The Sacramento City Council voted 7-2 to approve the term sheet for a new Entertainment and Sports Complex at the Downtown Plaza Mall. With its approval, the city moves forward on a financing plan that will hopefully compete and defeat a proposal from a Seattle-based investor group that would relocated the city’s NBA franchise.
“Sacramento once against had its back against the wall and once again we’ve beaten the odds,” said Mayor Johnson. “This is bigger than basketball. Tonight’s vote is a win for jobs and our economy, a win for taxpayers, and a win in terms of a fair public-private partnership with a dream team investor group consisting of Ron Burkle, Mark Mastrov, and Vivek Ranadivé.”
According to the City, the ESC will provide 4,100 jobs and account for roughly $7 billion in economic activity.
The term sheet provides a detailed framework for how the City will develop the $447 million facility at the Downtown Plaza site in conjunction with the investor group. The City will contribute $258 million to the project, primarily via city parking assets. An additional $189 million in private dollars will come from the investor group.
In addition, the City has committed to working with the investment group to secure the necessary entitlements to allow for the potential development of up to 1.5 million square feet of office, retail, housing and hotel uses around the ESC on the Downtown Plaza Site. The preliminary cost estimates provided by the Investor Group are just over $500 million.
Through the agreement, the investor group who hope to acquire the Sacramento Kings, agree to play all home games in Sacramento at the new ESC for a 35 year period. The investor group will be responsible for pre-development, construction, and operation of the ESC. They have also agreed to pay for all capital repairs and cost overruns on the facility.
A key provision of the proposal is ensuring no net impact to the general fund, which will be achieved by generating approximately $9.66 million in new revenues primarily from a 5% ticket surcharge on ESC events, revenues from the parking, and other sources created by the development of the ESC. The proposal honors the Mayor and Council’s core tenets including preventing any new taxes and ensuring protection on the general fund.
As part of the agreement the City will issue new bonds to retire the existing Kings loan, provided the City receives adequate security/collateral from the Kings for the loan. The City has also made commitments to explore future arts opportunities in the City and the redevelopment of land in Natomas.