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In less than two hours Tuesday night, the Anaheim City Council paved the way for the Sacramento Kings to relocate there by agreeing to issue $75 million in bonds – $25 million to improve the Honda Center and $50 million for a loan to the Kings.
The council's unanimous vote by its five members propelled Sacramento further on its path toward losing the National Basketball Association team that has made its home in the state capital for 26 years.
Anaheim Mayor Tom Tait presided over what he described as a historic meeting.
"Tonight, Anahiem took a giant step closer to bringing an NBA team to Anaheim and the Honda Center," Tait said. "I am thrilled. I think a better word is 'stoked.' "
The council's move was supported by many in Anaheim and Orange County's business community, who spoke during a public hearing that preceded the vote. Neither the Kings' owners, the Maloofs, nor Anaheim Arena Management owner, billionaire Henry Samueli, spoke at the meeting at Anaheim City Hall.
Anaheim Arena Management later issued a statement saying the council's vote was sure to be seen favorably by the NBA board of directors, which is expected to vote April 14 or 15 on a request from the Kings to relocate. The Kings must file a request for relocation by April 18.
“We are grateful to the entire leadership group of the city of Anaheim, who tonight fully endorsed our shared efforts to bring an NBA franchise to the region,” Michael Schulman, chairman of Anaheim Arena Management, said in the prepared statement. "This vote is an important first step as we continue working toward hosting an NBA franchise at Honda Center.”
The loan to the Kings is expected to cover the team’s moving costs, which include a hefty relocation fee from the NBA.
The bonds will be issued only if the team and Anaheim Arena Management sign a venue contract within 180 days and the team relocates, Anaheim spokeswoman Ruth Ruiz confirmed.
The Kings' name was never mentioned Tuesday during consecutive meetings of the Anaheim City Council and the city's Public Financing Authority. The authority, consisting of the same members as the council, also approved authorizing the bond issuance and the terms.
The taxable lease revenue bonds will be issued by the Anaheim Public Financing Authority and financed by three private investment companies. Anaheim and its taxpayers won't be obligated to repay the bonds under any circumstances, Anaheim Finance Director Bob Wingenroth said.
The bonds have a 10-year term, and investors will be reimbursed from arena revenue over that period.
The agreement requires the team name to include "Anaheim," rather than "Orange County" or any other location identifier.
The council's decision ignored a request made Monday by Sacramento city officials that Anaheim drop the financing plan and stop negotiating with the Kings. Sacramento Mayor Kevin Johnson indicated Tuesday afternoon he wouldn't oppose the team's move if the Maloofs repay $77 million in lease revenue bonds owed to Sacramento – and the Maloofs assured him Monday that they would.
Johnson also said the Maloofs may agree to let the city run Power Balance Pavilion after paying off the loan. The Maloofs agreed to be "good partners" and do what is in the city's best interest, Johnson said during a press conference in North Highlands Tuesday afternoon.
Tuesday morning, Kings owner Joe Maloof issued a statement calling the loan from Sacramento a "non-issue."
"We’ve always paid our financial obligations in the past, we’re going to do it in the present and we’re going to do it in the future," Maloof said in the statement. "Whatever the future holds to ensure the long-term viability of the team, the city of Sacramento will be paid in full.”
The council approved a venue contract between the team and Anaheim Arena Management that requires the team to use the Honda Center as its home base for at least 15 years. The council also approved extending its facility management agreement with Anaheim Arena Management by another 10 years to June 2033.
Anaheim's 18,336-seat arena, which the city owns, was built to accommodate two professional sports teams and opened in 1993. Anaheim is close to realizing a "20-year dream" to bring an NBA team to the city, Anaheim Councilwoman Kris Murray said.
Also Tuesday, state Senate President Pro Tem Darrell Steinberg of Sacramento promised to do everything he could to protect the Sacramento region's "economic well-being." He is considering legislation, as requested by the city, to force the Maloofs to repay the Sacramento loan if needed, Steinberg spokesman Mark Hedlund said.
"His primary concern is to ensure Sacramento is made whole by full repayment of the city's $70-plus million loan if the Kings leave," Hedlund said in an emailed statement. "He's also concerned with the possibility Anaheim may use taxpayer funds to entice a business to leave one major California city to relocate in another major California city."
Meanwhile, the ICON-Taylor group, which is studying the feasibility of building a new arena in Sacramento, has not met with the Maloofs, Sacramento Assistant City Manager John Dangberg told the Sacramento City Council Tuesday evening.
The ICON-Taylor group is making “significant progress in their analysis and are moving forward regardless of what happens with Anaheim,” Dangberg said.
The developers are likely to complete their arena analysis in mid-May, he said.
Before the vote, city attorney Eileen Teichert fired off a letter to Tait asking Anaheim to continue consideration of the environmental impacts of the new Honda Center operations until conducting a "proper" environmental review or issuing a mitigated negative declaration saying the project will have no impact. Anaheim did not respond to that request.
At the Sacramento City Council meeting, the mayor said Anaheim’s decision to give $75 million in financial incentives to the Kings was not a surprise.
“I think it’s disappointing," Johnson said. "(But) I think Anaheim made a decision that’s in their best interest.”
Staff reporter Kathleen Haley contributed to this report. Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.