City of Sacramento Beats All Challenges to New $477 Million Downtown Sports Arena

Cities, counties and private enterprises throughout the U.S., particularly in California, are competing to recruit and retain professional sports teams. The decisive factor in nearly every proposed deal is providing a new multi-million dollar sports arena. As the City of Sacramento experienced during the past four years, the planning, approval, environmental review, financing, construction and operation of a new arena can generate an endless range of expected and unexpected legal and regulatory challenges.

Everyone wants to know how to plan for and beat the myriad of challenges so these critical economic development projects can move forward. We now have the City of Sacramento to thank for the roadmap of success it has provided based on the recently ended battle for its new $477 million NBA arena and multi-purpose entertainment center. On August 5, 2015, the City overcame the final obstacle when plaintiffs decided to dismiss their case in exchange for a waiver of costs after the court’s proposed Statement of Decision found that they had “failed to meet their burden of proof on any of their causes of action.” The suit primarily alleged that public officials had granted a “secret subsidy” to the project’s private business partners for the purchase of the team and violated the “significant public benefits” requirement for issuing bonds under the Marks-Roos Local Bond Pooling Act. The City can now begin making its $255 million contribution toward the project, 14 months after City Council approval and nine months after construction began.

The City and its staff did more than blaze a trail for others to follow. They demonstrated an unyielding dedication to public service and undertook a herculean effort in teamwork across departments to deliver a transformational project. Following is an outline of the series of challenges the City faced and the victories it achieved.

• Thwarted one of the prior owner’s attempts to move the team to another city;
• 11-day trial with 18 witnesses (including the Mayor and the majority owner of the Sacramento Kings NBA team) and over 150 exhibits, alleging fraud, concealment, collusion, secret dealings, waste and illegal expenditure of public funds, and violations of the Marks-Roos Act governing issuance of the bonds;
• Two published appellate decisions denying CEQA-based challenges;
• A constitutional challenge to the special statute that was passed to streamline the City’s CEQA review of the proposed stadium;
• A constitutional challenge to the Marks-Roos Act as a violation to the electorate’s right to initiative and referendum; and
• An eminent domain victory giving the City permission to take over the final piece of downtown property.
• The City’s difficult and highly scrutinized journey was chronicled in many, and often daily, front-page news stories, a few of which are linked below. Meyers Nave had the distinct honor to serve as lead counsel throughout the City’s pioneering endeavor. We extend our strongest congratulations to the City and its staff for their exemplary vision and leadership.

News Coverage:

Judge: No Merit City Contributed ‘Secret Subsidy’ For New Sacramento Kings Arena

Sacramento Arena Subsidy Foes Drop Lawsuit; City Can Begin Financing 

Arena Ruling: City Can Take Former Macy’s Store 

Court Dismisses Environmental Challenge to Kings Arena

C.A. Rejects Challenge to Law Expediting CEQA Litigation Over Basketball Arena

Contacts:

Amrit Kulkarni, Principal, akulkarni@meyersnave.com

Re: the City of Sacramento’s new NBA arena, Amrit served as lead defense counsel in Saltonstall v. City of Sacramento (2014) 231 Cal.App.4th 1437 and Saltonstall v. City of Sacramento (2015) 234 Cal.App.4th 549.

Brenda Aguilar-Guerrero, Principal, bguerrero@meyersnave.com

Re: the City of Sacramento’s new NBA arena, Brenda served as first chair in Gonzalez v. Johnson (Superior Court of California, County of Sacramento, Case No. 34-2014-80001489, July, 24, 2015).

David Skinner, Managing Principal, dskinner@meyersnave.com

Re: the City of Sacramento’s new NBA arena, David served as lead counsel in the crucial eminent domain action (City of Sacramento v. State of California Public Employees’ Retirement System, U.S. Bank National Association, et al., Case No. 34-2014-00156358, January 2014).