Sacramento crafted Kings arena plan to be immune to public referendum

I hope you weren’t excitedly looking forward to Sacramento Kings Arena Referendum Part 3, because it turns out there won’t be one, since the deal was structured not to be subject to a public vote:

Sacramento Taxpayers Opposed to Pork (STOP) determined that the City Council’s approval of the financing plan is not subject to voter referendum because of the form of joint-powers authority the city created to issue the revenue bonds backing the project, said Jim Cathcart, one of the leaders of STOP.

So that’s … probably not it, because I’m sure there are some other legal challenges floating around. But at this point, it doesn’t seem there’s much that can stop the Kings arena from going ahead, except maybe the arrival of an atmospheric river.

Read more here:

31 comments on “Sacramento crafted Kings arena plan to be immune to public referendum

  1. Voters can make their voices heard today by yelling “No” on the library tax. This is just the first of many taxes that will be proposed to maintain current services in light of the deficits that will be caused by the bond payments.

    Vote “No” today and on every other proposal. If the city council wants the arena, they can figure out a way to pay for it that stays out of my pocket.

  2. Sacto taxpayers must feel pretty good that a franchise that the new owners of this franchise have already doubled its value after the Clippers sale and still have the city footing most of the bill for a new arena—timing is everything depending on which side you are on–

  3. I know I’ve posted this link before, but details on the active lawsuit (34-2014-80001840) can be found here:

    This is a CEQA lawsuit, but it goes beyond that to challenge the constitutionality of SB743. I would guess that since the city has to wait a certain amount of time to sell bonds, an injunction could, in theory, come in that timeframe. We’ll see.

  4. @RA – Of course without those additional taxes they’ll just choose to not “maintain current services” – and you’ll still end up paying for the arena. That’s the beauty of these deals.

  5. City has filed its response to this lawsuit, and you can order your own copy here:

    However, I can sum it up. “We deny all allegations.” It takes 10 pages to say that about 50 times, but in a nutshell, there you go.

  6. To address your last comment, Neil, yes, I think this arena will get built, and have felt that way for a few months.

    It’s just that new revenues to the City will fall far, far short of the predictions contained in the Think Big reports (somewhere between $7B and $11B, depending on the iteration you believe), and on the surrounding development, SBH will ask for more subsidies from the City before they do a thing, so it’ll cost us far more than the $255M the City keeps claiming.

    I think tax receipts WILL rise, but the total tax and parking receipts, plus the lease payments, will be about $10M less than the bond payment. Honestly, in year one, we’ll come up $10M short. This will be in the ballpark.

    We won’t be able to make up a $10M shortfall on volume, either.

  7. MikeM, KJ’s slate swept the city council races, sure, but McCarty finished ahead of Cohn in the state assembly race, and hopefully McCarty gets rewarded and Cohn gets punished for their arena votes come November. Arena folks will be dumping lots of money into Cohn’s campaign.

  8. Dave Jones, who has criticized these arena deals for a very long time now, also kicked some butt. That was encouraging.

    The library tax won huge, and that won’t be anywhere near enough to cover arena debt. I’m not as worried about that as other posters are here.

    Cohn’s going to lose, because people just don’t like him. KJ’s machine is welcome to pour as much money there as he wants; it won’t help.

    Darrell Fong is still alive, but barely. I think he’d help himself if he stopped talking like he always has marbles in his mouth.

  9. I’d say it’s the Rick Jennings win that bothers me the most. He supports the SMI, was involved with CASA, voted to turn Sac High into KJ’s charter, and he’s pro-arena… And he won in one of Sacramento’s bluest areas. I don’t get it.

    “This guy is for an awful lot of stuff we hate, so let’s vote for him.” That’s some sound logic right there; elect a KJ lapdog. Solid move there, Greenhaven.

  10. MikeM, I hope you’re right about Cohn. I broke my own no-lawn-signs rule last week after getting an anti-McCarty hit piece quoting Marcos Breton (“he’s a weasel doing weasely things”). Breton is a clown and it’s too bad the Bee has come to that.
    As for Jennings, I’m with you, but I think Cherry’s $200K plus public safety pension costs him. Jennings is a made-to-order KJ lapdog.

  11. Isn’t it sad, yet telling of our liberal media today, that our only recourse to reveal the truth about this arena scam and to discuss related local politics is here on this blog?

    The Bee cutting off online reader comments, that were heavily anti-arena, demonstrates what’s wrong in our media today. Censorship of the truth. The MSM is nothing but a propaganda machine that spins a one sided story to fit their agenda. And, there is a symbiotic relationship with the politicians and other elites that has corrupted the media.

    Thank you Neil for giving us a forum to counter the lack of any investigative journalism or truth in the Kings story here in Sacramento. The MSM is truly the “enemy within” regarding sports facility funding or a host of other topics and schemes.

    One final thought on the Kings “Jiffy Pop Arena”. I’ve put this out there before. If the City of Sacramento owns the arena, then why did they give away the naming rights to the Kings that could be worth $120M or more over 20 years? That is a public subsidy, basically a flow through to pay the rent, but nobody talked about it and it was slipped through.

  12. Why give away the naming rights? Simple – profit for the kings. The kings know that they will not be able to squeeze a profit out of the arena. Big-name shows skip the Sacramento area – not because of the “aging sleep train arena” but because they can charge more money per ticket in the Bay Area. This market will not bear those prices. Without the billboards on which they can sell advertising, the parking garages where they can set any rate they wish, and the naming rights, there would be no profit.

  13. And the City isn’t gaining parking revenue. They’re giving away 3,900 spots that will be used for arena event parking, and really, that’s about as much parking as that arena will need on average. Between mass-transit and approximately 2.5 persons/car, really, 3,900 parking spots should almost get the job done.

    SBH will get parking revenue. The City? Once they raise their rates to $3/hour and businesses then move away from the arena — the City won’t do that great.

    Restaurants near the arena will be dead while events are on. Before games, they MAY pick up some business, but so many restaurants near there are so busy that they didn’t need the draw of an arena. If it costs $25 to park downtown on event nights, those restaurants will be empty once the event starts for the evening.

    That’s why I think this will all be revenue-neutral. And that’s not 100% true; I think they’ll get some revenue, just not $22M/year. More like $10M-$15M.

  14. The increased parking costs will be revenue suicide for arena debt payments. Folks here aren’t going to put up with nasty congestion, $25/nite parking, $9 beers, $60 nose-bleed seats, too many slam-dunks for very long. Why eat at restaurants downtown when there’s free parking at Tower Café, at Freeport Bar & Grill, or all the other eateries on the midtown/downtown periphery? Agree with MikeM…$10million additional revenue growth will be pushing it. Probably less ager the 1st year novelty wears off.

  15. I don’t think City administration believes parking will cover arena debt payments. It appears they will accomplish their goal of issuing arena bonds against the general fund, and when payment deficits surface, the only option will be tax increases or service cuts.

  16. In looking at the election, we’re assuming that people know who was for/against the arena–except for the Cohn/McCarty race, where both had voted at the City Council. For instance, I was amazed to discover that many of my neighbors did not know that a WalMart was planned for the new Delta Shores development. Uh, the City Council repealed the anti-big-box ordinance that would permit WalMart last August. Most Sacramentans seem to have decided that they can’t do anything about it, so they just don’t care. And don’t bother to vote either–the turnout was 20%.

  17. The Bee only today figured out that the City has responded to the Gianturco lawsuit. That’s awesome reporting, guys.

    The article refers to the City’s response, which came June 6. You should read the response. It’s embarrassing. I think the City believes the bond sale will be halted while the CEQA trial proceeds, hopefully after the judge rules SB743 unconstitutional.

  18. I agree that the response is an embarrassment. They wrote two statements and copied and pasted them dozens of times. I’m surprised they remembered to adjust the numbers.

  19. Lots of good new information posted on the Court’s website regarding the Gianturco lawsuit.

    Items 19-23 released today.

  20. In regards to the parking issue, specifically the lot space where the arena will be built, the whole mall and some of the surrounding areas, comprises quite a number of public parking spaces. Having worked in this area I can tell you that many workers and more importantly visitors rely on these lots since its already difficult to find parking downtown. This is going to be burdensome for people and a loss of a revenue source. Just one more reason to piss people off i’m sure.

  21. Absolutely true, MCG. I’m downtown a lot, and City-owned lots near City Hall and Memorial regularly fill up, and it’s very problematic to find any parking east of about 14th Street about 4 nights a week (Thursday-Sunday). Restaurants like Mikuni and Cafeteria 15L, among many others, are hard to get into. Ever tried to get into Burgers & Brew after about 5 on a Friday night? Forget it.

    So let’s just give away 3,900 parking spots.

    Yeah, I saw that slideshow where the guy with the army hat showed us how empty restaurants are down there, and he showed us pictures of River City Brewing to illustrate that. How about a little balance? Walk over to 16th Street and show us how dead Mikuni is. Oh, right, it’s PACKED. Sorry, my mistake.

    I still don’t know how this deal gets past Article 16, Section 6 of the California Constitution.

  22. Yeah Mikem, you know where I worked at city hall I had access to much of the correspondence to the city and a lot of it was complaints from tourists who had a difficult time with both finding and understanding the parking regulations. Many if not all were pissed and didn’t want to come back.

  23. Now the City Council gets to vote on the $750,000 in general fund money it has to spend to defend itself from lawsuits:

    Gee, I guess the guys who are suing should just slink off. It’s much better to walk away and let the general fund cover $23M/year for the next 36 years and build the arena. That makes so much more sense.

  24. If the city would use its own lawyers instead of hiring an outside firm, the costs would be much lower.

  25. To paraphrase Jay Schenirer, “It’s $23,000,000 each year that we cannot spend on police, that we cannot spend on community centers and that we cannot spend on providing services for young people – all of which should be our priorities.”

  26. The revised petition to the court on the secret subsidy has been posted. Case number is 34-2013-80001489.

  27. Neil, I just have a feeling that demolition will NOT start in late July. There are simply too many legitimate questions at this point. For example:

    Article 16, section 6 of the California Constitution, which spells out that government may not give public property to private concerns;

    The misuse of parking meter revenues;

    Due-process issues regarding SB743;

    Problems with the EIR, even if SB743 is not tossed by the courts.

    But what’ll happen is that when this project is not underway on July 25, the racist, anti-progress, greedy and foolish opponents of this project will be to blame, instead of the fact that what the Council passed has legitimate legal problems. Yup, I’m gonna get blamed for this. I wouldn’t even be surprised if I was specifically mentioned as being a foolish racist.

    I do not expect demolition to start on July 25.

  28. Apparently, one of the pieces of property that the Council tried to give SBH has $3M in outstanding public bond debt against it, and the only way we can give it to them is to repay those bonds (plus penalties) before they can give it away.

    So, they complain about the $750,000 in legal fees they’ll be forced to pay to defend themselves on three lawsuits (where those attorneys are working pro bono), but apparently, $3M+ from the general fund so they can give land away is just dandy.

    I cannot be convinced this isn’t a gift of public funds. How can they now argue that it’s not?

  29. Here’s what the Council voted on tonight:

    No public debate at all. Did it all behind closed doors. Eh, what’s $3M of general fund money? No big deal.

    Not a word in the Bee, either. Amazing.

  30. SBH and the City are demanding that arena opponents post a $100M bond before they’re allowed to proceed with their lawsuit.

    Is there precedent for that?