Last week, Sacramento Superior Court Judge Eugene Balonon issued a tentative ruling in the lawsuit targeting the arena deal orchestrated by Mayor Kevin Johnson, a former NBA star. It supported petitioners’ requests that they be allowed to depose Sacramento Councilman Kevin McCarty and Sacramento Economic Development Director Jim Rhinehart about undisclosed dealings between city officials and the new Kings ownership group to help it buy the team.

The Sacramento Investor Group, led by tech entrepreneur Vivek Ranadive, purchased Sacramento’s NBA franchise from the Maloof family in May.

Arena deal: Many key issues remain murky

The arena deal has prompted questions over the lack of public debate about key details, dubious financial numbers from the city and the public subsidy the project requires. Also, last-minute legislation by Senate President Pro Tem Darrell Steinberg, D-Sacramento, would let the arena’s construction proceed without a credible environmental impact review.

Plaintiffs Issac Gonzalez, James Cathcart and Julian Camacho are members of Voters for a Fair Arena Deal. They hope to put the arena subsidy issue on the ballot in Sacramento.

Defendants, who include Johnson, City Manager John Shirey, Deputy City Manager John Dangberg and other city officials, have sought to keep the deal behind closed doors and off the ballot.

The lawsuit accuses city officials of making a secret deal to provide an extra $80 million of public money to help the investors’ group beef up its offer against a well-funded Seattle group that wanted to buy the Kings and move them to Seattle, which lost its NBA team to Oklahoma City in 2008. Plaintiffs’ attorney Patrick Soluri said city officials have committed fraud because they have not fully informed the City Council and the public about details of the deal.

The city subsidy, according to the lawsuit, is actually $338 million — not the $258 million the city claims.

In response, the defendants insist the information the petitioners seek is “undiscoverable, privileged information” and contend there was no secret deal. Defendants’ attorney Dawn McIntosh said in in a Thursday court hearing there is not even any formal agreement in place about building the arena in downtown Sacramento. McIntosh said the lawsuit was “a waste of everyone’s time.”

However, the City Council voted Tuesday of last week to begin eminent domain proceedings to acquire the property necessary in the development of the new sports arena.

The lawsuit’s plaintiffs want to depose McCarty and Rhinehart because they believe the city officials have evidence about the city’s undisclosed subsidies. While Judge Balonon indicated in his tentative ruling last week that he favored authorizing a deposition of McCarty and Rhinehart, he also said he would issue his final decision this week.

Councilman McCarty opposes the city arena deal, and thus far, has not responded to deposition requests. I contacted McCarty several times for previous stories about the arena deal, but he did not return phone calls or emails.

Stall tactics until the deal is done

Deposition notices were sent to city officials in September. But according to Soluri, the mayor and city officials have engaged in various avoidance tactics, including filing numerous objections to deposition notices, rolling demurrers, and refusing to comply with a court order directing them to reschedule a further hearing. Soluri said these were stall tactics was designed solely to delay the inevitable discovery until after the city’s expected formal approval of the arena in April.

Those behind the lawsuit are not the only ones who think that Mayor Johnson and other city officials aren’t being honest about the real size of the public subsidy. Public policy watchdog Eye on Sacramento says that when all of the publicly owned assets being thrown into the deal are accounted for, the public’s contribution is actually $375 million — far higher than the city’s $258 million claim.

The city also agreed to give the arena’s private development group the city’s empty 100-acre plot next to Sleep Train Arena in North Natomas and six other city properties, five of them adjacent to or near the downtown arena site. City officials are also giving away the city’s parking lot at the site, and the revenue from parking meters, after claiming the parking lots have no value.

Beyond the legal challenge to the city’s deal, there is also a ballot initiative petition to require a public vote on any public subsidy for a professional sports franchise.  The petition signatures are currently being counted.

However, it appears Mayor Johnson and the City Council will attempt to moot the result of that vote by pushing up their approvals of the arena prior to the June vote that would thereafter require voter approval.  Approval of the deal and related bond sales were previously scheduled for summer or fall 2014.

Craig Powell, president of Eye on Sacramento, calls this “stealing the election.”

The files on the arena lawsuit are available on the Sacramento Superior Court website, case no. 34-2013-80001489.

The group also criticizes the city, which prides itself on its diversity and multiculturalism, for neglecting communities of color in handing out grants for the arts.

“From 1986 to 2013, the City of Sacramento has consistently provided the Opera, the Ballet, a Symphony and a large museum with taxpayer-funded grants, loans, lines of credit, forgiven loans, and capital improvement funds without making similar funding opportunities available to arts organizations rooted in communities of color,” the study, titled “The City of Sacramento: A Case Study in Municipal Support of the Arts,” found.

According to the report, four non-profit organizations have devoured the lion’s share of the city’s arts funding during the past three decades, all while maintaining a spotty record of fiscal accountability. Since 1989, Sacramento has provided $22.45 million in support to the Crocker Art Museum, $2.18 million to the Sacramento Symphony, $1.6 million to the Sacramento Ballet, and $601,000 to the Sacramento Opera.

Crocker Art Museum loan forgiveness

Earlier this year, the Sacramento City Council voted to forgive a $7.5 million loan to the Crocker Art Museum. The move raised questions about whether it was in the best interests of taxpayers.

“Everyone loves the Crocker Art Museum,” pointed out Raheem Hosseini in the Sacramento News and Review. “But a plan to forgive the cultural hub a $7.5 million debt deserves a little vetting.”

The vetting, according to the new report, showed that the museum had at least $10 million in pledges.

While the Crocker Art Museum received the loan forgiveness despite its strong fundraising, other organizations have received support while experiencing “severe financial and organizational instability.” The Latino Arts Network report cited a 2000 City of Sacramento staff report that blasted the financial management of the Sacramento Opera.

“The Sacramento Opera has experienced severe financial and organizational instability in recent years that threatens its continued viability. Like some local arts organizations, the problems facing the Opera include: (1) use of deferred revenue, (2) borrowing from boards and endowments, (3) high accumulated debt, (4) no cash reserves or method to deal with annual cash flow shortages, and (5) no financial planning or plan to invest in its infrastructure,” found the city staff report on the Opera, which was published in 2000.

America’s “most diverse” city snubs some arts organizations

Meanwhile, Sacramento, which was once dubbed by Time Magazine and the Civil Rights Project at Harvard University as “America’s Most Diverse City,” has provided minimal support for Latino, Asian and African American arts organizations. Of the $2.4 million allocated for the arts in the most recent fiscal year, the City of Sacramento awarded just $53,130, or 2.2 percent of its budget, toward communities of color.

The report says, “With the exception of grants awarded by the Sacramento Metropolitan Arts Commission, the City’s allocations to nonprofit art organizations reflect a lack of coherent cultural policies, a failure to develop plans that take into account the residents’ changing demographics, and an elitist cultural investment strategy that makes no economic sense.”

Tomas Benitez, Chairman of the Latino Arts Network, hopes the analysis alerts the City of Sacramento.

“The findings in our report should be a wake-up call to other municipalities who are ignoring the huge demographic changes taking place in our state,” Benitez said. “Our hope is that this study, which took place over eight months, will encourage greater equity in the distribution of tax payer money and wiser investments in the arts. Sacramento deserves better.”

City of Sacramento promises to investigate the findings

For its part, the City of Sacramento says it will be investigating the findings.

“We received this report and we will be taking a closer look at the findings,” said Shelly Willis, executive director of the Sacramento Metropolitan Arts Commission. “The timing of the report works well for the arts commission as we are embarking on a project that will fully examine how we work to bolster our cultural arts.”

Willis added, “We have a process in place for funding multicultural arts but we acknowledge the need to examine how we do that moving forward. We appreciate the report from the Latino Arts Network and it is our intent to continue to work with them closely as this plan is developed.”

Rebecca Nevarez, the executive director for the Latino Arts Network, hopes this study begins the dialogue necessary to change the inequitable distribution of arts funding.

“With this research, we’re hoping to create a dialogue about equity and inclusion for Latinos who make up almost 30 percent of Sacramento and 40 percent of the state,” she said.

March 30, 2013

By Katy Grimes

SACRAMENTO — The unusually speedy approval of a new NBA arena for the Kings basketball team in the heart of downtown Sacramento leaves many details and unanswered questions on the table, including how this arena project possibly will be completed and ready for opening by 2015.

Approved by the Sacramento City Council, the latest plan uses overstated revenue projections, grossly overstated projected attendance numbers and city-owned parking garages to sweeten the finances. As with all of the previous schemes to keep the Sacramento Kings in town in a luxurious arena, neither city officials nor local news media have ever performed due diligence to expose the questionable business deal it will be for taxpayers.

Local media have been cheerleading the project, with little criticism or analysis. It’s another typical government-involved project, with bad numbers, pie-in-the-sky plans, lots of hype and no accountability.

Impacts on the city

A project of this magnitude will impact downtown parking, local businesses, housing and commercial property prices, traffic congestion and even air quality. Projects a fraction of this size are required to comply with extensive state mandated regulations, including Environmental Impact Reports and the state’s California Environmental Quality Act.

Many say that, given how Sacramento officials have already rammed through the term sheet approval in record time, they will also try to ram the development process through, without giving residents and businesses the standard allotted time to question the process and project.  And given the California Legislature’s recent history working around CEQA regulations for politically favored projects, could city officials already be working to ensure this project also is exempted from the state’s strict environmental guidelines?

Sacramento CEQA exemption

I contacted Senate President Pro Tem Darrell Steinberg, D-Sacramento, to find out if he plans on sponsoring legislation for the Sacramento arena similar to AB 900 and SB 292, which were passed last year and streamlined the CEQA process for Los Angeles-area sports stadiums. AB 900 was a general bill and expires on Jan. 1, 2015.  But SB 292 specifically was targeted at the $1.2 billion stadium for downtown Los Angeles being sponsored by the Anschutz Entertainment Group.

“It will be up to the government to decide if the project falls under the AB 900 criteria,” said Rhys Williams, Steinberg’s spokesman.

But in a later phone call, Williams said, “No plan was in place to fast track the stadium through CEQA, unless the project meets AB 900 criteria.” Williams also noted that Steinberg authored AB 900.

I also contacted Sacramento City Manager John Shirey to inquire about a CEQA exemption for the arena project. Shirey was not available, but spokeswoman Amy Williams said she hand’t heard of anything involving CEQA exemptions for the arena project, and said she would ask others working on the project for the city. I did not hear back from Williams.

Interestingly, I also contacted Anaheim city officials. Anaheim was in the running two years ago to acquire the Kings. Part of their proposal was to increase the size of the Honda Center indoor arena. Ruth Ruiz, Public Information Officer with Anaheim, forwarded the city-led Environmental Impact Report summary which found the Honda Center would not fall under CEQA guidelines because the expansion was only intended to enhance the design and services offered at the arena, and would not increase the maximum seating capacity.

Unnecessary financial risk

Arena opponents are concerned that Sacramento is opening itself up to risk it cannot afford. Eye on Sacramento, a public policy watchdog group, compared Sacramento to Stockton, which filed for bankruptcy protection after spending tens of millions of dollars on an arena and other publicly financed facilities.

Others are concerned about the increasing number of government projects will continue to be exempted from California’s unusually strict environmental regulations — regulations which have killed many private sector projects.

Part Two of this two-part series will be on the stadium and jobs creation.

Katy Grimes: Not wanting to be left out of the latest trend, it appears that Sacramento’s City Council wants to file for bankruptcy as well.

“An overwhelming majority of the council has expressed support for raising the sales tax as a way to produce revenue for core city services,” the Sacramento Bee reported today. And because most city council members support raising taxes, “the Sacramento City Council is expected to move forward tonight with placing a measure on the November ballot seeking to raise the sales tax rate in the city.”

Another great idea from the elected brain trust in Sacramento.

Garbage begets garbage

Like an episode out of Goodfellas, this same city council approved a really stinky, smelly multimillion dollar solid waste contract last year. Despite dire warnings, the city council approved the no-bid contract awarded to BLT Enterprises, later swallowed up by garbage giant, Waste Management Inc. Sacramento city rate payers will have to live with the contract for decades, according to the Sacramento County Grand Jury.

The stinky contract forces city residents to pay 25 percent higher garbage pickup rates than any other city in Sacramento County. It makes one wonder which city official has an uncle who owns the garbage company.

The City Council did this without a competitive bid process, despite the contract being worth more than $22 million.

These same officials now want to raise taxes.

It’s going to get really ugly in Sacramento.

“Councilman Kevin McCarty told The Bee’s editorial board this week that he will propose adding a six-year ‘sunset’ term on the tax hike, as well as annual audits of how the new revenue is being spent and the creation of a citizens’ oversight commission to track the spending,” the Bee reported.

Somehow McCarty thinks a phony sunset date on the tax and phonier annual audits will make the new tax increase more palatable to voters.

He could not be more wrong.

For the last three years, the city of  Sacramento has been cutting the services it is required to provide to city residents, and for which we pay a great deal of money. Garbage and recycle waste pickups have been decreased, and the yard waste piles are no longer picked up at all. This may not be a problem for newer Sacramento neighborhoods, but in my old neighborhood in the City of Trees, one yard waste can doesn’t come close to dealing with the reality of yard clippings, leaves, grass piles, leaves, needles, and more leaves.

Misplaced priorities

Under Mayor Kevin Johnson’s reign, the past three years the city has focused the majority of its capital trying to get a new sports arena approved for the Sacramento Kings, despite overwhelming opposition from city voters.

Sacramento has increased city utility rates and utility taxes, and has demonstrated that officials and elected politicians lack the fiscal restraint or discipline needed to resolve the historical budget deficit, or deal with astronomical pension debt, which is the elephant in the city park.

The Sacramento Housing and Redevelopment Agency continues to operate as if nothing has changed.

Instead of working diligently to keep rates low, local utilities are participating in low-income housing remodelings – a brilliant priority in a city with a massive deficit.

Mystery poll

The Bee claims that a poll conducted in April found that 68 percent of voters would support a half-percentage-point increase in the city sales tax. “That boost would generate an estimated $31.4 million for the city each year, according to a city staff report,” the Bee reported. “Support was even stronger for a quarter-percentage-point addition to the sales tax, an increase that would bring in $15.7 million each year for the city.”

The Bee editors used the same poll information in an editorial yesterday, but neither story linked to the poll, nor could I find this mystery poll anywhere.

Interestingly, these same poll results appear to have been used in many cities throughout California.

* “Based on a survey of several hundred county residents, there appears to be strong support for a sales tax measure for roads,” the Lake County News reported today. “Approximately 68 percent of those polled said they would support such a measure. Responses from within the city of Clearlake polled even stronger for the tax,” the LC News amazingly found.

* The San Francisco Chronicle reported on July 8, “Many politicians and community leaders felt a half-cent sales tax, mirroring what voters in Santa Clara County recently approved, was the most they could hope for. The poll showed, however, that slightly fewer people, 68 percent, supported the half-cent tax.”

* The Press Democrat found that in Petaluma, Vice Mayor Mike Healy, “who commissioned a poll that he said showed 68 percent of the community supported a half-percentage-point, eight-year, general-purpose tax.”

* The Albany, CA Patch reported nearly the same discussion of tax proposals. “The proposed sales tax, which would last eight years and is estimated to generate about $600,000 each year, comes in response to declining revenues, which have forced city leaders to consider cutting certain city services.”

Each of the cities states that because the sales tax will not be earmarked for specific purposes, it will take only a simple majority to approve the tax. If the taxes were earmarked, the tax measures would need two-thirds majority vote for passage, lessening the chances of any of the tax proposals from passing.

And each of the cities’ tax proposals have language similar to Albany’s as justification of the tax increases: “to preserve the quality of life and maintain critical city services and facilities, including maintaining police and fire services, along with recreational, senior and youth programs.”

In fact, if you google the phrase “68 percent of voters would support a half-percentage-point increase in the city sales tax,” news stories from cities all over the country report very similar polling and outcomes.

Tax increases or loss of city services

The Bee reports “basic city services have been gutted by deep budget cuts. There are fewer police officers on patrol, fire companies are routinely ‘browned out’ and many parks are a mess. If not for volunteers, nonprofits and businesses raising money and pitching in, it would be even worse.”

And city taxes and fees have never been higher. Could the money be going to pay pension debt instead of paying city employees to provide the services we are taxed for?

Sacramento heading for a meltdown

Sacramento has seen a very deliberate loss of police protection, the parks have been allowed to decay in the most public and visible areas, yard waste is left on streets to rot, 9-1-1 puts callers on hold, fire departments are have announced brown-outs, and police no longer respond to property crimes or burglaries.

Could the taxing plan be any more transparent? Unfortunately, there are far too many two-Prius families living in Sacramento city proper who buy into this liberal drivel.

While Sacramento’s Mayor and a couple of council members claim  they are “trying to restore faith and confidence,” the city council members know they have the support of the city’s labor unions if they vote to push another new tax on city residents.

Unions pushing tax increases

It’s unions driving this bus, and it’s probably unions which provided the polls for the various cities. Big labor unions own politicians, and it’s never been as evident as it is right now.

It even appears that unions are writing the scripts for news stories, and for the politicians.

But this arena deal wasn’t exactly the smartest issue in which to support Johnson.

Sacramento needs a $391 million arena like it needs another new strip mall or shoddy housing development. The city is operating a $60 million deficit, parks are closing or disintegrating, police officers laid off, streets are potholed, and it needs a new sewer system.

Sacramento hasn’t even capitalized on its unique characteristics. Sitting on two rivers, one would have thought that development along those beautiful waterways would have been a priority. Instead, we have homeless camps along the rivers.

That the city is already the biggest slumlord in downtown seems to be a fact ignored by the council members, who must be suffering under illusions of grandeur – the “World Class City” theme continues to dance in their heads like visions of sugarplums.

These small-town yahoos think another new sports arena will propel Sacramento into big-time status. Wouldn’t the Sacramento Kings already have done that after 25 years of being Sacramento’s NBA team?

After the council voted to support the financing deal, the brilliance that came from council members was stupendous: “You have to be optimistic to make this kind of investment,” said Councilman Steve Cohn … No. You’d have to be myopic and obtuse.

“The arena deal is the largest financial transaction in the city in years…” councilman Kevin McCarty said. “We are the most broke city in the region.”

In a rare moment, I found myself in agreement with McCarty. He was one of the “no” votes.

The council asked favored local developer David Taylor if he would cover any cost overruns on the arena deal – of course Taylor said he would. Yeah right. And I have some swamp land to sell city…

“The City needs to think of ourselves as venture capitalists and do this arena deal” said councilman Rob Fong. It’s always easy to spend other people’s money and look like a big guy.

The only sanity in the room was Councilwoman Sandy Sheedy, the other “no” vote. “Why are city taxpayers paying for county parks when our own are deteriorating and volunteers are maintaining them?” asked Sheedy.

The dumbest, pandering award goes to Councilwoman Angelique Ashby who used her opportunity to question the deal, and instead complimented city staff and the arena supporters on the work they had done. Ashby totally ignored that a majority of residents are furious that the city is spending any money on this arena debacle.

The Mayor described last night as “the finest moment in Sacramento.”

Coming from a local boy, I am appalled that our Mayor thinks that it takes a sports arena to make Sacramento worthy.

MAR. 7, 2012

FEB. 28, 2011

For several years Sacramento has waged a debate over whether our NBA team, The Sacramento Kings, will leave town for greener pastures and deeper pockets.

As a Sacramento native, I remember very well the fanfare surrounding the Kings’ arrival in town in 1985. You’d have thought that the real royals, Prince Charles and Princess Diana, had moved in. A local developer was able to bring the team to Sacramento without using public funds, but that tune has changed dramatically.

In the years since the Kings have been Sacramento’s team, fans have been fickle with support. When the Kings are winning, the arena is packed. When the team loses, as is historically the case, the arena has lots of empty seats.

Which makes many fiscally responsible Sacramento residents angry that the city council continues to push for building a massive arena. If you build it, they will come only happens in movies. Even on the verge of losing the Kings to Anaheim, talks about a local arena continue with local developers and money people.

Sacramento’s decades of elected leaders have a crisis of identity. Neither the Sacramento Kings, nor any other professional sports team can fill the empty void where confidence should be, or repair the insecure-city syndrome.

The city cannot manage to develop its two beautiful rivers or resolve the perpetually blighted K Street Mall downtown — despite the millions of redevelopment dollars dumped into the ugly and crime laden street. Such a cityshould not have a seat at the NBA’s table because the city has so badly mismanaged its 25 years with the Kings.

Taxpayers told the city emphatically “no” to a taxpayer-funded arena in 2006 when Measures Q and R went down in defeat. And instead of listening, city councils since have tried to end-run voters, attempting to keep talk of a publicly funded arena alive — despite the denials.

The Sacramento Grand Jury criticized both city’s and county’s backdoor dealings with the Kings, accusing the city and county of “deceiving” the citizens. The Grand Jury reported in “The Kings and City and County of Sacramento: Betrayal in the Kingdom?“:

In 1996 the second group owning the Kings was considering selling or moving the team. The owners approached the city with a $235 million public/private partnership proposal to develop a sports complex and entertainment center.

The proposal was termed ‘Partnership for Playing.’ The city’s gross commitment would have been $150 million. This included a $90 million contribution toward Arco Arena and a $10 million commitment for infrastructure at the arena and stadium sites as described under the North Natomas Financing Plan. On January 21, 1997, the Kings group withdrew their proposal.

And on January 28, 1997, the Kings and the city reached an agreement for financial assistance which included a $70 million loan, and fee credits and deferrals for future infrastructure. The source of payment for the loan was slated to be arena revenues and ticket surcharge revenues. The loan is still outstanding, although payments are being regularly made.

Planning failures

Sacramento’s elected councils have failed miserably in long range planning and priorities. Bad roads, failing city schools, threats of deadly flooding, foreclosures and suburban blight, high taxes, businesses closing or leaving and high unemployment are all the reality in Sacramento, and should be the regular agenda of the city council.

Sacramento needs to get its own house in order before aspiring to big city status. Downtown needs a sincere clean up and renovation efforts, not the shuck-and-jive redevelopment scams that have been in place for decades, making local developers wealthy, and leaving taxpayers footing the bill. Our downtown has never looked worse, with the city the biggest slumlord in the area.

The owners of the Dive bar, Mermaid bar, and Cosmo Cafe on K Street are recipients of $30 million in subsidies. Currently the city is planning a new entertainment venue and more low-income apartments and restaurants in the downtown area. Is that the best use of tax dollars during one of the worst economic slumps in history?

The small thinkers on the city council impose crash taxes and meddlesome, subjective home design requirements on area residents, acting more like a town council of busybodies. Recently the council killed the house design of a local couple, even though the couple had adhered to zoning ordinances and design requirements, and been given the go-ahead by two local boards made up of design professionals. Before voting to kill the project, the council spent hours during a council meeting discussing the design, demonstrating a tremendous waste of time, money and abuse of political power.

Let the entrepreneurs develop bars and restaurants and housing and entertainment venues, because they only build if there is a demand. Contrary to the popular liberal notion that government creates jobs, it’s actually private enterprise that creates jobs and profits, and the subsequent tax money required to sustain the government beast.

Unless and until Sacramento residents start electing business leaders, Sacramento will be forever referred to as the cow town between San Francisco and Tahoe, with only fleeting moments of fame.

– Katy Grimes