SEATTLE – One more legal hurdle aimed at derailing the effort to bring the NBA back to the city and into a brand new arena was knocked down Friday.
King County Superior Court Judge Laura Middaugh granted a motion to dismiss a lawsuit that claimed the $490 million arena proposal put forward by investor Chris Hansen was in violation of Initiative 91. It was the second time a suit pegged to the initiative was dismissed by a judge.
Middaugh ruled that “it’s just not ripe yet” to discuss I-91, an initiative approved in 2006 that requires a certain return on any city investment in a sports complex.
Hansen's legal team, joined by an attorney representing King County, argued that the Memorandum of Understanding spelling out how the Seattle arena would be funded is not final because transaction documents are not complete.
“We believe this wasn’t the time to take up this case,” said Jack McCullough, Hansen’s attorney. “We are well into a second year of a transparent process here.”
Mark Baerwaldt, who founded Citizens for More Important Things, had led the suit. His attorney, Cleveland Stockmeyer, said the group will likely fight the case after the transaction documents are filed. “We (still) think it’s hundreds of millions of dollars short,” said Stockmeyer about the proposed financing plan.
Attorney Peter Goldman, representing a similar legal challenge by the ILWU (also dismissed), said he’ll continue to fight, and created a spectacle in the hallway outside today’s hearing, shouting at reporters: “Mister Hansen is attempting to deceive the NBA that there are no storm clouds for his arena, when in fact there are storm clouds.” Goldman continued, “They are kicking the ball down the road and it’s gonna bite ‘em in the butt later on.”
Down that road in Sacramento, there were other developments on Friday. The Sacramento Bee reported former Facebook Executive Chris Kelly had joined a counter-bid for the Kings franchise, and that the group of investors had notified the NBA that it would match Hansen’s bid.
Hansen and his partners -- Microsoft CEO Steve Ballmer and Pete and Erik Nordstrom -- have a signed agreement to buy 65 percent of the Kings franchise, which a new valuation at $525 million.
Two sources close to the negotiations also said it had not been formally submitted. An NBA spokesperson said he would have “no comment” on whether an actual written, matching “back-up” bid had been filed with the NBA.
If there is a match, the NBA may be forced to choose between both the Seattle and Sacramento arena proposals.
Hansen’s legal victory, for now, clears the way for him to move forward on his plan.
KING 5 has learned that Hansen's group will file a Master Use Permit with the city as early as Monday, for construction of the new arena. A source said Hansen’s group has an option to own another piece of land in SoDo, and the final price on the land acquisition may be close to $80 million.
Hansen’s team now believes the new arena could be completed by September 2015, and a source said that fact was part of the Seattle presentation to NBA owners last week in New York City. The Seattle project is currently going through the Environmental Review process.
Bryan Stevens, with Seattle’s Department of Planning and Development, said the MUP “represents a major milestone in the permit process.”
Stevens said the draft environmental impact statement (DEIS) will be available for public review and comment in June. The DEIS will show identified impacts for each of the alternative sites along with proposed mitigation. Stevens said the city council would have to make a decision on street vacations before final approval.
“Once our decision is published and the related appeal period has ended, it allows construction to proceed,” said Stevens, who said there would be a 14-day appeal process after that.
Hansen’s proposed construction schedule is likely predicated on past history.
Denver contractors began work on the Pepsi Center on November 20, 1997, and it officially opened 23 months later on October 1, 1999. Los Angeles’ Staples Center was done in a shorter amount of time. Construction began there on March 27, 1998, and was finished in time for an opening on October 17, 1999 -- a period of 19 months.
Sacramento has a non-binding term sheet for construction of a $447 million downtown arena complex.
The City of Sacramento’s Community Development Department posted a notice Friday for the preparation of an environmental impact report on the new complex. A public meeting is scheduled for later this month. The notice says an EIR will be prepared by the city to evaluate significant environmental impacts, in compliance with the California Environmental Quality Act, or CEQA. The document also listed a several block area in downtown Sacramento that would be the location for a new arena.
However, the Sacramento County Assessor’s office shows multiple owners for the parcels listed in the designated location. It’s unclear, based on records, whether all the needed land has been formally acquired by the same person or group.
There is still an open question about the impact of recent judge’s ruling on California Assembly Bill 900. That law was designed to help streamline environmental reviews for large projects. But Alameda County Judge Frank Roesch declared a portion of the law unconstitutional earlier this month.
Sports Law Expert and NBA.COM contributor Michael McCann said the legal ramifications are still not obvious. “It's not clear that the 175-day expedited process, which has been deemed unconstitutional, would have benefited Sacramento given that its arena project is in most ways private, but if it did, then it won't benefit from it,” said McCann, who is the Director of the Sports and Entertainment Law Institute at the University of New Hampshire.
“The typical judicial review process for this type of environmental study is about 9 to 12 months,” said McCann, “The ruling can be appealed, though not before BOG votes. I don't believe actual or potential litigation for either city's arena project is a deal breaker. The NBA knows both arenas would eventually be built, though less litigation equals less delay.”
A pair of Sacramento attorneys have already indicated their intention to sue to block the Sacramento plan, and that it violates CEQA.
The last major public stadium project in Northern California was bogged down by delays. The San Francisco 49ers will eventually move into a new stadium in Santa Clara.
But a project history on the City of Santa Clara’s website shows the council approved a non-binding term sheet way back in 2008. The site says a draft environmental impact report was released a year later. The project then went to a public vote, and more changes, before groundbreaking in April 2012. It is not scheduled to open until 2014, or six years after the process began.
The NBA Board of Governors is scheduled to vote on Hansen’s deal, and any potential back-up deal, next week.