which has analyzed several arena plans in recent months.

At their weekly meeting, council members briefly discussed pitfalls with efforts to build a new sports and entertainment center. A complex plan for a new downtown arena spearheaded by developers Gerry Kamilos and David Taylor recently failed. The plan called on Cal Expo to be a major partner, but Cal Expo decided not to join the effort.

Marni Leger, speaking on behalf of the Natomas Chamber of Commerce, urged the council to consider Natomas as the site for a new entertainment and sports center.

The infrastructure for a new arena in Natomas is in place, she said. “Kings fans support the Natomas site,” she added.

Later in the meeting, Johnson said he didn’t want the city “to sit on its hands” with the arena issue in the next few months.

Assistant City Manager John Dangberg said after the meeting that city staff will be talking to stakeholders in the next few months. Staffers are not likely to evaluate proposals in the next couple months and make recommendations on proposals in January, he said. Instead, he said city staff are likely to “report back to council on what we learned” in January and suggest a process to move forward on the arena issue.

Photo by Brandon Darnell.

Kathleen Haley is a staff reporter for The Sacramento Press.

Inland forecloses on Railyards

2010-10-23T01:24:16Z

A Chicago-area real estate investment company took possession of most of downtown Sacramento's historic railyards Friday in a courthouse auction after no one else bid.

The company, Inland American Real Estate Trust, officially foreclosed on Thomas Enterprises' 203-acre Railyards site by winning the auction outside the Sacramento County courthouse Friday afternoon. Inland had set the opening bid at $50,350,000 in an off-site process earlier this week.

"Inland will now roll up its sleeves and work with the city, state of California and other agencies to allow the project to proceed," Inland representative Jared Ficker said just minutes after the auction.

Inland will work with the city, state and independent contractors to keep infrastructure construction going on such projects as the Fifth and Sixth street bridges and railroad track relocation, according to Ficker and Assistant City Manager John Dangberg, who attended the trustee sale.

The company is putting together a development team and will set up an office in Sacramento. Ficker said it’s too early to comment on how the planned development would change under new ownership. Inland expects to announce its plans within two months.

Thomas Enterprises staff will serve as project consultants for Inland for an undetermined amount of time during the transition. Under an agreement between the two companies, Thomas will have the right to buy the Inland subsidiary that now owns the Railyards for the next 18 months.

Dangberg applauded Thomas Enterprises for all of its hard work at the site and in getting $154 million in federal and state funding for the development.

"The city of Sacramento is looking very much forward to working with Inland for a smooth transition," he said.

The auction wasn't marketed to potential investors worldwide. That led auction experts to predict that the sale was held as a technicality so Inland could get clear title to the land.

During the auction, Priority Posting auctioneer Mike Birdsall explained rules for more than 30 people and journalists gathered to watch the event. The crowd included representatives from Inland, Thomas and the city, as well as curious onlookers.

"Your bid will only be canceled by a higher bid," he said, sitting behind a laptop computer at a table outside the courthouse doors. "I will not pronounce the property sold until I have the funds in my hand."

The auction didn't go off without a couple of hitches, though.

One guy thrust bankruptcy papers at Birdsall in the middle of the Railyards auction. The documents were for another property, the man said later.

Birdsall misread the opening bid from Inland as $50,350. However, the trustee's instructions to set the opening bid at more than $50 million trumped the auctioneer's misquote. Birdsall held the auction a second time at Ficker's request.

"Going once, twice, third and last," Birdsall said. "Property sold to the beneficiary."

No one else entered a bid during either auction. If someone had, Ficker could have bid higher on behalf of Inland and won ownership of the property.

Technically, the auction was for the property's second mortgage. Inland owned the first and second mortgages.

If someone else was the successful bidder, they would not have gotten the deed to the property unless they could also pay off the undisclosed first mortgage or deed, which likely would have been much higher.

The foreclosure ends months of uncertainty over the project. Thomas defaulted on nearly $194 million in loans on the property in June. The company could have declared bankruptcy, which could have tied up the site in a lengthy legal process.

Mayor Kevin Johnson said he believes foreclosure was the best outcome, said mayoral Special Assistant R.E. Graswich.

Graswich let the mayor know by text message when the auction was done. Johnson had just one thing to say.

“His text message said, ‘Amen,’ ” Graswich said.

Photos by Suzanne Hurt.

Developer signs exclusive arena agreement

2010-04-23T00:19:42Z

The city of Sacramento is one step closer to selecting the Kamilos "Sacramento Convergence" group to build a new arena in the downtown railyards.

Both sides met Thursday morning, and, according to an assistant city manager, John Dangberg, Gold River developer Gerry Kamilos signed an exclusive right to negotiate (ERN) document. The City Council will be asked at its April 27th council meeting to consider entering into the agreement with Sacramento Convergence Holding LLC, the group headed by Kamilos.

The agreement comes five weeks after the council asked staff to begin talks with the group about its proposal to build a sports and entertainment center at the downtown railyards. Kamilos is partnering with Sacramento developer David Taylor and two investment companies on the project.

"What we're doing is entering into an exclusive right to negotiate with the Convergence group on the entirety of their proposal," Dangberg said.

The developer is asked to sign the agreement first to ensure that no changes are made to the previously-announced proposal, before the council agrees to it and authorizes city staff to sign it next Wednesday. However, an official proposal must still be submitted to the city, Dangberg added.

In January, the Kamilos Group unveiled plans to build a 19,000-seat sports and entertainment center next to the city's historic train station to replace Arco Arena as the home for the Sacramento King's. The plan was worked out with the Kings' owners, the Maloof family, and the National Basketball Association.

Under the plan, the Kamilos group would buy and develop the 360-acre Cal Expo site, which has been the grounds of the California Exposition and State Fair since 1967, and the Maloofs and the city would give Arco Arena and 133 acres of land in Natomas to the state for a new fairground.

The Kamilos group has also asked the city to donate 9.5 acres of railyards land that is currently embroiled in arbitration due to a dispute over its value with railyards developer Thomas Enterprises. A court arbitrator's decision on its value is due by Monday.

The agreement calls for the city and Sacramento Convergence to negotiate exclusively on the project for four months. The Kamilos group had submitted a proposal to a task force created by Mayor Kevin Johnson, but not to the city. The developer now has 30 days to submit a more detailed, formal proposal, which would include a detailed description of the project and the financial plan.

The city will concentrate on analyzing the financial viability of the proposal for the next four months. City staff could need as much as a year to determine the project's feasibility.

At the end of four months, the city could extend the ERN or enter into a project implementation agreement with the developer. The City Council must decide whether to enter into binding contracts with the developer, Dangberg said.

Kamilos did not return phone calls seeking comment.

Photo by Kati Garner.

Railyards developer pays back taxes

2010-04-10T04:50:55Z

The developer of the downtown Railyards paid Sacramento County about $218,000 in current and back taxes and penalties Friday, said Suheil Totah, vice president of Thomas Enterprises.

Funds were sent from the company's Atlanta headquarters to the county's assessor office via overnight mail, Totah said.

But Thomas Enterprises did not pay the property taxes in time to prevent city officials from publicly criticizing the company earlier Friday.

The city had moved to cut off state grant payments to the company, according to an April 9 letter from city officials to the state’s housing and development department.

A letter from Assistant City Manager John Dangberg said that as long as the taxes were unpaid, Sacramento would not sign off on funds to Thomas Enterprises from a $17 million state grant.

The company owed as much as $114,000 in back taxes that were not paid in December, according to the letter.

Now, Senior Deputy City Attorney Sheryl Patterson said Sacramento will be "back in business" with Thomas Enterprises after the city verifies Monday that the company has paid its taxes.

City Councilman Kevin McCarty held a press conference Friday morning to announce that if the company did not pay its taxes, the city should try to block as much as $47 million in state funding to the Railyards.

But Patterson said the city did not have the authority to block payments on amounts other than the $17 million from the grant.

The city could have written a letter asking the state’s Housing and Community Development Department to stop payments on additional state funds for the Railyards, she added.

Photo by Sacramento Press Staff Reporter Suzanne Hurt.

Kathleen Haley is a staff reporter for The Sacramento Press.

City keeps quiet on claims of quid pro quo at department

2010-04-06T03:41:12Z

The city attorney’s office is not providing information on how the city will respond to claims of potential quid pro quo in the development department.

Allegations of possible quid pro quo at the Community Development Department were mentioned in a Jan. 26 report from the offices of the city attorney and the city manager.

But it’s unknown when an investigation into the allegations may begin.

In a Monday e-mail response to questions from The Sacramento Press, City Attorney Eileen Teichert referred to the claims of possible quid pro quo as a “personnel issue.” She indicated in her response that some information about the issue may eventually become public depending on whether the city takes disciplinary actions.

Questions for the city attorney

The Sacramento Press asked Teichert the following questions in an April 2 e-mail:

Which body will investigate that issue (the potential quid pro quo)? When will the investigation (of) this issue begin? Will information from the investigation be made public? If not, why?

Teichert’s response

Teichert responded to the above questions in an April 5 e-mail:

"Pursuant to Council direction all matters meriting further audit or investigation, that did not involve personnel issues, were provided to the City Council. I understand that the third-party auditing firm (yet to be selected) will be tasked with looking at these matters provided to the City Council. The timing for such audit is unknown and the results will be public.

"As for personnel issues, the City cannot divulge information regarding any such investigation, as to do so would compromise the investigation and would infringe on the subject's rights of privacy. At such time as the investigation is complete and if findings are made resulting in discipline, the nature of the discipline and a description of the basis for imposing the discipline will be make public."

Making sense of CDD investigations

The possible quid pro quo is among several issues that may affect the department, according to the Jan. 26 report.

The city has taken a variety of responses to numerous issues at the department. It may be helpful to break down recent city actions to understand the issues.

To begin with, a city employee last year gave permits to K. Hovnanian Homes to build in a Natomas flood area, according to a Dec. 15 letter Teichert’s office sent to the Federal Emergency Management Agency. Teichert’s office and Renee Sloan Holtzman Sakai, an outside law firm, investigated that issue. City officials have admitted that the employee’s decision broke FEMA rules.

Then, several more issues were mentioned in the Jan. 26 report on the Teichert and Renee Sloan investigation of the building permits problem. These issues included the possible quid pro quo, claims of unpaid development fees and problems with the department’s culture, among other concerns.

City officials released a 2,529-page document on the issues March 25. A third-party auditor will investigate the issues in the document, according to City Auditor Jorge Oseguera.

But the status of the possible quid pro quo concern remains unclear. Teichert’s e-mail to The Sacramento Press indicates that many details surrounding that issue will not be made public.

At a Jan. 26 City Council meeting, Assistant City Manager John Dangberg and Courtney McAlister, an attorney for K. Hovnanian Homes, both said there was no quid pro quo between Hovnanian Homes and the city.

Kathleen Haley is a staff reporter for The Sacramento Press.

Post-Kerridge: Will development department change?

2010-03-14T22:11:39Z

Sacramento’s business community has said repeatedly that former City Manager Ray Kerridge established a customer-service culture in the city’s development department. At the same time, the department is wracked with investigations into possible breaches of laws. Now that Kerridge has left the city — March 11 12 was his last day of work — how will the culture of the Community Development Department change?

New leadership and the findings from an audit are two upcoming developments that may change the department. The recent resignations of Kerridge and department director Bill Thomas have created job openings.

At this point, both positions are being held by interim officials. Gus Vina is interim city manager; David Kwong is acting director of the Community Development Department.

A third-party audit of the department is on the horizon. An outside auditor will follow up on issues from an earlier joint investigation by City Attorney Eileen Teichert’s office and the law firm Renee Sloan Holtzman Sakai.

The auditor will analyze several issues identified by the Teichert/Renee investigation. They include possible violations of the city’s planning rules and possible decisions to bypass, delay or lower fees.

A Jan. 21 report from the offices of the city attorney and the city manager on the Teichert/Renee investigation also listed “potential quid quo” in the department as an issue that should be studied in more depth.

The Teichert/Renee investigation centered on another highly controversial issue: the 35 permits that the department approved last year for construction in a Natomas flood zone. The Jan. 21 report said a department employee broke federal rules by distributing the permits.

The city placed former department director Thomas on paid leave in October. He resigned March 1.

A Customer-Friendly Culture

The department had a poor reputation among developers before Kerridge’s arrival in 2005, according to a March 28, 2008 Sacramento Business Journal article. In 2003, members of the local building industry said in a Business Journal survey Sacramento's building department was the most problematic of all similar city and county departments in the area. Five years later, the industry said in the survey that Sacramento's building department was the area's best.

Kerridge served as assistant city manager for development before being promoted in 2006 to city manager.

Despite the department’s crises, Sacramento developers have praised Kerridge for his work to establish a customer-focused culture.

Developer Mark Friedman was one of the members of the business community who invited Kerridge to leave his job with the city of Portland and come to work for Sacramento.

“I think (Kerridge) did a great job,” said Friedman, whose company, Fulcrum Property, owns Arden Fair Mall. “He streamlined the building department processes and made the organization more customer-friendly than it had been.”

Richard Rich, development director for Thomas Enterprises, Inc., expressed a similar sentiment in a Jan. 25 comment on The Sacramento Press. Thomas Enterprises is developing the downtown Railyards.

“This department isn’t perfect but its people, including Bill Thomas, deserve credit for creating a culture of public service,” Rich said.

Elected Leaders Praise Customer-Service Attitude Toward Development

Mayor Kevin Johnson and several City Council members also applauded Kerridge for his customer-service framework at a March 9 council meeting. Their comments indicate that there is political support to maintain the customer-service environment at the Community Development Department.

“And this whole notion of ‘getting the customer to success’ is something I think we’re all proud of,” Johnson told Kerridge at the March 9 meeting. “And that’s going to be with us, Ray, for many years to come.”

Some council members, though, are running for re-election. Depending on the results of their races, they may not have much time to make decisions affecting the department. The City Council incumbents running for re-election are Ray Tretheway, Steve Cohn and Robbie Waters.

Councilwoman Lauren Hammond is running for Assemblyman Dave Jones’ seat against fellow council member Kevin McCarty. Sacramento County Supervisor Roger Dickinson also is running for the seat. Hammond will leave the City Council.

McCarty’s seat is not up for re-election.

Hammond and Waters praised Kerridge for his work revamping the culture of the department. Waters said Kerridge “turned (the department) around” in a short period of time.

Councilwoman Bonnie Pannell commented that developers were Kerridge fans. “It’s obvious by the developers — who really want to keep you here — that you changed the way Sacramento does business.”

Councilwoman Sandy Sheedy spoke of Kerridge’s view of city growth. “You taught us how to look at this city as something that could grow and be something bigger,” she said. “And it can be, and it will be.”

Cohn said Kerridge led the customer-service culture change in city government, which is a forward-looking approach.

The errors that people may point out in Sacramento’s government “have been errors of trying to be proactive,” he added.

In his speech to the City Council, Kerridge said the business community has been “a great source of strength” for him.

Like Johnson, Kerridge thinks greatness is in store for Sacramento.

“Sacramento has a destiny,” Kerridge said. “Its destiny is to become a great American city.”

How Do Top City Staffers View the Department?

Interim City Manager Gus Vina will run the department for nine months to a year, at which time a city manager will be named.

Vina told The Sacramento Press last week that he is interested in the permanent city manager position.

He said his priority will be on “best practices and a culture that gets the job done.”

Assistant City Manager John Dangberg said in a March 12 interview that the department can simultaneously help builders and abide by laws.

“Our level of customer service for people who want to invest in our city is of paramount importance,” Dangberg said.

The city wants to ensure that it’s adhering to laws and that buildings are safe, he said.

Meanwhile, Vina said in a March 9 interview that the upcoming audit of the department will be key to the next steps for the department. “We definitely need to regroup,” he said. “We don’t want to go to a bureaucracy that ... doesn’t deliver for the customer. But if the audit says, by the way, you got a little too loose on policy ... we’ve got to bring that back to the middle.”

He said the city needs to examine the audit’s findings, then ask: “Do we need to change rules? Are they too loose? Are they too tight?"

Photo of Mayor Kevin Johnson and city council members by Anthony Bento.

Kathleen Haley is a staff reporter for The Sacramento Press.

Vina to be interim city manager for 9-to-12 months

2010-03-10T23:40:43Z

Gus Vina, already serving as acting city manager, has been selected to be the interim city manager for the following nine-to-12 months.

City Manager Ray Kerridge resigned last month and will leave his post Friday. Kerridge has said he’s taking a private sector position, but has not yet announced where that position will be.

Mayor Kevin Johnson and several council members held a press conference Wednesday to announce Vina’s new position.

“And I think it’s very clear to all of us that (Kerridge) has very big shoes that we need to fill,” Johnson said. “And we feel that we found the right person to fill his shoes in a very short timeframe.”

Johnson and the council members unanimously chose Vina. They also interviewed Assistant City Managers John Dangberg and Cassandra Jennings.

Johnson explained that the City Council will hold a private meeting Tuesday to formally complete Vina’s new contract. The City Council wanted Vina to serve as interim city manager for nine to 12 months, Johnson said.

Vina previously held one of three assistant city manager positions. He supervised the police, fire, finance, human resources and labor relations departments, among others. He is also a former budget manager for the city.

Vina earned his master’s degree in public administration from the University of San Francisco. He holds a bachelor’s degree in business administration from California State University, Sacramento.

Councilwoman Sandy Sheedy said Vina “is motivated for the city.” She added that he works well with neighborhoods, business and labor.

“We have challenges,” Vina said at the press conference, “but those challenges are opportunities.”

Johnson said that he and the council members were looking for many attributes in an interim city manager including expertise in local government issues, budget matters and labor relations.

Kathleen Haley is a staff reporter for The Sacramento Press.

Council reacts to investigation of Natomas building permits

2010-01-27T06:54:39Z

A Sacramento city councilwoman said Sacramento’s municipal government has “gone wrong.” A second councilwoman blamed high-level city staff. And a councilman suggested that the city consider setting up a whistleblower hotline.

During an intense meeting Tuesday night, the Sacramento City Council grappled with an investigation involving the city’s community development department.

Council members wrestled with findings from an investigation into the department’s approval last year of 35 permits in a Natomas flood zone. The investigation was carried out by City Attorney Eileen Teichert’s office and a third-party law firm, Renee Sloan Holtzman Sakai.

In a recent report, the offices of the city attorney and city manager note that the department broke federal rules by approving the permits.

The report also points out several new issues with the building services division of the department. The issues include “potential quid pro quo,” “demolition without CEQA review,” “non-compliance with city’s planning requirements” and “non-compliance with fee-deferral program.”

The City Council unanimously decided Tuesday to move quickly to hire an external auditor to investigate the department.

“This council needs to find out what has gone wrong with city government, and we need to fix it,” Councilwoman Sandy Sheedy said.

Councilwoman Lauren Hammond blamed the department’s management.

“The problem is the management of the department,” she said.

Councilman Kevin McCarty raised the idea of a whisteblower hotline for the city.

Courtney McAlister, an attorney for K. Hovnanian Homes, the company that received the 35 permits, said there was no “quid pro quo” involving the company and the city. Assistant City Manager John Dangberg made the same comment.

Photo by Anthony Bento.

Kathleen Haley is a staff reporter for The Sacramento Press.

City's dual efforts on arena plans

2009-12-16T06:45:46Z

There are now two efforts by city officials to analyze plans for a new sports arena and entertainment complex in Sacramento.

While Mayor Kevin Johnson has recently assigned a task force to work on ideas for a new complex, the city manager’s office continues to participate in talks to build an arena at Cal/Expo.

Though Johnson is a city official, his task force is considered unique from the city manager's project.

Assistant City Manager John Dangberg told the City Council Tuesday that Johnson’s task force is a “private effort.” Dangberg continues to update the City Council periodically on negotiations involving Cal/Expo.

The National Basketball Association and Cal/Expo officials are involved with plans for an arena at Cal/Expo.

Meanwhile, Johnson’s 12-member “Sacramento First” task force includes real estate, finance and communications executives. Task force positions are unpaid.

The task force will make recommendations to the City Council on a sports and entertainment complex. Task force co-chairman Chris Lehane has said the group’s recommendations may be ready in mid-March.

The task force is meeting at 10:30 a.m. Thursday, at the South Natomas Community Center. At that meeting, a panel will explain how arenas elsewhere -- including the Staples Center in Los Angeles and AT&T Park in San Francisco -- have provided benefits to cities. The meeting is open to the public.

Kathleen Haley is a staff reporter for The Sacramento Press.

City eyes state buildings for future tax revenue

2009-10-23T04:38:58Z

City officials are eyeing state buildings in Sacramento as a potential source of local property tax revenue. A public affairs official with the state’s Department of General Services confirmed with The Sacramento Press on Thursday that it is moving forward with plans to sell some state-owned buildings in the city.

Sacramento does not receive property tax from state-owned buildings. But if the crisis-ridden state government sells the buildings it owns to private entities, property tax monies would flow to the city as well as to other local governments, such as the county and school districts, according to Assistant City Manager John Dangberg.

Mayor Kevin Johnson and the city manager support the planned sale. Johnson noted in a phone interview that if the state sold some its buildings, it would help its “cash-flow problem.” There are advantages and disadvantages to being the state capital; one disadvantage is the state’s ownership of some of downtown’s prime real estate, Johnson said.

Dangberg said the state needs to make its own decisions about the economic viability of selling its property. If the state sells its properties, the city “would want to be sure it was done in a manner that would allow us to collect property taxes,” he added.

Dangberg said he has talked about the state’s possible sale of Sacramento properties with Zach Miller, an official in the Real Estate Services Division of the state’s Department of General Services.

The Capitol Area Development Authority’s (CADA) role as a recipient of local property tax revenues adds another dimension to the issue. The city is examining the implications of the state’s possible sale of the Capitol Area East End Complex, which consists of five buildings and a parking facility at Capitol Avenue and N Street. The complex is in CADA’s jurisdiction, Dangberg pointed out. If the state sells the complex, CADA would receive all property tax revenues, he said.

In light of this, the city is trying to figure out if it can receive property taxes in areas under CADA jurisdiction, Dangberg said. He noted that the city provides police and fire services to the CADA area.

The state, meanwhile, appears to be seriously pursuing the sale of 17 buildings. The state plans to lease back the buildings after selling them. “Starting in the new year, we’re planning to market them aggressively,” said Jeffrey Young, deputy public affairs director for the Department of General Services. Details about the state’s plans to sell buildings -- including those in the city and county of Sacramento -- are featured prominently on the department’s website.

Kathleen Haley is a staff reporter for The Sacramento Press.

Councilmembers voice concerns over Nestle bottling plant

2009-10-01T03:47:35Z

Two Sacramento city councilmembers are raising concerns and voicing skepticism about the Nestle company’s plan to set up a plant to bottle and sell water from the American River.

Councilmembers Kevin McCarty and Lauren Hammond are advocating for the City Council to get involved in the city’s negotiations with Nestle, which so far have been managed by city staffers.

Nestle Waters North America’s plan to set up shop in Sacramento early next year is drawing attention. A group of citizens created "Save Our Water Sacramento" to oppose Nestle’s plans. The group is calling for the City Council to set a moratorium on beverage bottling plants in Sacramento.

The company noted in a statement that it plans to start operations by bottling 30 million gallons of Sacramento water annually at a Florin/Fruitridge industrial park site. Nestle would buy the water from the city on a yearly basis. But a city staff memo dated Sept. 14 points out a different figure — it says the Nestle plant would use 81 million gallons, or 250-acre-feet of water annually.

McCarty said he is concerned about the project’s environmental impacts and said the proposal sounds like a “sweetheart deal.” He criticized city staff for giving him a “weak response” on the project’s details. He said he’s now going to engage in “further exploration to get to the bottom of this,” adding that he wants to have a thoughtful discussion on whether the project makes sense.

Hammond has also entered the debate, saying that city staffers need to look to the City Council for public policy direction before entering into an agreement with Nestle.

Hammond and McCarty are running against each other for Assemblyman Dave Jones’ seat in 2010.

A Sept. 14 memo from Utilities Department Director Marty Hanneman notes that Nestle’s planned use of 81 million gallons per year is “less than .2 percent of the city’s current demands.” Hanneman said the project does not fall under California Environmental Quality Act requirements.

Assistant City Manager John Dangberg responded to McCarty's criticism, saying that Nestle is not obtaining special water rates from the city. The company would pay the same water rates as any other water user in Sacramento, he said. The company is also going through the permitting process with the same requirements that other entities face, and is not receiving special incentives, Dangberg noted.

The company's proposal meets conditions under city requirements that allow it to apply for a building permit without going through the City Council or the Planning Commission, he said.

Meanwhile, Chris Kemp, Sacramento Plant Manager for Nestle Waters North America, said the company is taking all legally required steps in setting up its plant.

“We look forward to working with the members of the city council to provide them with information about our company and operations as we become an employer and neighbor in the Sacramento community,” Kemp said. "We are complying fully with the permitting requirements of the appropriate city, state and federal governmental authorities.”

Kemp said the public is invited to ask questions about the project at the “Ask Us” section on its website.

Kathleen Haley is a staff reporter for The Sacramento Press. Staff Reporter Suzanne Hurt contributed to this report.

800 K/L-Belvue Demolition Plan Returns To City Council

2009-08-24T18:59:58Z

On Tuesday, August 25, the Sacramento City Council will hear a proposal by developers Bob Leach and Parkcrest Development to build a hotel at the corner of 8th and K Street and a parking structure at the corner of 8th and L Street, a project that would require demolition of city landmark the Bel-Vue Apartments and adjacent buildings. The meeting will be held at New City Hall, 915 I Street, at 6:00 PM in the main City Council chambers.

The item was originally to be heard at the August 11 meeting of the City Council (see sacramentopress.com/headline/11884/City_to_decide_on_fate_of_BelVue_Apartments_and_Berry_Hotel_today ) but was taken off the agenda at the last minute. According to the staff report, the "Exclusive Right to Negotiate" between the city of Sacramento and the developers expired on Sunday, August 23, but city staff can still work with the development group while a new RFQ (Request for Qualifications) is being prepared, a process that should take about 90 days according to the staff report. If city staff and developers cannot reach an agreement, the new RFQ will request proposals from other developers and development groups for a different project on the 800 K Street site.

Also according to the staff report, city staff had not fully analyzed the new proposal as of its submittal date of Friday, August 21, and could not provide complete comment. One change from previous proposals is a change to requested exemption from the hotel's "Transient Occupancy Tax": instead of 100% exemption from TOT for 10 years, they are asking for 50% exemption for 14 years. According to the accompanying financial documents, this would add up to approximately the same total subsidy for the project, but over a different span of time.

Another change is that Mohammed "Mo" Mohanna is no longer listed as a member of the development team. The staff report does not specify whether another investor has joined the team in Mohanna's place, or whether one of the existing investors will contribute more funds to make up for Mohanna's financial contribution to the project, or why this change has taken place. Most of the financial commitment comes from the Korean firm Consus, but the city has not yet received a formal commitment with complete terms and conditions from Consus.

The staff report does mention that the original "Exclusive Right to Negotiate" for this project occurred as a condition of a lawsuit settlement between the city of Sacramento and Mohanna, in addition to the city's payment of about $18 million to Mohanna for the land.

The total subsidy for the project is estimated at $31.5 million in land and tax exemption (both transient occupancy tax and tax-increment fund exemption.) This amount does not include the money previously paid to Mohanna for the property as a result of the lawsuit settlement.

The staff report does not address the issue of a potentially competing hotel project planned for the corner of 10th and K Street, nor does it address the issue of the demolition of the Bel-Vue landmark.

The staff report for this item can be found here:

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The agenda for this week's City Council meeting can be found here:

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