The Sacramento Kings got the green light from the NBA Wednesday to build their new $477 million arena, setting the stage for preliminary demolition to begin early Friday at Downtown Plaza.
The league's advisory/finance committee, consisting of 10 team owners, approved the Kings' loan terms and lease arrangement with the city of Sacramento, Kings president Chris Granger said. With the NBA's approval in hand, the team expected to close on a loan with Goldman Sachs Group Inc. and have the first installment of its money wired late Wednesday or early Thursday.
Granger said work would begin at 6 a.m. Friday. He and Mayor Kevin Johnson will greet what's expected to be an initial wave of 100 construction workers.
While portions of the mall are already fenced off, he said additional barricades will go up, and electricity will be shut off to the construction site in the eastern portion of the mall. Macy's and other tenants at the western end will stay open during the two-year project.
"We're excited to get to work," Granger said. "After so many twists and turns...we've finally arrived."
He said the Kings plan to install "viewing stands" on 5th and 7th streets for people to watch construction, although there won't be much to see at first.
"It's going to be a couple of weeks before buildings start coming down and you see visible signs of construction," he said. The team also plans to install webcams and will occasionally fly cameras mounted on drones over the site for online viewing.
At its peak, the project will involve hundreds of workers. Most days, the site will be busy from 6 a.m. to 11 p.m. Monday through Saturday, with a handful of 24-hour shifts to haul in construction materials overnight.
The building, a replacement for aging Sleep Train Arena, is supposed to open in October 2016. "I feel very confident that we remain on schedule," Granger said.
A former NBA vice president, Granger said teams have to get approval from the league's advisory/finance committee arena financing and lease terms. The Kings will operate the arena but will pay the city rental fees that will start at $6.5 million a year and grow to around $18 million.
The Kings are contributing $222 million to the project. Granger wouldn't say how much the team is borrowing, or how much it would receive in the first installment of the loan. City officials have said they expect the Kings will have spent about $75 million by the end of October, not counting land purchases. The team has spent $36 million buying most of the mall.
While the Kings are finalizing their Goldman Sachs loan, the city has wrapped up a bond-purchase agreement that ensures the city will be able to finance its share of the project. The agreement, also with Goldman Sachs, represents a guarantee that the city will be able to sell its lease-revenue bonds to cover the bulk of the $255 million public contribution to the arena.
Three pending court cases, including two challenges to the project under the environmental laws, won't interfere with the start of construction but mean the city probably can't sell the bonds until next spring. In the meantime, the Kings needed assurances the city would be able to sell the bonds eventually before the team could close on its financing. The city's bond-purchase agreement provides that certainty.
"It's been a long time coming," said Assistant City Manager John Dangberg, referring to the start of demolition. "It's a very exciting milestone not only for this project but for all of downtown."
The eastern end of Downtown Plaza has been vacant since late May, shortly after the City Council approved the subsidy and development deal with the Kings. Since then, other signals have emerged that demolition was imminent. The fountains on the ground floor have been shut off, and signs have been erected warning motorists that the main underground garage will close permanently on Thursday. Drivers will be able to use the garages at 3rd and L, 5th and J and beneath 24 Hour Fitness at the eastern edge of the mall.
Another retailer at the mall, the GNC store, shut down Tuesday.
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