Anaheim Gets Its Arena Site : City Government: The mayor says the sports facility could be built in time for the 1991 NBA season, keeping pace with Santa Ana in the race for a professional basketball or hockey franchise.

The city of Anaheim Friday approved the purchase of a seven-acre site near Anaheim Stadium for its proposed $85-million indoor sports arena that Mayor Fred Hunter said could be built in time for the 1991 professional basketball season.

The agreement, involving a complicated three-way land swap, appears to have pulled Anaheim at least even with--and perhaps ahead of--nearby Santa Ana in the race to build an indoor arena, which is needed if either city hopes to attract a professional hockey or basketball franchise.

“This afternoon is the beginning of the Anaheim Arena,” Mayor Fred Hunter said. “We’re going to try to begin construction--tell Santa Ana--about the middle of January.”

With Friday’s agreement, Anaheim and Santa Ana each appear to have suitable land for their proposed, nearly identical 20,000-seat arenas.

Construction cannot begin on either the Anaheim or Santa Ana arenas until environmental impact reports are compiled. Officials in both cities estimate that the reports could be ready for public review by January.

However, neither city’s project has attracted a professional hockey or basketball franchise, which some observers see as essential if either arena is to be profitable.

The Anaheim land swap approved Friday involves the city’s purchase of a 14.5-acre vacant parcel for $5.9 million from the private firm of Sanderson, J.-Ray Development of Irvine. The city in turn agrees to sell a different 14.5-acre vacant parcel for $3 million to the same company.

“I can assure you, the city’s getting a good deal (and) the developers are not walking away with any gift-wrapped package,” said Al McCord, the city’s economic development manager.

City officials and company spokesmen said the $3-million parcel sold to Sanderson, J.-Ray Development requires costly improvements before it can be developed, making it of comparable value to the $5.9-million site. However, more than seven acres of the $5.9-million site is under high-voltage power lines, limiting its development, Assistant City Manager James Ruth conceded.

The $3-million parcel “requires an immense amount of engineering work,” said James (Walky) Ray, one of the partners of Sanderson, J.-Ray Development. “I think it’s a good deal for the city as well as us, and for the Phoenix Club.”

Sanderson, J.-Ray Development last May contributed $1,000 to Hunter’s campaign war chest, which Hunter said Friday is at least $40,000 in debt.

Michael Ray, a partner in the firm, also made a $100 campaign contribution to Councilman Thomas Daly in September, 1988, according to city records. Ray also is a director of the Democratic Foundation, whose political action committee gave Daly $1,000 and Councilman Irv Pickler $500 in October, 1988, the records show.

“I think they’ve given us all about $1,000,” said Councilman William D. Ehrle, who said he, too, has received contributions from the firm or its principals.

Democratic Foundation Chairman John Hanna said the organization contributed relatively large sums to Daly and Pickler because they are Democrats in a city where campaigning is expensive. He said it was not Michael Ray’s idea to make the contributions.

There is no state law prohibiting city council members from voting on matters concerning campaign contributors, a spokesman for the state Fair Political Practices Commission said.

Ehrle, Hunter and Pickler said the contributions had no effect on their votes. Daly was out of town Friday and did not vote on the land swap, which passed 4 to 0.

Michael Ray was vacationing out of state and could not be reached for comment. His brother, James, and their partner, Chase Sanderson, said Friday that their firm’s $1,000 contribution to Hunter was made because “he’s a great mayor.” They said they are sure the contribution did not affect Hunter’s vote.

Anaheim’s actions Friday were hailed by council members. “It’s a major milestone,” Ehrle said. “The only thing we’re waiting on is the environmental impact report, which is due in December. We have one or two public hearings on that and boom! we’re in the ground. We’re not concerned about Santa Ana.”

Anaheim’s land purchases will be financed by a sale of bonds, which will be underwritten by an increase in the city’s bed tax on motels and hotels.

“This tax falls upon the visitors to our city and not upon Anaheim residents and taxpayers,” Ruth said. “Therefore, the arena land acquisition will be of no cost to Anaheim residents and businesses.”

Although Anaheim had been working on its arena plans for months before Santa Ana entered the race earlier this year, Santa Ana appeared to have an advantage because it did not need to acquire land for its facility.

As proposed, Santa Ana’s $70-million arena would be privately owned and operated and built on 17 acres of vacant private land at Edinger Avenue and Lyon Street.

Anaheim paved the way Friday for its city-owned arena on city land by approving the $8-million purchase of 7.6 acres of industrially zoned land on Douglass Street near Katella Avenue from the Phoenix Club, a German-American social group. The Anaheim arena would be operated under a lease agreement with private firms, with the operators and city splitting profits.

The purchase of the Phoenix property hinged on the two related land deals.

The city agreed to pay $5.9 million to Sanderson, J.-Ray Development for the 14.5 acres zoned for industrial use near Ball Road and the Orange Freeway. In turn, the city will sell about 8.5 acres of that property to the Phoenix Club for $3 million.

The club, which has 3,500 family memberships representing about 10,000 persons, plans to build a new, 25,000-square-foot meeting facility at the Ball Road location.

As a condition of buying Sanderson, J.-Ray Development’s Ball Road property for $5.9 million, the city agreed to sell the firm the 14.5 acres of vacant, commercially zoned property at Weir Canyon Road and La Palma Avenue for $3 million.

The less-expensive Weir Canyon Road property is “not at street grade” and requires expensive improvements before it can be developed, city and company spokesmen said.

After considering the costs of such improvements, the two parcels “become almost equal” in value, the city’s McCord said. “There’s a lot of property improvement that has to be done. It is not exactly prime commercial” property.

When he learned of Anaheim’s land deals, Santa Ana Mayor Dan Young said: “We’ve had our land deal arranged from day one.

“Both sides are probably going to be making substantial progress over the next three to four months,” Young said. “I’m really not sure how it’s all going to turn out.”

In 1987, Anaheim’s bid for an NBA basketball expansion franchise was never seriously considered because it had no suitable facility, an NBA spokesman said.

But Los Angeles attorney Neal Papiano, who is handling Anaheim’s negotiations with the NBA and NHL, said he is encouraged by Friday’s land deals.

“I think everything has fallen in place,” Papiano said. “I think it’s just full speed now.”

Ruth said the city is negotiating with more than one team in the National Basketball Assn. and National Hockey League, but declined to identify them.