SACRAMENTO (CN) – Opponents of a new downtown entertainment center being built for the Sacramento Kings basketball team dropped their lawsuit against the city on Thursday.
After two years of litigation, three Sacramento residents agreed to drop their lawsuit alleging the city gave the Kings’ owners a “secret subsidy” to entice them to help finance the arena. The residents were forced into settling after a state judge ruled the city was able to recover $98,000 in attorney fees from the plaintiffs.
Sacramento County Superior Court Judge Timothy Frawley called the residents’ allegations speculative and “based largely on taking statements out of context and assuming facts not in evidence.”
Frawley issued a 41-page proposed statement of decision July 24 and sided with the city on nearly every claim. He refuted plaintiffs’ claims that the city underestimated its contribution to the arena project and that it concealed the value of certain perks it gave the Kings’ ownership group, including free billboard advertisements and parking spaces.
In 2013, the Sacramento City Council agreed to allocate $258 million toward the sports and entertainment complex, with the Kings footing the rest of the bill. Construction is over half-finished and the Kings plan to open the arena October 2016.
During the 11-day trial, the residents presented more than 150 exhibits and called 18 witnesses, including Sacramento Mayor Kevin Johnson. Johnson, a former NBA all-star, admitted during testimony that he deleted text messages that potentially related to the arena project despite being warned by city officials not to.
Plaintiffs and critics of the project felt Johnson’s testimony gave them momentum, along with another city councilmember’s admission they too had deleted messages.
While Frawley admonished Johnson for knowingly deleting the messages, he called Johnson’s actions careless and not malicious.
“Here, the court does not find it reasonable to infer that the deleted text messages were the proverbial “smoking gun,” Frawley wrote.
Neither the residents nor their attorneys appeared at Thursday’s dismissal hearing and have not offered public comment regarding the lawsuit since last month.
With the dismissal of the residents’ lawsuit, the city says it will now be able to finalize a short-term loan to finance their end of the arena deal. The litigation delayed the city from executing the loan and city officials were worried they would pay a higher interest rate with a pending lawsuit against them.
The final cost of the arena is expected to be $510 million and will host the Kings and entertainment events year-round. The Kings have been playing in the Sleep Train Arena in nearby Natomas since 1988 and its former owners attempted to move the team from Sacramento because of the city’s inability to fund a new arena.
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