The new Sacramento Kings ownership group has been unable to buy a parcel at Downtown Plaza seen as vital to the development of a new arena. Now, the group has asked City Hall for assistance, with the threat of eminent domain looming as a potential negotiating tactic.
The City Council on Tuesday will be asked to allow staffers to help in the Kings' negotiations to buy the Macy's men's store from a New York-based real estate firm. Under the agreement, the Kings will reimburse the city for all costs incurred through those negotiations, including the property purchase and legal fees.
While describing the tactic as a last resort not yet needed, city officials said they could eventually exercise eminent domain to acquire the property at 600 K St. That step would require City Council approval.
"Any decision for something like eminent domain wouldn't happen for a long time," said Assistant City Manager John Dangberg.
Adam Mendelsohn, a spokesman for Sacramento Basketball Holdings, LLC, said the new Kings ownership group had anticipated one day seeking the city's help in talks with Island Capital, the company that acquired the Macy's store in foreclosure. Macy's owns the women's store at the other end of the plaza and leases the Island Capital property in question.
"We are focused on moving as quickly and aggressively as we can to build this arena on time and at or under budget," Mendelsohn said. "It's a complex project and we planned for every scenario."
Dangberg said the Kings had hoped to close on a deal to buy the store in May or June and that the team reached a tentative agreement with the property owners. That deal eventually fell apart.
A city staff report said the Kings ownership group had made "a generous offer."
"Sacramento Basketball Holdings has been in negotiations and will continue to be in negotiations," Mendelsohn said. "Everything else has been on track in regard to site control (of land needed to build the arena)."
Eminent domain cases in the city are rare but not unprecedented.
The city sued downtown property owner Moe Mohanna in a 2008 eminent domain case prompted by his refusal to sell nine downtown parcels the city sought for redevelopment.
The case was settled eight months later, with Mohanna accepting an $18.6 million price for the properties. The parcels occupy the blighted 700 and 800 blocks of K Street, long a focus of the city's redevelopment efforts.
Bee staff writer Dale Kasler contributed to this report.