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Lawsuits in Seattle give Sacramento head start in race to approve an arena

Feb 22, 2013, 4:08 PM EST

seattle arenas

The question of which city, Sacramento or Seattle, is ahead in the race to bring the NBA a brand new arena attached to a shiny new public subsidy is unclear at this time, but sources with intimate knowledge of the situation tell PBT that so long as Sacramento Mayor Kevin Johnson delivers on his promises that Sacramento will be ahead in that process.

A lot of that comes down where each city is legally within that process, and how that process is conducted in both Washington and California.

While some early media reports might have led folks to believe that Chris Hansen’s arena deal (and offer to buy the team) were a slam dunk, the documents laying out the framework of his arena proposal are under siege.

Specifically, the Memorandum of Understanding (MOU) and Interlocal Agreement (IA) he entered into with the city of Seattle and King County have been under intense scrutiny locally, as they are currently the target of two lawsuits.  The first of those lawsuits is potentially being decided today at 1:30 PT.

The first suit brought by the International Longshoreman’s Workers Union challenges the site selection process within Washington’s Environment Impact Review (EIR) process, saying that Hansen and the local government conducted a “sham” site review process that did not provide reasonable, actionable alternatives other than Hansen’s hand-picked site.

That site, located in Seattle’s SODO district, has been the battleground of competing arguments regarding traffic and how it might impact Port of Seattle’s operations, and otherwise cause gentrification, loss of business in the area, and impact a large number of family-wage jobs in exchange for temporary construction jobs and a smaller number of low-paying arena jobs.

Arena proponents point out that most of the events at the proposed SODO site would occur after the Port’s business hours. Arena opponents say that the cumulative impact of creating a third large-scale sports and entertainment facility within their maritime industrial area, with an L.A. Live-like experience of retail outlets and restaurants, will necessarily bring more traffic to the region regardless of hour and disrupt Port operations.

These kinds of lawsuits are standard fare in any large-scale development project nationally right now, but they can have impacts on developments. In this case, opponents of the current MOU and EIR process point out that it could take “hundreds of millions of dollars” to mitigate the traffic issues a new arena would face, according to head lawyer for the ILWU suit Peter Goldman.

Hansen has offered $40 million to address traffic mitigation concerns, but in reality the question of who pays what for additional mitigation has yet to be solved because the EIR has yet to address the issue. Should Hansen have to pay for additional mitigation, it could further strap him and his group as it relates to their overall offer for the Kings, but the fear for locals is that the money would have to come from the public coffers.

The ILWU’s suit alleges a number of concerns relating to the site selection process, and asks the court to force Hansen and the local government to declare the MOU and IA “null and void” because they are in violation of the State Environmental Policy Act (SEPA).

It is unclear whether or not this would impact Hansen and the local government’s warranties to the NBA about its current arena situation.

(UPDATE: The judge ruled in favor of Hansen, Seattle, and King county and dismissed the lawsuit.  Hansen and governmental officials argued they did not have an arena agreement in place and that they would look at other locations.)

Goldman said that this suit was “preliminary,” and cited the broad swath of industry that is opposing the arena proposal in its current form. He pointed out that there will be more times for lawsuits to be filed down the road, but that he and his client were concerned that the site selection process wasn’t being conducted according to current state laws.

The second lawsuit relates to Seattle’s in-force Initiative 91 and the contention by its co-author Mark Baerwaldt that the current MOU does not meet the law’s criteria.

Baerwaldt is careful to point out that the courts would decide the matter. His complaints focus on the financing mechanisms that Hansen and the local government are using to meet the statute’s definition of turning a profit on public subsidies for sports arenas. This lawsuit is awaiting response from Hansen, Seattle, and King County.

I-91’s other co-author, Chris Van Dyk, has also been at the center of this discussion, being cited by many Seattle media outlets as being supportive of Hansen and Seattle’s MOU. He addressed those reports exclusively with PBT, saying he “never said it was compliant” and that “if he’s the best cheerleader (Hansen and Seattle) can come up with then they’re in trouble.”

Van Dyk also offered that “he’s looking forward to hearing the expert testimony,” because he didn’t think “I-91 anticipated meeting the type of funding mechanism that Hansen has presented.”

Whether or not the Longshoreman’s suit goes in favor of the plaintiff or Hansen and Seattle, Goldman says to expect more legal resistance down the road.  If they win, Hansen and Seattle has to start over with their MOU and come to the table with alternative sites that they may not like.  Then the city would have to choose between the site that Hansen wants, and a potential site that presents better alternatives in terms of environmental concerns and traffic.

If they lose today, he says that there is a “significant appetite” not just by his clients but a broad swath of industry including the Port of Seattle to appeal the decision and fight the EIR process at every stage. All of the potential delays and injunctions were reflected when David Stern told Jonathan Feigen of the Houston Chronicle that the NBA had “no approved plan for an arena in Seattle.”

Therein lies the rub for the Seattle group. While they seek to convince the BOG that they have an actionable arena plan, they are arguing in court that their MOU and IA just lay out a process for reviewing and financing an arena proposal and do not constitute an ‘action’ under state EIR laws. Therefore, they contend that the Longshoreman’s suit is not “ripe” and are asking for it to be thrown out.

Sources with intimate knowledge of the situation tell PBT that this is a tightrope that the Seattle group can walk, and Scott Howard Cooper of NBA.com illustrated that point by saying the league isn’t overly concerned with legal issues in either Seattle or Sacramento, but the question goes back to points made by TNT’s David Aldridge about which city can get an arena deal done first.

Aldridge, who had previously reported Seattle had a “clear path” to obtaining the Kings, said on Saturday “there are questions about whether or not the Seattle deal is as airtight as they say it is.”

After Stern’s press conference on Saturday Aldridge elaborated, “We have very equal bids here. What it comes down to is the feel the owners have on ownership groups, and which arena can be built the fastest.”

The EIR process in Seattle is underway, but with two lawsuits pending and only the judges in both suits being capable of delivering an up-or-down answer to the litany of issues presented, the uncertainty over what type of delays Seattle could face and what type of mitigation will be needed to preserve other parties’ rights are huge question marks.

On the other side, it’s Johnson’s track record of delivering on promises to the NBA that has insiders optimistic about Sacramento’s chances of delivering that ‘fair and competitive’ offer that will include a significant public subsidy and downtown arena.

That effort has been underway for a while now, as the NBA negotiated the current arena deal that the Maloofs backed out of, a deal that Johnson and Sacramento have maintained is still on the table.

Additionally, proposed arena locations in Sacramento aren’t likely to have the same types of blowback being faced in Seattle, where their sizable maritime industrial economy feels threatened by Hansen’s proposal.

One source with intimate knowledge of the situation speaking to PBT under conditions of anonymity spoke about Sacramento’s pair of proposed locations:

“Both potential Sacramento sites are complimentary to the existing downtown commercial uses, and unlike the fight in Seattle the downtown proposals are being welcomed as a revitalization project. Both are efficient reuses of developed property, and both sites qualify under the expedited state AB 900 CEQA process, which limits the delay from any potential lawsuits. Having already approved a deal structure a year ago with no lawsuits filed, Sacramento has a big advantage to deliver a timely arena facility.”

That AB 900 CEQA process is an interesting wrinkle to Sacramento’s effort to keep their team, as the bill creating that process was recently signed into law and co-authored by Think Big Sacramento supporter and California Senate President pro Tem Dan Steinberg. According to law firm Stoel and Rives:

“The (bill provides) an incentive for applicants to move forward with their projects because any challenge to a leadership project Environmental Impact Report (“EIR”) under the California Environmental Quality Act (“CEQA”) will be venued immediately in the Court of Appeal. The court will then have a maximum of 175 days to issue its decision on the challenged EIR”

Incidentally, the bill was passed in part to help facilitate the potential Farmer’s Field deal to bring NFL football back to L.A. The company driving that proposal is AEG, who is supporting Sacramento’s bid and being pursued for purchase by Ron Burkle, who is one of the ‘whales’ that reportedly stands behind Sacramento’s offer.

“It’s time for big thinking and big projects that put Californians back to work,” said California Governor Brown. “Projects like Farmers Field can create thousands of jobs during a tough economic time, so it is imperative for the state to cut the red tape that could delay projects like this for years. These bills strike the right balance between protecting our environment and kick-starting jobs and investment in California.”

Sources say NBA owners will be weighing the totality of the arena timelines for both sides, and in Seattle’s case how many years a potential Sonics team will have to play at Key Arena, a facility deemed by the NBA to not meet its standards when the Sonics left for Oklahoma City in 2008.

Hansen’s current plan calls for a potential Sonics team to play in Key Arena (with modest improvements) for as little as two years, while arena opponents believe that timeframe could be extended to as many as four years if lawsuits hold up the process. While Sacramento could face similar lawsuits, they didn’t face any during the 2011 arena deal, and the expedited review process and potential for less environmental concerns at the city’s proposed sites have sources pointing at the issue as a point in favor of Kevin Johnson’s expected proposal.

While Seattle’s lawsuits aren’t likely to be the defining factor in this saga – Sacramento’s production of an actionable offer will be that factor –the fact that the Emerald City can’t say with certainly how long they’ll be locked up at Key Arena could be the starting point for their bid to take the Kings to unravel.

  1. nickmiller63 - Feb 22, 2013 at 4:19 PM

    Cue the Seattle trolls.

    • buttfumbles - Feb 22, 2013 at 5:02 PM

      Seattle: Where two wrongs make a right.

  2. mrlaloosh - Feb 22, 2013 at 5:10 PM

    Hey Seattle, you mad bro?

    • seahawkswilson - Feb 22, 2013 at 6:06 PM

      Why would Seattle be mad for taking your team? The lawsuit, which was a known turd and basically a formality when you do business in Seattle (or for that matter Cali) and the judge dismissed the case today. You don’t think the anti-govt-subsidy Sacramento opponents would fight if a deal is ever reached? This whole article is nothing but smoke and mirrors as the BOG is not going to unravel a deal that is well ahead of the Sac deal (or lack thereof). So back at you Sacramento, you mad bro?

  3. mrwatters9 - Feb 22, 2013 at 5:35 PM

    ILWU case mentioned above has been dismissed.

  4. thedom2424 - Feb 22, 2013 at 6:03 PM

    UPDATE: 95KJR am in Seattle just reported breaking news that Judge North granted the city of Seattle’s motion to dismiss the ILWU’s lawsuit to challenge the Sonics Arena MOU.

    Mr. Bruski, I suggest you uppdate your article or take it down.

    … on a side note… Don’t the previous 2 commentors above look stupid… U MAD BRO?

  5. thedom2424 - Feb 22, 2013 at 6:05 PM

    *950 KJR*

  6. emeraldcityfan - Feb 22, 2013 at 6:09 PM

    Mad at what exactly? They dismissed the longshoreman lawsuit today. And please, Sacremento has just as many anti-sports stadium zealots as Seattle. If you don’t think there will be lawsuits over a new arena in sacramento; you are fooling yourself.
    I just can’t wait for this to be all over, regardless of the outcome.

  7. praetorian12 - Feb 22, 2013 at 7:52 PM

    Aaron, all your stories need to come with a disclaimer that you’re in the bag for Sacramento. You’re not giving NBA fans the straight scoop. Ironic that less than two hours after this story is posted, a King County judge tossed the remaining legal challenge to the Sodo Arena project.

    Whether Seattle or Sacramento gets the team is not the point here. The point is you’re reporting is one sided and pathetic. I was hoping to come to this website for some intelligent discussion of the issues. I guess I will have to go elsewhere.

  8. cosanostra71 - Feb 22, 2013 at 8:18 PM

    I lived in Seattle for a while, and the area where they are proposing to build the stadium would be an excellent site. There is nothing much going on there right now. There is a nice concert venue named the Showbox there that would be knocked down, but there is another Showbox in the downtown area. Other than that, it is just a bunch of industrial crap that can be moved pretty much anywhere- warehouses, etc. Building a basketball arena there would mean that the Seahawks, Mariners and Sonics would all be in the area and give it some much needed revitalization. It would be a great boon for the nightlife, restaurants and shopping in Pioneer Square and the International District.

  9. cpfirish - Feb 22, 2013 at 9:55 PM

    Come on Seattle get it done! That would be great to see the Seattle Supersonics again!

  10. mrgrant23 - Feb 22, 2013 at 10:50 PM

    I hate Seattle fans for this. Every time I see an article regarding the Kings there are some Seattle fans that can not wait to take the Kings away from Sacramento. When it happens to them they want pity from the World and start crying a river, but when its them doing the damage its all good!!! I hope the Kings stay in town! Find another team if you want the Super Sonics back!

    • sweetnlow44 - Feb 23, 2013 at 1:38 AM

      Your hate is pointed in the wrong direction. Don’t hate Seattle fans, hate the Maloof’s. They put your team in this situation. You can’t blame Seattle fans for being excited about potentially getting an NBA team back in their city.

      • mrgrant23 - Feb 27, 2013 at 10:44 PM

        My apologize for this late response, yes I hate the Maloof’s! They are the worst owners in the NBA and they are too cheap and want results. They can not even manage to budget there money as they owe basically everyone! The NBA,the city of Sacramento, you name it! But my previous statement still stands with Seattle fans that can not wait to take the Kings from Sacramento.

  11. vols84 - Feb 22, 2013 at 11:34 PM

    I’ve been to sac-town. Amazing……that they have (or had) a professional sports team.

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