After modest debate and four hours of public testimony, the Sacramento City Council voted 7-2 Tuesday night to give non-binding approval to a term sheet that outlines the financing and construction of a $448 million entertainment and sports center downtown. The vote allows the city to proceed with its counteroffer to the sale agreement signed by Seattle native Chris Hansen in January to purchase the NBA Kings and move the team into KeyArena in the fall.
Both parties will have their proposals vetted April 3 in an unprecedented meeting with the NBA’s finance and relocation committees in New York.
Despite some community opposition to the $258 million public portion of the deal, which includes city-owned land valued at $38 million, the approval was not surprising given the urgency created by the NBA’s deadlines and Sacramento’s late start in response to the unexpected sale by the Maloof family that owns the Kings. After the April 3 meeting, NBA owners are scheduled to vote on the Hansen offer and relocation April 19.
When the protocol vote that wrapped up the meeting came to Mayor Kevin Johnson, he shouted “Let’s do it, Sacramento!” Cheers erupted in council chambers and a chant began: “Sac-ra-men-to! Sac-ra-mento!”
The council meeting was largely a civic pep talk for using the arena as the center of a downtown revitalization backed by four of California’s wealthiest investors, whose representatives met privately with council members Monday.
“Most cities would die for these people to come to their city and make this kind of investment,” said city manager John Shirey in his presentation. “This is something we’ve not been able to do in this city, maybe ever.”
Council members received the term sheet Saturday afternoon and had a relatively short time to study the document. No third parties had a chance for review. But the importance of the Kings to Sacramento’s local and national image became apparent, as well as the economic vulnerability of a city hit hard by the Great Recession.
Council member Steve Hansen, who voted against an arena proposal last year and was expected vote no again, switched because he thought the arena downtown would begin “a golden age” for Sacramento.
“We have an opportunity to have four billionaire say Sacramento is worthy,” Hansen said. “It’s been a long time since people validated us this way.
“Last year’s deal was one I could not support. This deal is for an arena downtown, which is an improvement. Last year the city was leveraged much more. This time we have well-capitalized investors. And we’ve successfully mitigated the risks to the public. . . I’m very pleased to support this deal.”
One of the numbers cited by Shirey revealed a startling fact about Downtown Plaza, the run-down shopping center that is the site of the proposed arena. Gross revenues for the mall were $218 million in 2000 and $112 million in 2012. The owners of most of the property, JMA Associates, spoke enthusiastically of the tear-down and build-up.
Hansen said he wished the deal was comparable to the lighter hits on the public exchequer engineered for stadiums/arenas by the pro sports moguls in Seattle, San Francisco and San Diego.
But council member Steve Cohn countered that the proposed arrangement will be looked upon by future cities funding arenas that will say, “That’s how you do a partnership . . . I’m not one who says we have to do anything to save the Kings. But I’m very excited about this.”
Some citizen opponents at the public portion said the issue should be subject to a vote and threatened to create a referendum, requiring 20,000 signatures, as well as litigation, if the arena project goes forward.
The mayor was undeterred.
“It’s a good day for Sacramento,” he said. “We are on track to do something very historic . . . we’re going to send a message to Seattle: We wish them well, they deserve a team some day, but we want to keep what’s ours.
“We have a chance to change the trajectory of this community for many, many years. This is our moment, our time.”
Monday, a fourth major investor joined the bid to keep the Kings. Vivek Ranadive, a Silicon Valley entrepreneur who joined the investors last week, told the Sacramento Bee the group has added the Jacobs family of San Diego, founders of Qualcomm, an international high-tech company listed in the Fortune 500. CEO Paul Jacobs and his brothers, Jeff and Hal, helps makes for “a dream team” of investors, Ranadive said.
The other members of the bidding group are Beverly Hills’ Ron Burkle, a grocery-chain billionaire, and Mark Mastrov of the East Bay, founder of 24 Hour Fitness, both of whom visited Sacramento to pitch their plan to council members and community leaders.
“Each person in this has the capacity to do this on their own,” Ranadive told the Bee. “This is about building a global brand. It’s about putting more wood behind the arrow.”
They were joined by project partner Todd Chapman, head of JMA Ventures, which owns most of Downtown Plaza.
Ranadive, who did not make the trip to Sacramento, said he is participating because he wants to do something big for Sacramento and California.
“I believe without a sports team, it is hard for cities to thrive,” he said. “I feel humbled to be given the opportunity to partner to keep this great franchise in this great city.”