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March 28, 2011
City taps law firm to review Kings loan

By Tony Bizjak and Ryan Lillis
tbizjak@sacbee.com

Saying they are seeking to protect the city financially should the Kings leave town, Sacramento officials have hired a specialist law firm to help enforce a legal requirement that the Kings pay off their $67 million city loan.

The City Council will be asked Tuesday to authorize paying Meyers Nave Riback Silver & Wilson up to $150,000 to study and advise the city on its legal ability to force the basketball team to pay off its city loan if the team leaves for Anaheim. The city already has signed a preliminary $70,000 agreement with the law firm.

Kings' team officials have been in negotiations with representatives of the Honda Center in Anaheim, and have a tentative contract drawn up. The Anaheim City Council is scheduled Tuesday to consider approving a $75 million bond sale to aid in the Kings' relocation.

The Kings have until April 18 to request league permission to move to a new city this year.

Sacramento City Treasurer Russ Fehr said Monday the hiring of an outside firm allows the city bring more bond expertise to the table. Fehr declined to say whether city officials fear the Kings might skip town without making good on their obligation to finish paying the city loan.

"We have a real complex transaction and lots of options so we are getting some outside help," he said. "Moving forward, we are trying to make sure we are protecting the city's interests."

Fehr said "an army of attorneys" reviewed the loan agreements in 1997 when the city and Kings signed the papers, and "the agreements are clear." The Kings must pay off the entire loan when they leave Power Balance Pavilion, formerly known as Arco Arena.

If the Kings default on the loan, the city takes possession of the arena and gets a $25 million stake in the team, Fehr said. The city legally currently owns the arena pending repayment of the loan.

Kings officials continue to decline to discuss their plans.

Call The Bee's Tony Bizjak, (916) 321-1059.



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