Concerns raised over Sacramento arena deal

Owners of the Sacramento Kings have raised concerns about the city’s ability to build a new arena complex in Sacramento by the 2015 NBA season, and a family spokesman said if those concerns aren’t met the team will consider relocation again.

Documents reviewed this week by The Times show that Kings owners Joe, Gavin and George Maloof are also disputing that they have a firm agreement to participate in a new entertainment and sports complex in Sacramento.

In a letter delivered Wednesday to city leaders under the subject “ESC feasibility concerns,” the Maloofs’ attorney Scott Zolke wrote “unresolved issues regarding the … project remain … “

Maloof spokesman Eric Rose said: “If an arena project cannot be completed by the timeline set by the city, then the Kings would be forced to explore all of their options.”

A year ago the Maloofs were poised to move the team to Honda Center in Anaheim before NBA Commissioner David Stern asked them to wait a year and let Sacramento Mayor Kevin Johnson, an ex-NBA All-Star point guard, establish a financing plan for a new arena in the city.

In late February Sacramento officials and the Maloofs said they had reached a verbal agreement for a new $391-million arena to be jointly funded by the Maloofs ($75 million), arena builder AEG ($59 million) and the city ($255.5 million).

In a Tuesday letter to the Maloofs’ attorney, Sacramento officials acknowledged they are working to ease the owners’ “questions and concerns.”

Sacramento Assistant City Manager John Dangberg wrote, “there is much work ahead that must be closely coordinated among the partners,” adding, “it is critical for all parties to be pulling in the same direction.”

Dangberg, in the nine-page letter, said completing construction by the 2015 NBA opener is “achievable.”

However, meeting the 2015 timeline requires satisfying environmental requirements and dealing with possible additional expenses and legal challenges, among other risks.

Public scrutiny of city spending has also spawned a civic group to fight plans for the arena investment. Sacramento Taxpayers Opposed to Pork filed an initiative with the Sacramento City Clerk’s Office to stop public arena funding.

Amid uncertainty about who will pay for a slew of pre-development and construction costs, the Maloofs pressed for specifics from the city March 20. “The leadership in Sacramento is aware of the many challenges in completing the project in the time frame they set,” Rose said in a prepared statement.

The Maloofs declined to comment.

NBA Commissioner David Stern issued a statement on the matter late Thursday:

“The parties have been attempting to reach agreement on funding the pre-development expenses that must be incurred in order for the project to move forward in a timely fashion,” Stern said. “Those discussions have stalled, but I have advised Mayor Johnson that the NBA will advance pre-development expenses on behalf of the Kings pending our report to the NBA Board of Governors at its meeting on April 12-13.”

Stern is projecting costs in the range of less than $200,000 before next month’s board meeting, not the $3.2 million-plus in total pre-development costs.

Still, the Maloofs are concerned any money advanced by the league would be a loan the owners might be on the hook to repay when they believe either the city or AEG should.

“The long-standing position has been that the Sacramento Kings would be a tenant in an arena owned by the city and managed by an outside company,” Rose said in a follow-up statement. “Pre-development costs are not the responsibility of the tenant. The Sacramento Kings organization will continue to work with the city to seek solutions to the unresolved issues.”

That prompted a statement by Mayor Johnson:

“The success of the new entertainment and sports complex depends on complete trust and partnership among all parties. It was with that spirit that we all agreed to a deal in Orlando, including the Maloof family, who looked an entire room in the eye and promised their commitment to Sacramento. In light of the Maloofs’ promise, we fully expect all parties to live up to their commitments.”

The Maloofs made a strong point in their letter Wednesday to say that the preliminary term sheet is non-binding, with their attorney writing, “there was never an agreement reached.”

Addressing legal challenges could complicate efforts to meet California Environmental Quality Act and Environmental Impact Report requirements, Dangberg wrote in his letter to the Maloofs’ attorney. Dangberg added that “development projects of this magnitude always involve risk.”

Tuesday the Sacramento City Council is expected to discuss the status of the arena agreement and to seek a more substantial commitment from the Maloofs.