The City Council on Tuesday revisited the city’s 2003 loan agreements with the Sacramento Kings and decided to keep them in effect.
City Treasurer Russ Fehr said he discovered the possible issue with the old loan agreement a few months ago. He said he discussed the matter with City Attorney Eileen Teichert, and she suggested that the current City Council examine the contract because it didn’t go before council members in 2003.
The Kings’ remaining debt to the city is $68 million, according to Fehr.
In 1997, the Kings and the city signed a contract that permitted the Kings to pay back its loans to the city after reimbursing $30 million in debt to another party, Fehr said.
Then, in 2003, the Kings worked with former City Treasurer Tom Friery to alter its contract with the city. The Kings decided to borrow an undisclosed amount from the National Basketball Association, and wanted to be able to reimburse the NBA before it paid back the city, according to Fehr.
The amount of debt specified in the contract changed, too. The new language permitted the Kings to pay up to $75 million in loans to the NBA before reimbursing the city’s loans.
Friery made that change without City Council approval, according to Fehr.
The changes to the contract contained minimal risk, Fehr said.
Councilman Kevin McCarty voted against authorizing the old loan agreement, saying that he felt uncomfortable with the way it had been handled in 2003.
Five other council members voted to greenlight the old loan contract. Council members Robbie Waters, Rob Fong and Sandy Sheedy were absent from the meeting.
Janelle Gray, a debt officer for the city, wrote in a Sept. 7 report that the Kings have been paying their debts to the city.
Read the city staff report on the issue here.
Photo of Kevin McCarty by Brandon Darnell.
Kathleen Haley is a staff reporter for The Sacramento Press.