With the Sacramento Kings on the verge of moving to southern California, both The Think Big Sacramento task force and Mayor Kevin Johnson have unveiled today several funding sources that could keep the Kings in town. The plan must be in place by next March or the Kings' owners say they will seek NBA permission to move the team out of town.
The project will lean on a mixture of income that has a connection to the arena, leasing city-owned parking spaces to private operators, surcharges on tickets and concessions, hotels “taxing” themselves, and a sell off five different land parcels.
Also, the arena could seek investment dollars from foreign nationals under a federal program known as EB-5, a controversial program that offers green cards and a path to citizenship to foreign nationals who invest at least $500,000 into U.S. businesses that create at least 10 jobs. The program has helped create jobs at the former McClellan Air Force Base in North Highlands.
Voters won't be asked to approve a sales tax increase to finance the $387 million facility.
This is it folks, after ten years of hearing various city leaders throwing one idea after another on the wall hoping to see something stick, this is now the cities last chance to pull something together and build an arena while we have a team to build it for. I can see all the above ideas working except the asking hotels to “tax” themselves. At this late date, with no other options to fall back on, I’m not confident this plan can come together on time… so prove me wrong Think Big task force!
Read more at either the SacBee or espn.
"Unveiled" is a bit of an overstatement...if all of the funding sources they identified, added together, actually happen, the total revenue is a couple million more than the predicted $387 million arena cost. But the vast majority of that money won't appear until after the arena is built, so it's quite certain that the city will have to get a construction loan. Assuming 4% interest over 30 years, that adds up to $24 million a year in loan repayments--but the predicted, best-case-scenario revenue is $13 million a year. Where does that other $13 million come from? The simple answer, of course, is that the city will end up paying it out of the general fund.
ReplyDeleteAnd that assumes the arena itself will break even--although with much of the arena revenue going to fund construction (surcharges on tickets, hot dogs, Kings T-shirts etc.) that's going to be its own extra-special challenge.
Whoops, should have been $11 million...but, of course, that assumes that every single revenue source is successfully tapped, without meeting opposition, less-than-ideal return, or a Prop. 26 challenge of hotel/auto rental taxes. And a very reasonable interest rate of 4% from Goldman Sachs, the most likely lender.
ReplyDeleteThanks for the details.
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