Category Archives: Sacramento Kings

Sacramento paper says Kings arena won’t cost much in taxes, ignores tens of millions in taxes

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Want to read a long, involved article about sports arena finance that tries to clarify things but is only likely to make readers much, much more confused? Dale Kasler and Tony Bizjak of the Sacramento Bee have you covered:

Welcome to Golden 1 Center. That’ll be $18.3 million, please.

That’s how much the city of Sacramento will pay each year to help fund the Kings’ new $556 million downtown arena, set to open Oct. 4.

So far, so good. The original projection was $21.9 million a year, but the city got a 5.67% interest rate instead of an even more extortionate 6.7%, so phew.

The Kings will pay an estimated two-thirds of the debt service through lease payments and property taxes generated by the new arena.

Errrr? The Kings’ lease payments start at $6.5 million a year, and do eventually escalate to $16.7 million by by the end of the lease. but while that may average almost two-thirds of the costs (57%, according to the Bee), it’s heavily skewed toward the distant future, and as anyone who’s taken out a loan (or, you know, handled money) should know, cash flow is way more valuable now than it is 30 years from now. (If you disagree, please lend me $10,000, and I will repay 100% of your costs with a $10,000 check in the year 2046.) So in present value terms, which is how one should be calculating this, it’s a whole lot less than two-thirds.

As for “property taxes” paying for the bonds, I have no idea where that’s coming from. Here’s the actual bond payment schedule, from the city council’s official plan:

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I guess if you count the increased property taxes coming from the arena as a team “contribution,” then maybe that offsets some more of this. (The Bee counts them at $25 million, but doesn’t indicate if that’s present value or what.) But getting to use your property tax money to fund your construction costs is a rather special subsidy not available to normal humans, so shouldn’t be counted as something that is somehow reimbursing taxpayers for their costs.

Increased parking revenue only has to support about 10 percent of the debt, according to the city’s latest cash flow projections. About twice as much money will come from dollars that will get freed up when existing debt on city parking garages comes off the books several years from now.

What? Taking parking-garage debt payment money that otherwise would have returned to the general fund when the garages were paid off and instead funneling it to pay for the arena isn’t free money — it’s, well, money that otherwise would have been returned to the general fund. It’s good that it won’t have to come from parking meter fees, sure, but it’s still the public paying for it.

What this all adds up to is less “this won’t cost the public much” and more “don’t worry, the amount of public money we projected to pay off the arena will be enough to cover the bills.” Which, to be fair, is what Kasler and Bizjak say in the article, if you read carefully enough. (“City officials say Sacramento can handle the debt with room to spare, and without dipping into its general fund.”) Unfortunately, whoever wrote the Bee’s headline did not read carefully enough, and came up with this:

New Sacramento arena relies on city parking fees – plus lots of cash from Kings

And that, kiddies, is how journalism becomes spin.

Sacramento prepares to pay for new Kings arena with deluge of downtown parking fees

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The new Sacramento Kings arena is set to open next month, at a cost of $556.6 million, $255 million of which will come from city coffers. And that also means the extension of parking-meter hours on downtown streets from 6 pm to 10 pm to raise money to pay for the public’s share. The Sacramento Bee has a good long article on how everyone is preparing for this (confusion, mostly), but I’d like to call out just one sentence of it:

Restaurant workers who now park on the street likely will have to adapt.

There are other considerations here for possible negative fallout — like, will some people start steering clear of downtown restaurants once they realize they have to pay for parking — and the city is offering discounted parking in downtown garages for some workers. Still, if you want one epitaph for the publicly funded sports venue era, you could do worse than “workers will have to adapt.”

Sacramento to flood downtown with lights and cops so Kings fans aren’t afraid of new arena

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With the Sacramento Kings‘ new arena set to open in October, where’s that transformation it’s supposed to create for its downtown neighborhood, according to the standard pro-arena-development line? Part of it is coming, but it’s taxpayers who will be paying for it:

Likely beginning this week, the city will install 104 pedestrian-level streetlamps on dimly lit blocks leading to the arena as well as several parts of midtown. The $1.7 million lighting program will supplement added police patrols, new police cameras and volunteer guides who will work the streets around the arena during events.

The hope is to make newcomers to downtown feel safer, and to encourage more people to stick around at bars and restaurants before and after games when the arena opens this fall.

None of this is bad, per se. But the notion that sports venues automatically make people flock to an area takes a bit of a hit when the story becomes “build it, and then build new streetlights and flood the area with police patrols and cameras, and they will come.” The Sacramento Bee report adds that “the arena building itself has been designed to serve as a beacon, with glass walls allowing interior light to spill onto adjoining walkways and streets,” though that’s not going to do much for pedestrians on the 200+ nights a year where nothing’s going on at the arena.

If there’s another concern, it’s that the Bee reports that most of the arrests downtown currently are for drug possession, so this at least raises the specter of Sacramento police doing sweeps of downtown for unapproved citizens who might freak out the basketball-goers. “Revitalization” is a complex, murky concept, one that’s not always easily captured in a “does it look different than before?” snapshot, as much as boosters and journalists alike sometimes like to pretend it can be.

Seriously, how did Kevin Johnson end up running Sacramento like his own personal fiefdom?

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The Baffler, the magazine that published what remains the best article I’ve ever seen on the scam that is the internship economy (and which remains even more of a scam today, if anything), has just published a long article by the Sacramento News & Review’s Cosmo Garvin on the disaster that has been Kevin Johnson’s political career, highlighted by spending $300 million on a new Kings arena that will open this fall. (Okay, also highlighted by charges that he’s a serial sexual abuser/harasser. Or maybe that’s a lowlight. Or maybe they both are.) It also talks about the lawsuit that Mayor KJ filed against Garvin and the N&R over his public records requests for city emails, and includes one of the best nut grafs you’ll ever see:

The lawsuit, the arena, KJ’s talent for diverting public resources for private gain, even the sex-creep stuff: to me, these facts seem to hang together under a common theme. The guy has boundary issues.

This gets into an area that I’ve always been curious about, which is: Why is it that so many local politicians, once they get into office, behave so much like, you know, politicians? Individuals who might have seemed perfectly sane in private life suddenly start mouthing platitudes and kowtowing to the usual moneyed interests and carrying out policies that are the exact opposite of what they’d promised. It’s incredibly common and fairly creepy, and a big reason why so many Americans don’t trust politicians as a group, even as they keep voting for them based on their promises.

Some of this, no doubt, is due to the political system itself: If you want to get re-elected, you need to say certain things and suck up to certain donors and make sure your daughter goes to a politically acceptable school, and so on. But I suspect that there’s a self-weeding aspect here as well. Think about it: There are thousands of former NBA players, many of which could use their celebrity to run for mayor of some city; why KJ? He certainly doesn’t need the money, or the fame. It takes a very special combination of ego, need for attention, and yes, lack of boundaries to decide that you’re going to merge your city with your personal brand, and declare that anyone opposed to one is opposed to both. And then sue them.

Obviously, not every mayor in the U.S. has set up their own secret government or molested teenagers — KJ is clearly special at this. But I think there’s a particular draw for people like that to run for public office: Anyone who can put up with the pressures of the political spotlight is going to require some, er, special characteristics, and they’re not necessarily ones that make for good management of the public interest. KJ is, by all accounts, a dangerous loon, but the system that put him in charge of a major American city is the bigger concern.

Not that I have any solutions to propose. Other than to ban unpaid internships, because that shit is seriously unethical and illegal.

Sacramento TV station stunned to find new Kings arena hasn’t cured homelessness

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I’ve never seen it myself since I don’t live in Sacramento, but my impression is that FOX40 is a pretty bad news station, prone to reporting crazy-ass rumors as if they were true. (Though you could say that for most local newscasts, I suppose.) Anyway, last night they went to report on the new downtown Kings arena, and found that, glory be, it hasn’t cured homelessness:

One downtown with two very different faces. The drive to revive Sacramento is evident in a state-of-the-art arena. But that effort is facing a troubling problem on the streets.

One downtown, there is hope for a rebirth of a city and emergence from the shadows. The other: where people feel hopeless, forgotten in the shadows.

“They could spend $500 million on a basketball court, but they won’t put out a dime to help the homeless people,” said Larry, who lives on the streets.

The struggle on the streets juxtaposed to a downtown on the cusp of a rebirth.

It goes on and on like that, and on the one hand, using the Kings arena as a hook to examine chronic homelessness (though the examination doesn’t get much past “it exists”) isn’t the worst thing in the world. But on the other, this report reveals how deeply messed up local development reporting can be.

The key is that word “rebirth.” In developer-speak, all too often parroted by local news reports, rebirth or revitalization or renaissance is what happens to neighborhoods when you build new stuff. And new stuff is new, and newness is supposed to fix everything, whether it’s lack of jobs or a strained city treasury or the team being a chaotic disaster or, apparently, homelessness. We built you a new basketball arena, poor people, why do you persist in not being able to afford homes?

This is, frankly, an insane way to report on anything. If you want to go out and talk about how having homeless people sleeping downtown is an embarrassment to the elected officials who are trying to sell Sacramento as all cleaned up now, go for it. But noting all the new construction taking place downtown and then asking “Will it work?”, as FOX 40 does, shows a stunning misunderstanding of what redevelopment is supposed to accomplish — or worse, is an implication that the only “revitalization” that counts is the kind that makes the homeless disappear to somewhere else. After all, the Olympics get away with it.

I don’t want to come down too hard on the FOX40 reporters, really I don’t. But if you’re going to be a journalist, it’s vitally important that you not only think about what you’re covering, but about how you’re covering it, and what assumptions go into the way you frame your story. This news item ends up telling one story in its text — “homelessness bad and intractable!” — and another in its subtext — “how much concrete do we have to pour in order to fix social problems?” Sometimes good journalism is less about finding the right answers than asking the right questions.

ESPN Kevin Johnson doc killed, was more awful even than you thought

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On my Google calendar for next Tuesday night, there is a notation for “30 on 30 on Sacramento Kings,” which is the ESPN documentary that was scheduled to run on Sacramento Mayor Kevin Johnson and his successful push to fund a new arena for the Kings. I was so looking forward to watching and commenting on some of the worst bits, but sadly this will now not happen, as ESPN has pulled the show’s airing after revelations that KJ may have molested teenagers and plotted to destroy the National Conference of Black Mayors and run his own secret private government in City Hall — most of which was public knowledge before they made the film, but better late than never, right?

In any event, we can all still point and laugh at the documentary even without seeing it, courtesy of Max Rivlin-Nadler of the New Republic, who got a screening copy and did plenty of pointing and laughing on his own:

Down In The Valley amounts to a 77-minute political advertisement for Johnson, a man who in 1995 paid a 15-year-old over $230,000 to keep quiet after she alleged that he had sexually abused her…

A narrator explains that this often-overlooked city would soon need to call on one of its own to save it. Cut to pictures of a young Kevin Johnson, playing baseball and basketball, and growing up on the rough side of town before developing into a world-famous basketball star.

This sounds Sharknado-level awful, and I’m more sorry than ever that it’s not going to be available for livetweeting.

And what about the Kings arena project, which is set up as Johnson’s finest hour?

The film focuses solely on Johnson for its final hour, letting him provide the play-by-play of the procedures involved in convincing the NBA to not let any new ownership move the team…

Completely missing from the film is any meaningful information about the cost of that new basketball arena. Johnson intentionally crafted the bill approving the arena to be immune to any public referendums, even though the public is on the hook for $226 million, almost half of the cost. Johnson, in his desire to keep the team in the city, convinced software tycoon Vivek Ranadivé to lead up an ownership group to buy out the Maloofs for a then-record $534 million. Johnson then got the city council to pass a spending bill that would avoid a public vote to pay for a new arena for the team, now assured that they would be staying. Down in the Valley mentions none of this.

ESPN, as Rivlin-Nadler notes, has a long history of being caught between its role as a news agency and its role as a network in the business of buying the rights to sporting events and using them to extract huge carriage fees from cable companies, and hasn’t always done the best to balance the two. So it’s not really surprising that ESPN green-lit Down in the Valley, nor that it got spooked and backed away from it at the last minute. I guess we should all just be glad that the network’s vacillation put its decision-making process on full display — and let at least a lucky few get a glimpse at the thing itself. The need to at least pretend to professionalism does have its benefits.

Kevin Johnson set up secret government, asked Kings, Republic for donations during arena and stadium push

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If you regularly read this site’s coverage of the Sacramento Kings arena saga, you may have the impression that Sacramento mayor (and former NBA great) Kevin Johnson will stop at nothing to get what he wants, whether it’s assembling his own prospective team ownership groups or coming up with bizarro-named astroturf organizations. But now, according to a long exposé in Deadspin, it appears his ruthlessness is way, way more extensive than anyone ever realized. Among the lowlights:

  • Johnson tried to take over the National Conference of Black Mayors to use it for his own ends, then when that failed, ran it into bankruptcy and set up his own competing black mayors’ group.
  • When the Sacramento News & Review issued a public records request over the black mayors’ group scandal, Johnson sued the newspaper and his own city to block the release of emails from his office. That case is still pending.
  • In the latest twist, KJ took advocates for charter schools (the crusade he shares with his wife, “Waiting for Superman” antihero Michelle Rhee) and gave them fake City Hall titles so they could work on his behalf during the black mayors putsch.
  • On the sports venue front, Johnson solicited campaign donations from the owners of both the Kings and Republic F.C. while seeking to build a new basketball arena and new soccer stadium for those teams.

Oh yeah, and then there’s the bit about Johnson being accused of sexually molesting multiple teenagers back in the ’90s, which is old news but worth remembering both because there shouldn’t be a statute of limitations on remembering stuff like this, and because it involved amazing secret recordings like this one:

Girl: “Well, I was naked and you were naked, and it wasn’t a hug.”

K.J.: “Well, I felt that it was, you know, a hug, and you know, I didn’t, to be honest, remember if we were both naked at that time. That is the night at the guesthouse?”

Girl: “Yeah. … Why would I be upset if it was just a hug?”

K.J.: “Well, I said the hug was more intimate than it should have been. But I don’t believe I touched your private parts in those areas. And you did feel bad the next day and that’s why we talked about it.”

Girl: “Well, if it was just a hug, why were either one of us naked?”

K.J.: “Again, I didn’t recall us being a hundred percent naked.”

Deadspin illustrated its latest piece with an image of KJ with devil horns drawn on. The site is known for being a bit over the top, obviously, but in this case, it seems like they’ve got it just about right.

Sacramento says giving parking, billboards to Kings cost nothing, because they were just lying around

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Testimony has begun in the Sacramento Kings arena hidden-subsidies lawsuit, and we’re already deep into “it depends on what ‘is’ is” territory:

[State assemblymember Kevin] McCarty said he felt the city should have told the public more about the dollar value of two other elements of that deal – several thousand underground parking spots the city agreed to let the Kings operate, and the right to build six billboards on city property…

[Assistant City Manager John] Dangberg said the city did not assign a value to those assets because, even if they are of value to the Kings, giving them away did not cost the city any money. He did acknowledge a potential “opportunity cost” on future revenues for the signboards.

Needless to say, Dangberg’s argument is what economists call “stupid” — there are any number of assets that a city could give away that don’t cost money yet that have significant value (unused land, taxes on projects that haven’t been built yet, the right to sell advertising space on the mayor’s suit jacket). Eye on Sacramento previously estimated the present value of the parking at $57.8 million, and the billboards at $18 million.

The court won’t be determining whether the city included hidden subsidies, though, but rather whether it committed fraud in doing so, which is a stickier legal wicket. In the court of public opinion, however, we are free to issue a verdict of liar, liar, pants on fire.

Lawsuit begins over Sacramento officials hiding tens of millions in Kings subsidies in plain sight

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It’s time for another lawsuit to go to trial over the Sacramento Kings arena deal, because it’s been absolutely months since we’ve had one of those. This one charges that the deal is illegal because its backers lied about its costs:

Downtown residents Jim Cathcart and Julian Camacho and Tahoe Park community activist Isaac Gonzalez say the deal is a fraud, and they’re asking for a court order invalidating the subsidy. For the next two weeks in Sacramento Superior Court, they will press their claim that the mayor and people around him lied to the public about the true value of the arena subsidy.

Instead of holding the line during negotiations, they contend that city officials covertly agreed to the investors’ demands, larding up the deal with as much as $200 million worth of undisclosed “sweeteners,” such as the parking garage beneath Downtown Plaza.

“They gave stuff to the Kings, and they did it without full public disclosure,” Cathcart said. “It’s wrong, and it’s got to be exposed.”

The problem with this lawsuit is that, while Sacramento city officials certainly didn’t go out of their way to publicize all the public subsidies that the Kings owners would be getting, it was all right there in the term sheet, spelled out clearly enough that budget watchdogs could add up the costs for all to see. So this comes down to a lawsuit charging city officials with spinning figures to make them look better for their side — which while we might wish it were illegal, is pretty much 90% of what city officials spend their time doing. So good luck with that before a judge, though if it means two weeks of court dates where Kevin Johnson and company are forced to acknowledge all the goodies that they ladled onto the Kings deal, there’s a benefit to that, too.