“Collusion” and “shady dealings,” are just a few of the words used in a letter to describe the City of Sacramento’s “utter failure to conduct any economic analysis” in the proposed taxpayer-subsidized sports arena.

Attorneys representing members of taxpayer groups opposed to the subsidized arena deal sent the letter to Sacramento City Attorney James Sanchez, with serious concerns over Mayor Kevin Johnson’s Think Big pro-arena group, and the Kings ownership investment group pushing the deal, with no real economic analysis, while they stand to reap all of the benefits.Mayor Kevin Johnson, city officials and the Kings ownership group have pulled out the stops to get this deal done — at any cost.

Attorneys Patrick Soluri and Jeffrey Anderson, who recently deposed Sacramento Economic Development Director Jim  Rinehart about the proposed taxpayer-subsidized sports arena deal, spoke at the Sacramento City Council meeting Tuesday.

The attorneys sent the letter Thursday to City Attorney James Sanchez, to address what they called “a serious misrepresentation” made at the conclusion of the “public comment” portion of the January 21, 2014 Sacramento City Council meeting.

The attorneys said they appeared at the council meeting to address their growing concerns with the City of Sacramento’s  lack of formal or even legitimate economic analysis of  the proposed sports arena, which has been heavily touted by the Mayor’s Office and other high ranking City officials, “several of whom are named individually as defendants in pending litigation,” according to the attorneys.

In the letter to Sanchez, Soluri and Anderson said the City’s only economic “analysis” contained in a staff report was to “cut and paste” bullet points obtained from the Sacramento Kings ownership investment group “in concert with the Mayor’s arena hype machine.”

Soluri and Anderson also wrote a letter  to Sacramento City Councilman Steve Hansen, January 20,  regarding Development Director Jim Rinehart’s sworn deposition testimony, which revealed shocking facts about the City’s failure to perform necessary due diligence with regard to the economic ramifications to the City resulting from the non-binding Term Sheet for the arena deal, adopted by the City Council on March 26.

From Soluri and Anderson’s letter:

“In our public comments Tuesday night, we again asked how the City could have structured a deal including a major public subsidy (consisting of a public subsidy of hundreds of millions of dollars to fabulously wealthy Kings owners and investors) without either engaging its economic development professionals or having the benefit of its own economic impact study,” Soluri and Anderson said. “In particular, the City has engaged in apparent unblinking acceptance of the proponents’ and project developers’ hype regarding the purported catalytic impact of the 1.5 million square feet of ‘ancillary development’ discussed in the Term Sheet that is, by all accounts, a predicate for the City obtaining any tangible economic benefit from the proposed ESC project; but for which there is no solid commitment or even tentative agreed upon timetable to bring to fruition.”

“Specifically, you stated that ‘the staff report and the presentation to the Council at that March consideration provided a significant overview of the economic benefits,’ which you assert the City will enjoy as a result of the ESC project, including job creation and enhanced property values, ‘among others,'” Soluri and Anderson wrote. “Lastly, you stated that the City’s ‘analysis’ set forth in the staff report ‘continues to be on the record and available for the public in the event that there is an interest in reviewing it.’”City denies concerns with planThe attorneys said City Attorney Sanchez attempted to refute the concerns they expressed at the city council meeting, along with  their concerns expressed in the January 20th letter to Councilmember Hansen.”

According to Soluri and Anderson, Sanchez provided false assurances to the public about the purported economic benefits of the arena, which was “a blatant and egregious misrepresentation.”

“Further, your cavalier duplicity is apparent by reference to just a few documents,” the attorneys said.

Soluri and Anderson concluded: “Rather than prepare an independent ‘significant overview of economic benefits’ as you falsely claim, relevant evidence squarely establishes that the City wholly and uncritically relied on claims of ‘economic benefits’ spoon-fed from both Think Big and the Kings investment group – the entity purportedly sitting across the table from the City at arm’s length negotiation.”

There was no fast break at a recent court date concerning a suit by Sacramento activists opposed to tax subsidies for a new arena. The activists are Issac Gonzalez, James Cathcart and Julian Camacho.

CalWatchdog.com attended the Dec. 19 hearing before Judge Eugene Balonon, who was expected to decide the case one way or another. Instead, the judge postponed the hearing date out to Jan. 9, 2014.

Just before that date, the plaintiffs and their attorneys, Patrick Soluri and Jeffrey Anderson, hope to be deposing the defendants, Mayor Kevin Johnson, City Manager John Shirey, Deputy City Manager John Dangberg and other city officials. The deposition dates are on Jan. 6, 7 and 8.

“I think we are starting to see the light at the end of the tunnel where we can actually start engaging in some serious discovery to obtain evidence to support the allegations we have made,” said attorney Anderson after the hearing. The attorneys said they are trying to force city officials and staff to reveal an alleged secret deal.

“We believe that will develop additional evidence that we can then take and do further depositions of other city officials and other document request,” Anderson said.

The lawsuit accuses the officials of making a secret deal with arena investors to provide an extra $80 million of public money to help an investors’ group beef up an offer against a Seattle group vying for the Sacramento Kings professional basketball team. Instead of a $258 million subsidy, as the city claims, the city allegedly was really going to deliver $338 million for the arena, according to the lawsuit. In the lawsuit’s wording from its May filing:

“Rather than risk a groundswell of public opposition that would be generated by accurately disclosing the combined subsidies for the arena and purchase of the Kings franchise, Mayor Johnson, Mr. Shirey and Mr. Dangberg determined that it was more politically expedient to simply misrepresent to the taxpayers the true value of the city’s subsidies.”

The entire case file is available at Sacramento Superior Court services.

Response

In response, Mayor Johnson, a former NBA player, the other plaintiffs and their attorneys insist the information the petitioners seek is “undiscoverable, privileged information.” According to a search on the Court website, they claim the discovery “is not permissible.” And they insist:

Solura said of the judge’s ruling on the depositions, “It informed the city that these stunts and tricks to prevent us from getting to discovery will simply not be tolerated anymore.”

The court documents tell the other side, that of the mayor and the other respondents, who maintained:

“Despite the pending demurrer, Petitioners began conducting discovery, but later conceded that their proposed discovery would not assist them in alleging a ripe claim. In light of this irrelevant discovery, respondents were forced to seek – and obtain – a stay of discovery pending its demurrer. A short time later, this Court agreed that the Petition did not raise a justiciable controversy but granted Petitioners leave to amend.”

Initiative

The court case also is competing on time with an initiative aimed at forestalling the arena. Gonzalez is the campaign manager for the group, Voters for a Fair Arena Deal. Reported the Sacramento Business Journal of the signatures the group gathered, “ ‘The overwhelming majority should be approved,’ Gonzalez said, pointing out another group involved in the effort, Sacramento Taxpayers Opposed to Pork, initially said they’d collected over 40,000 signatures, but the total submitted only ended up around 34,000. ‘There was an exhaustive scrubbing going on at the end.’”

The groups working for a ballot measure used a validation service before submitting the 34,000 signatures and think their valid signature percentage will be high, according to a recent Sacramento Business Journal story.

However, reported the Bee, “So far, the council has only tentatively approved the financing plan, and a vote on issuing the bonds won’t come until next spring. What isn’t known is whether the subsidy issue will come to a public vote in June.”

Public funds

The City of Sacramento’s approval of a term sheet on the arena deal “constitutes the illegal expenditure of public funds,” according to the lawsuit. Despite the city calling the term sheet “non-binding,” Gonzalez et al. argue the city has already “committed monies to the hiring of consultants and other services.”

Mayor Johnson and city officials approved the $447.7 million arena deal at the Downtown Plaza in March, insisting it was a public-private partnership, with the private contributions amounting to only about one-third of the deal.

The lawsuit also alleges the public subsidy will enrich the Sacramento Investor Group, at the expense to taxpayers. The Sacramento Investor Group purchased the Sacramento Kings NBA franchise.

In response, the mayor and other backers of the arena cite a city-sponsored study saying the arena will bring $7 billion in economic benefits to the city over 50 years. “That includes spinoffs such as sales at restaurants and hotels, as well as $6.7 million in taxes,” according to a Sacramento Bee story.

Sacramento’s publicly funded arena deal has been billed as “the largest redevelopment project in city history” in Sacramento, as CalWatchDog.com explained in an article.

Voters in 2006: ‘No’

However, for more than 13 years, there have been numerous attempts to gain city approval for a new, publicly subsidized arena. Sacramento voters even turned down two ballot measures in 2006 that would have approved a public subsidy through a ¼-cent sales tax.

In 2011, Johnson formed an “independent” non-profit group to develop the new arena. The “Think Big Sacramento” group conducted a bold public relations campaign to push the publicly subsidized arena plan.

But Johnson’s group turned out to be so closely linked to the Sacramento Kings organization, the Fair Political Practices Commission fined him $37,500 for his failure to report more than $3.5 million in “behest” payments from the Kings. According to the FPPC, “[T]hese payments are not considered campaign contributions or gifts, but are payments made at the ‘behest’ of elected officials to be used for legislative, governmental or charitable purposes.”