The price tag for Sacramento’s new downtown arena has jumped by $30 million in recent months and is now expected to total $507 million, a Sacramento city official said Monday.
Assistant City Manager John Dangberg disclosed the new figure Monday as he testified in Sacramento Superior Court on Day One of a trial in which a group of Sacramento residents is challenging the city’s partnership with the Sacramento Kings to build the downtown facility.
Dangberg, under examination by the plaintiffs’ attorney Jeffrey Anderson, argued the city’s investment, which includes $255 million in cash and land, as well as other assets, will help spur millions of dollars in ongoing economic benefits to the city and downtown.
The city’s contribution to the arena is capped. Under the deal struck by the city and the Kings’ owners two years ago, any cost increases will be absorbed by the Kings.
The original arena construction price tag was listed at $448 million in 2013, and later revised to $477 million – in part because of the addition of a practice facility.
Dangberg said the city received a construction update report a few weeks ago from Turner Construction, putting the new arena estimate at the $507 million.
“It is $60 million more than when we approved the term sheet,” he said. “It is probably going to go up more when you look at the Turner estimates.”
Outside the courtroom Monday, city officials said the Kings’ planned hotel project next door may pick up about $13 million of those extra costs because they involve the plaza the two facilities will share. That would make the official current price tag for the arena $494 million, said Desmond Parrington, the city’s arena project manager.
The arena, under construction since late last year, is expected to open in October 2016, and has been described by the Kings as one of the most technologically advanced in the world.
The Kings could not be reached immediately for comment about the higher arena price tag.
Dangberg’s comments came during the first day of what is expected to be a two-week trial. Plaintiffs Isaac Gonzalez, James Cathcart and Julian Camacho contend the mayor and other city officials purposely hid the full value of what city agreed to contribute to the Kings’ owners in the 2013 arena deal – notably 3,700 parking spaces under the former Downtown Plaza, and rights to erect six digital signs along city freeways.
The plaintiffs contend the city quietly and fraudulently added those assets and others as deal sweeteners to compensate the Kings’ investor group for overpaying for the team. That group bought the team in 2013 in a bidding war with a Seattle group, pushing the franchise price up to what was then a record level.
In total, the plaintiffs’ group estimates the city gave the Kings up to $200 million more in value than the publicized $255 million investment.
“Fraud pervades the entire action by the city,” attorney Anderson said in opening comments Monday.
Attorney Dawn McIntosh, representing the city, dismissed those charges, saying in her opening comments that the city fully disclosed every aspect of the deal, and is now being challenged by disgruntled opponents of the city subsidy.
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“This is really about a few people who don’t like the decision by the City Council,” she said.
Dangberg testified Monday that the city’s negotiators told the Kings’ owners early on that they city would not help the Vivek Ranadive group buy the team. He pointed out that the city noted repeatedly in deal documents that it was turning over control of the underground parking spots to the Kings, and that it was giving the Kings access to small pieces of city property to construct billboards.
But, he contended, neither of those assets cost the taxpayers anything.
“The signs had no cost to the city, except as an opportunity cost,” Dangberg said. He said the city wasn’t planning to build any signs on those parcels, anyway.
The case is being tried by Judge Timothy Frawley, who has chosen not to impanel a jury. Frawley will issue a ruling himself. Mayor Kevin Johnson is listed as a likely witness, along with Kings principal Ranadive.