You can argue whether the Sacramento arena is a bad deal for the city. But is it illegal?
That’s the very tall mountain arena foes are trying to climb, claiming in their lawsuit that city officials committed fraud by giving prospective Kings owners as much as $200 million in undisclosed “sweeteners” to help the investors offset overpaying for the team.
I’ve always believed that city officials should have been more forthright and put a dollar value on those assets, primarily six digital billboards and 3,700 parking spaces under Downtown Plaza.
But those “sweeteners” were no secret. And if they were debated and criticized in public, it’s a reach to say there was illegal fraud.
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My view didn’t change after 21/2 hours Tuesday afternoon in a fourth-floor courtroom watching plaintiffs’ lawyer Jeffrey Anderson grill Mayor Kevin Johnson, the star witness in this trial. Alas for Anderson, there was no “Perry Mason” confession from the witness stand.
I’ve covered my share of trials, including death penalty dramas and even an obscenity case where they actually showed a grainy porn flick in the courtroom. Tuesday, there were no writhing bodies on the big screen – only the mayor’s scribbles on memos – but the proceedings were still fascinating in their own way.
The lawsuit hinges on private conversations and confidential memos in early 2013. City officials, desperate to keep the Kings in town, were scrambling to come up with the city’s share for the arena; the prospective new team owners were struggling to match an offer from Seattle billionaire Chris Hansen.
Both sides identified the digital signs and parking among possible revenue sources for the team. One memo shown in court valued the billboards at $50 million to $80 million. Another mentioned $30 million to $40 million for the parking.
No doubt, there was cozy cooperation as well as hardball negotiating going on. Whether you see the back-and-forth as sinister or not depends on whether you support the arena deal. The haggling may not be pretty, but I can’t see illegal collusion or conspiracy.
No matter what exhibit was shown or what he was asked, Johnson stuck to his talking points: The city never went above $258 million as its contribution to constructing the arena (the final deal pegged it at $255 million). The team received assets that could generate revenue, but those came at no cost to the city. He focused on the “big picture” and let city officials handle the detailed numbers. The city and its taxpayers got a good deal, and now that the arena price tag has risen, it’s a great deal.
It got to the point that for one question, Judge Timothy Frawley gave those answers for the mayor.
It’s also telling that when the city’s lawyers got their turn to cross-examine Johnson, it took only about a minute. Dawn McIntosh asked directly and simply: Did he offer a “secret subsidy”? Did anyone else do so? Were city assets intentionally undervalued?
“Absolutely not,” Johnson replied each time.
During his time on the stand, the closest thing to drama revolved around texts on the arena deal that the mayor deleted. After the lawsuit was filed, the mayor received a letter in June 2013 telling him to preserve any electronic communications related to the deal.
Johnson said since it was his habit to delete texts almost immediately, he no longer had any from earlier in 2013 when the deal was being negotiated, and he relied much more on emails anyway. There was no “ill intent” to hide anything, the mayor testified. It’s up to Frawley to decide how much weight to give any destruction of possible evidence.
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The plaintiffs’ attorneys are expected to wrap up their case Thursday. I’m no lawyer, but unless I’m completely missing something, it’s hard to see a smoking gun for a finding of fraud.
It doesn’t help the plaintiffs that this case will be decided not by jurors, but by Frawley. He has already ruled against plaintiffs in two other arena-related lawsuits – one seeking a public vote on the city’s subsidy and another claiming environmental damage from the arena. It’s likely to be three strikes and they’re out.
Even if the plaintiffs win, construction is well underway on Golden 1 Center, so it’s not at all clear what they would actually get.
That’s the big irony here. By delaying the city’s bond sale and increasing its legal expenses, the most certain result is that the arena bill will be higher to taxpayers – the same taxpayers the plaintiffs profess to be protecting.
What’s coming out in the trial is all very interesting. I’m just not sure it’s worth the price of admission.