Sacramento Mayor Kevin Johnson has been crusading to keep the Kings in Sacramento. Fighting off attempts by Anaheim and Seattle to steal the team away with attractive offers of renovated arenas or new builds; Johnson is closer to accomplishing his goal than ever before.
Today, Sacramento’s City Council will vote on a framework for a deal for a new, downtown Entertainment and Sports Complex. The specifics of the deal have taken nearly a year to work out, and required bringing together the independent interests of the NBA, the Maloof Family, AEG Sports, local developer David Taylor, the city, and local residents.
Now that the framework is available, it is possible to see how the deal that will keep the Kings in Sacramento until 2045 evolved from the earliest attempts in 2006, which ended with a resounding electoral defeat.
In 2006, Sacramento had its eyes on a $541 million arena for its downtown corridor. To pay for it, the voters could have approved Measures Q and R to raise a countywide sales tax as a major financing mechanism. Instead of approving the measure, 80 percent of the County voted against the sales taxes.
Mayor Johnson’s spokesman Joaquin McPeek told the Sacramento Bee in June of 2011 that the city hoped to learn from that experience.
Later that month, the Think BIG Committee released the Economic Engine Report, detailing how the ESC could provide a boon to the local and regional economy.
Report concluded that:
“A downtown entertainment and sports complex will generate over $157 million in revenue for the entire region on an annual basis, including $100 million in downtown Sacramento, $116 million in the City of Sacramento, $131 million in the County of Sacramento and in $157 million in the greater Sacramento region.”
That would mean some $7 billion in economic activity over the next 30 years.
Many speculated that the Think BIG committee, with its 60 members is larger than the State Senate, was designed to help build a regional coalition of governments that would leverage their combined credit and bond issuing authority to provide a regional funding plan. However, the lessons of the past, coupled with some elected officials’ unwillingness to tax their own residents for Sacramento’s arena, impugned the credibility of the plan.
Mayor Johnson and the Think BIG Sacramento committee soon moved away from a
broadly implemented sales or special tax. Instead, the group focused on user taxes, fees, and city assets to cover the public component of the arena-financing plan.
In August of 2011, Think BIG published a report entitled “The User Fees Report,” which identified a number of revenue streams, “Naming rights, ticket surcharges, arena fees, business improvement districts related to increased tourism, and parking, which all bear a direct nexus to the facility and would be funded by those that either directly benefit from the construction of an ESC or are primary users of the facility.”
In other words, those who chose to use the ESC would be responsible for paying for the ESC. It was an approach to financing the stadium that had broad support by the public.
They investigated issuing more cell tower permits for public land – a move that could have raised $500,000 per year; and at one point a plan to place more billboards in and around the ESC was discussed.
That’s about the same time that former Pittsburg Mayor Tom Murphy came to Sacramento to discuss redevelopment, community investment, and building sports complexes. As mayor, he built both an NFL and a MLB stadium with views of Pittsburg downtown.
Drawing upon his experience in Pittsburg, he offered the City some advice in a speech at City Hall.
“You don’t want the team to get the parking revenue, because it becomes addictive,” said Murphy. “Instead what we did was put that revenue into a reserve fund and built a parking structure.”
It appears, however, that advice went unheeded. According to the Terms Sheet published by City officials last week, the Kings will retain all parking revenue related to Kings events. In most cases, the city will retain the revenue from non-Kings events.
In the end, the City brokered the deal by offering up $255 million of public money. The Maloofs then contributed $73 million, AEG contributing $58 million, and David Taylor providing $10 million for a parking structure.
The plan incorporated many moving parts and interested parties. The plan is bold and somewhat controversial, but as Pittsburg Mayor Murphy said, “Bold decisions aren’t made incrementally.”