Friday, March 02, 2012

Framework for New Arena

In addition to this new rendering for the proposed arena in the railyards, the city has released the financial term sheet detailing the huge finical commitment the city will be making to lease the city’s parking operations for 50-years.
City Public Commitment: $255.5 million
·         $230 million parking monetization
·         $18.5 million from land sales. (Estimated total value of land salesis$30.7million;however, the City has used conservative assumptions. So only $18.5 million is budgeted for the ESC in order to address variability of market conditions and to account for expenses associated with sale of the land.)
·         $5 million Sheraton MOPA (for predevelopment costs under a public-private partnership)
·         $1.5 million parking infrastructure fund(for predevelopment costs)
Capital Campaign (e.g., bricks, other) $3 million
Sacramento Kings $73.25 million
Anschutz Entertainment Group (AEG) $58.75 million

TOTAL $390.5million
The new arena plan includes a 30-year commitment from the Kings to stay in Sacramento, and a 30-year operating lease with AEG. All non-Kings events will be charged a Facility Fee of $1 per ticket. There will also be a tiered revenue-sharing plan that gives the city 15 percent of the first $10 million net operating profit from the facility, and 30 percent of the next $5 million of profit. The city would get 50 percent of all net profit after that.
The ICON-Taylor team has guaranteed to deliver a completed arena by September 2015 – in time for the start of the 2015-16 basketball season – and cost overrun protection, assuring the city of a $391 million final price tag. Taylor would build a $25 million adjacent garage with a combination of private funds and profits from a previous city/Taylor redevelopment project.
The nonbinding  term sheet must be approved by the City Council this Tuesday for the project to go forward in addition to spend $850,000 from the city's parking fund to move ahead on preliminary steps in the process.
City officials say the parties would need to commit by April 3 to spending a combined $13 million on engineering, environmental and other costs.
The documents show for the first time how the city would backfill the $9 million a year the general fund would lose once the city completes its plan to extract upfront cash from its parking operations.

It should also be mentioned that this project is going to use the city's MOPA funds, proceeds from the sale of the Sheraton that were supposed to be use for David Taylor's 800 K Street project. With SHRA dissolved and MOPA funds spent on the arena, K Street might have an abandon dirt lot for years to come.
To read the term sheet for the Sacramento Entertainment and Sports Complex, click here.