Recently released public records reveal Kings arena subsidy ‘sweetener’ request and paper-trail coverup

One by one, the lawsuits against the city’s Kings arena project have fallen away. But one suit challenging the legality of the city’s $300 million-plus arena subsidy has quietly been working its way through the court for more than a year.

It’s hard to imagine at this point that a judge would do anything that would substantially affect the project, or make much of a difference to taxpayers who are on the hook for it. Still, as Bites has remarked before, these suits have a way of bringing important facts to light. Facts that should have been made public a long time ago.

This suit, brought by lawyer Patrick Soluri—on behalf of residents Isaac Gonzalez, Jim Cathcart and Julian Camacho—alleges that the city has been dishonest about the structure and purpose of the Kings arena deal.

“This is such an important and basic issue,” says Soluri. “Did the city use the framework of the arena deal to subsidize the purchase of the team? If they did, that’s fraud.”

Last year, Assistant City Manager John Dangberg and Mayor Kevin Johnson both took the stand and acknowledged that would-be Kings owners, including Vivek Ranadive, explicitly asked the city for a subsidy to help buy the team. The city’s financial help would make up the difference between the price Ranadive and company paid for the Kings, and the actual value of the team.

“Well, it was basically stated that [members of the Sacramento investor group] felt that the overpayment for the team might require the city to play a larger role in the financing of the arena because of the economics,” Dangberg explained to the court. Then adding, “We said, ’That isn’t going to happen.’”

But Soluri says that it did happen, and he says the city has recently turned over some important evidence showing that it happened.

In recent weeks, the city has dumped thousands of pages of documents on Soluri and his clients. “The vast majority of it is garbage. You’ll see the same document repeated hundreds of times,” Soluri said. A typical example: instead of turning over an Excel spreadsheet file, the city will print out the spreadsheet as 800 PDF pages.

But some of the documents are more illuminating. For example there’s an internal city memo that spells out what the Kings owners wanted: “Investor group wants $258 million plus additional City assets (land, entitlements, City loan forgiveness, etc.) to offset the difference in the purchase price of the Kings vs. their perceived value of Kings. They believe the difference is $150-$200 million. City is willing to invest the proceeds of the parking monetization. Investor group may want the 3,700 parking spaces at the Downtown Plaza.”

If those numbers sound familiar, it’s because that’s largely what the investors got. Soluri says other memos, notes and typed talking points show the city figured out, piece-by-piece, how to meet the ownership group’s demands, while publicly downplaying the value of the subsidy. One note, which Soluri believes is in Kevin Johnson’s handwriting, puts the value of the city’s parking garage under Downtown Plaza at $30 million to $40 million. “Can’t put in writing. Politically tough,” the note reads.

Another note from Johnson’s chief of staff Daniel Conway warns folks working on the arena deal not to leave a paper trail: “Dangberg recommended not sending out emails after the ad hoc meetings. He said we’d have to be sensitive about the info the email contained since they would just be fodder for PRAs.”

“PRAs” of course are records requests under the California Public Records Act. Bites is just going pause here a moment to marvel at the idea that Dangberg, who makes a base salary of $176,000 a year, believes he’s getting paid to hide public information.

Assistant City Attorney Matt Ruyak reiterated to Bites that the city’s significant financial help with the arena “had nothing to do with the purchase of the team.”

“The ownership group asked. And we rejected that request,” Ruyak added.

But what’s the difference, really, if the city calls it a “subsidy” or an “investment”? When you add it up, the Kings owners got exactly what they asked for.

And if the city manager’s office and the mayor really did the righteous thing, why wasn’t Ranadive’s demand ever disclosed to the public? Didn’t the public deserve to know this information while judging the prudence of the city’s “investment”? (And why is the city manager’s office telling staff to shield arena information from public records requests?)

This lawsuit may not change anything about the arena deal going forward. It certainly won’t change many minds. Arena fans will see it as a nuisance; skeptics will say it confirms what they already knew.

But at least it will have produced some information that ought have been disclosed to the public a long time ago.