The National Basketball Association announced Thursday it is backing a dramatic land-swap proposal that would move the State Fair to the Arco Arena site in Natomas and build a new arena and entertainment complex next to the downtown train depot.
The intricate proposal – involving three prime pieces of Sacramento real estate – was unveiled Thursday night by a team of local developers, with international financiers and NBA executives at their side.
The concept, offered by Gerry Kamilos, a suburban Sacramento land developer, is the most spectacular of seven arena concepts submitted in response to a request from Sacramento Mayor Kevin Johnson.
Saying 22-year-old Arco Arena is outdated and warning that the Kings may jump town, Johnson issued a call in November for developer proposals for a new sports and entertainment facility.
Details of the seven submissions were offered at a City Hall forum Thursday night. But the real action happened later a few blocks away at the Citizen Hotel, where Kamilos and NBA officials unveiled details of an ambitious land-swap concept involving Cal Expo, Arco Arena and an eight-acre piece of city-owned land at the downtown railyard.
NBA officials said they and the Maloof family, owners of the Kings, support the concept because it has what other proposals don't – private investors willing to put up money.
"We wouldn't be here today if (the Maloofs) didn't like it," NBA representative John Moag said.
The Maloofs issued a brief statement thanking the NBA and the mayor.
"We're committed to help any way we can," it said.
The land-swap plan has been in the works for nine months, Moag said.
It is nothing if not complex.
One of those involved, downtown developer David Taylor, called it a "jigsaw puzzle."
It will require agreements among many parties, including the state, the city, the Kings and several private developers.
"My biggest concern is it has a lot of moving parts," City Manager Ray Kerridge said. But, he said, "It can happen."
It also appears, on first review, to require more of the Sacramento Kings than any previous arena proposal, and less of taxpayers.
The NBA's Moag said the Kings have agreed in concept to put $300 million into the project by signing a 30-year lease with $10 million annual rent payments.
The arena would be owned during that time by a private development group including developers Kamilos and Taylor and private cash partners.
That group would front the initial costs of an arena – an undetermined amount – with cash from the two key backers, financiers Macquarie Capital of Australia and Pacific Coast Capital Partners of California.
Nicholas Hann of Macquarie Capital said his company is willing to take the risk with cash up front as well as selling bonds and obtaining loans to construct an arena because of the significance of the project and the money-making possibilities of the Sacramento market.
A critical factor in making the financing work, however, will be the development group's ability to make a deal with state officials to move the State Fair from Cal Expo.
The NBA's Moag said the development group, including the Kings, would seek to buy Cal Expo from the state, then donate the land at and around Arco Arena to the state to relocate the state fairgrounds.
Part of the Arco site is owned by the city, and part by the Kings. Moag said a $70 millon loan the Kings owe the city would be retired in the deal but did not offer details.
The group, in its proposal called "The Sacramento Convergence," goes as far as suggesting state officials could turn Arco Arena into an expo hall.
Once the Cal Expo site is in private ownership, developers would build a suburban community of homes, offices and retail, as well as sell off some of the land to other developers – and create a cash flow to help pay off arena construction debt.
Moag acknowledged that the deal is being pulled together in a difficult economy.
State officials were notably absent at the NBA announcement.
Cal Expo head Norb Bartosik told The Bee earlier Thursday he hasn't seen any details of the plan. He said State Fair officials want to build a better fairgrounds and would entertain legitimate proposals, including potentially moving to a new site.
"We've said all along our goal is to get a state-of-the-art fairgrounds," Bartoski said. "If that includes a move and everything works, we'd have to take a long, hard look at that."
Gov. Arnold Schwarzenegger's spokesman said the governor has been interested in selling Cal Expo if it is a money-making deal for the state.
Cal Expo and the NBA had been in negotiations for several years about a possible arena and redevelopment plan for the Expo site, but that stalled because of a lack of financing.
Kamilos said he and his partners came up with the land swap idea while watching the NBA and Cal Expo struggle.
"We began to see you had to create a much broader asset base than the one (site) they were looking at," Kamilos said.
Representatives of the mayor's task force said the proposal is just one of several they received that look impressive. The task force, a 12-person citizens' volunteer group, is expected to review the seven proposals and submit an arena concept to the mayor in March.
The proposals include:
• Downtown railyard owner Thomas Enterprises also proposes building a sports and entertainment center on the city-owned land at the lower end of the downtown railyard.
Thomas officials said they and the city have a massive head start, winning agreement for hundreds of millions of dollars so far in state and federal funds for infrastructure at the site.
The historic train depot would serve as the grand entrance to the arena and a new transit center. A nearby performance hall is part of the proposal.
Thomas officials said financing details would have to be worked out later when the Kings, the city and others sit down at the table.
• The Natomas ESC Partners group proposes an arena on the city-owned 100 acres adjacent to the existing Arco Arena.
• Tripp Development would place an arena at Third and L streets downtown, at the current site of a city parking garage.
• Ali Mackani proposes an arena at the east end of the current Westfield Downtown Plaza shopping mall on K Street.
• M&M Group, led by Matt Haines, proposes an arena along the Sacramento River, south of the Embassy Suites hotel, in what city planners call the Docks area.
• Doug Tatara has submitted a proposal for an arena at Cal Expo.
Chris Lehane, co-chairman of the mayor's task force, said his group will dig into the proposals in the coming weeks.
"We intend to ask the hard questions and … approach this review process with the mind-set that the teams behind the proposals will have a significant burden of proof to make clear that Sacramento is, indeed, being put first," Lehane said.
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