Sacramento clerk rejects Kings arena petitions, everybody warms up their lawyers

Turns out that getting people to sign multiple different versions of a petition is a problem after all: Sacramento city clerk Shirley Concolino ruled on Friday that she was rejecting the petitions to put a vote on the Kings arena plan on the June ballot, because of the multiple-versions thing, and the failure-to-include-required-legal-language-saying-this-will-be-enacted-into-law-if-approved thing, and the statements-ending-in-incomplete-sentences thing. “I’ve never seen a petition with as many flaws as this one,” Concolino said.

Of course, Concolino’s boss is Sacramento Mayor Kevin Johnson, something that ballot measure advocates noted in protesting her ruling. Sacramento Taxpayers Opposed to Pork and Voters for a Fair Arena Deal will almost certainly now challenge the petition rejection in court; the Sacramento Bee cites some legal experts as saying judges tend to interpret petition rules strictly, others that they’ll let things slide if they’re not major, so it’s anyone’s guess how things proceed from here. Except that unless things are resolved soon, there’s an excellent chance that Sacramento will be able to sell arena bonds before anyone can vote on anything, which could make the whole issue moot.

Meanwhile, the Bee this weekend ran another story about that economic impact report Kings arena boosters issued last month, this time burying the bit about how more than 90% of the impact would just be cannibalized from spending elsewhere in the city way down in the 22nd paragraph. Actual additional economic activity: $25 million a year, according to the report. Even that’s questionable (Stanford economist Roger Noll says it’s more likely $10-15 million a year), but if we take the report at its word, this means that the city of Sacramento would be better off taking its arena money in suitcases of twenties and handing them out on the streets of the city. (Especially when you consider that Sacramento residents are more likely to spend money locally than Kings players or owners, making for a higher multiplier.)

It’s the kind of thing you’d expect to see in a headline — “Even Kings supporters don’t see much new economic impact” — but instead we get
“City says Sacramento arena would be economic powerhouse; subsidy critics disagree.” Because far be it from journalists to actually try to say whose math is correct.

Sacramentans could vote on Kings arena funding measure in June, unless they don’t

Aw, man, did I forget to tell you guys that the Sacramento arena ballot petitions got certified? Well, they did, last week, and now there will be a vote on whether financing of any pro sports facility should require a public vote, which would take place on June 3. (The vote on whether to vote would take place on June 3, that is. The actual vote on the Kings arena in particular would take place in November.)

Except that the county registrar still needs to rule, possibly as early as today, on whether those multiple versions of the petition mean some should be tossed, and regardless of what she says, there will be a lawsuit over this whole thing anyway. So we probably won’t know for a while yet whether there will be a vote. Hey, here’s an idea: Why don’t we have people vote on whether to vote on whether to vote? I’ll get a petition going…

 

Sacramento officials must testify on alleged hidden land subsidies

A Sacramento judge has ordered that city councilmember Kevin McCarty can be subpoenaed to testify in a lawsuit charging that — you know what, I have to go on the radio on half an hour, let’s let the Sacramento Bee explain:

In a statement filed in court, attorney Patrick Soluri said McCarty told him the city gave the Kings a secret subsidy intended to reimburse the Kings investors for the fact that they were “overpaying” for the franchise. The new owners bought the team in a deal valued at an NBA-record $535 million.

Also, Soluri said McCarty told him [city economic development director Jim] Rinehart felt the city had seriously undervalued city land that is being given to the Kings as part of the deal. Soluri’s clients, a group of citizens fighting the deal, believe the true value of the subsidy is well above $258 million.

McCarty, who opposes the subsidy, said Tuesday by email, “I certainly have no problem answering tough questions during these legal proceedings.”

I’m not sure what makes this part of the Kings deal any more “secret” than the rest of it, given that what’s been announced already doesn’t really add up, but if the city allegedly knew it was cooking the books but didn’t say so, I guess that’s news. McCarty and Rinehart now both have 20 days to be deposed in the case; if nothing else, it should provide some entertainment right about the time that Cemeterygate starts to die down.

Sacramento pro-arena group holds press conference in cemetery, because that’s where dead people live

As several readers have now pointed out, when I wrote on Friday that the Sacramento Kings arena vote squabble couldn’t get any more ridiculous, I apparently spoke too soon:

A group supporting the construction of a Sacramento Kings arena is in hot water from both sides of the debate after holding a press conference in a cemetery on Friday.

I’m sorry, in a what?

The group clarified on Twitter that the location of the conference was meant to highlight signatures of dead people found on petitions submitted by Sacramento Taxpayers Opposed to Pork.

If you want video, you can find it here. At this rate, I think maybe Sacramento should give up on this whole basketball thing and just construct a building where people can buy tickets to watch STOP and The4000 face off for the next 30 years.

Sacramento arena petition battle getting ridiculous in too many ways to fit in a headline

There were a bunch of developments in the Sacramento Kings arena saga this week, and fortunately Sactown Royalty has summarized most of them for us. But I’m still going to summarize them even more, because that’s how the Internet rolls:

  • The counting of petitions to put the arena deal up for a public vote in June, already complicated by such matters as the mayor’s pro-arena group trying to demand that the petitioners pay to have the petitions counted, got even more complicated with the report (also from the same pro-arena group, the crazily named The4000) that the petitions were issued in five (or maybe eight) slightly different versions. This is either a major crisis that will require going back to the beginning and doing a recount, or a minor issue that in past petition cases hasn’t caused any problems at all, depending on who you ask. Or, more likely, grounds for a lawsuit.
  • If you’re wondering how the petition validating is going otherwise, Mrs. Lincoln, of the first 8,518 signatures to be checked, 67.7% were deemed valid, somewhat ahead of the 62% validity rate needed for the ballot measure to go through.
  • There could be an initial ruling soon in a lawsuit claiming that the city illegally offered under-the-table inducements to the new owners of the Kings to help get them to buy the team, with the plaintiffs currently trying to depose city councilmember Kevin McCarty on the subject. Which seems like a reach, but we’re talking about a battle here that’s currently turning on petition typos, so really, anything is fair game.
  • Meanwhile, Craig Powell of Eye on Sacramento writes that the city is trying yet another tack to get around a possible June vote, by pushing up the sale of arena bonds to 14 days before voters would go to the polls. That could be difficult — as the Sacramento Bee has previously noted, petitioners could always go to court to try to delay the bond sale until after the vote, and “it’s also difficult to imagine that the bond could get through the legal and underwriting process with a ballot measure pending” — but we’ve certainly seen these sorts of shenanigans before.

In sum, then, the arena battle is still a great big steaming mess, and everyone could save a lot of time and legal fees by choosing a simpler method of resolving it. Like, say, arm wrestling.

Bucks owner: Arena plan should work if we can threaten to move like Kings — wait, did I just say that?

I’ve wondered before about Milwaukee Bucks owner Herb Kohl’s bizarro move non-threats, but this latest one really takes the cake:

Kohl, in an interview with nba.com’s David Aldridge, said he is hoping for a deal similar to one led by Sacramento Mayor Kevin Johnson for a new Sacramento Kings arena that will help keep the Kings in town. The city of Sacramento pledged $258 million of the estimated $448 million building, with the Kings paying the rest plus any cost overruns.

“Sacramento — that’s a model, almost half and half,” Kohl told Aldridge. “They were also helped by the drama with it all.”

First off, “let’s go halfsies” isn’t a model; actually figuring out how the public will pay for its half is a model. And given that Sacramento still hasn’t completely figured out how that will work for the Kings arena, they’re probably not the best model there.

Then there’s that “helped by the drama with it all,” which can seemingly only refer to the Kings’ threats to move to Seattle, which eventually coerced the city of Sacramento to approve an arena plan despite the shaky financing. Put it all together, and Kohl’s remarks translate to “This should go great if we can just get Milwaukee to agree to pay for half an arena whether or not it can afford it, and if we pretend we’re going to move the team in order to scare officials into approving subsidies.” Which is no doubt what he actually means, but you have to wonder if he knew he was saying it out loud.

Sacramento prepares eminent domain suit to seize Kings arena land

The city of Sacramento has talked before about using eminent domain to seize property for the planned Kings arena, and now it’s moving ahead: The Sacramento Bee reports that an eminent domain lawsuit could be filed as early as next week to take control of the former Macy’s building on the proposed arena site.

If you’re wondering whether cities can just force property owners to sell to them for anything they want, including an arena for a pro basketball team, the answer is yes, yes they can. The two conditions necessary are that the property be blighted — and since the Macy’s is closed, courts are likely to okay that one — and that the project be for a public purpose — and assistant city manager John Dangberg told the Bee that it will qualify since the city will get to use it for up to nine high school graduations, concerts, and sporting events each year. Which may seem a slim thread to prove “public purpose,” but courts have gone for a lot less.

One of the strangest aspects of this situation is that the city will actually be suing the state’s public employee pension fund, CalPERS, which owns the Macy’s building. (U.S. Bank holds a lease on it.) In all likelihood, this will all be settled out of court, but it’s a reminder that eminent domain is a huge hammer that cities can wield on behalf on pro sports owners.

Kings arena boosters think numbers are just things you make up because they look pretty

If you were wanting a primer in “ridiculous economic claims by sports venue advocates and how to debunk them,” Sacramento Mayor Kevin Johnson’s The4000 booster club is here to help. Yesterday the group issued a report claiming that spending $258 million in city money (really more like $334 million, but who’s counting?) on a new Kings arena would generate $11.5 billion in economic activity over 35 years — then managed to undercut its own numbers in the fine print:

[University of Maryland economist Dennis] Coates, who hasn’t yet seen the Sacramento study, added: “I’m pretty sure people eat and drink even if they don’t have a team in town that night.”…

The study said the arena and the surrounding development at Downtown Plaza would lead to $230 million in annual spending, not counting arena ticket sales. Factoring in inflation, that would add up to $11.5 billion in 35 years. Taking out the dollars that would be spent “regardless of the existence of the new facilities,” the net impact is reduced to an estimated $25 million a year, or about $1.25 billion over 35 years.

[Study author Cathy] Dominico [of Capitol Public Finance] defended the use of the larger number, saying she thinks the net figure is a gross understatement of the project’s true value because of the “catalyst” effect it would have on downtown.

I’ve seen an awful lot of economic impact reports, and agree with Coates that “basically they are just PR documents,” but this is the first time I’ve seen one actually calculate how much arena-related spending would be cannibalized from elsewhere in the city and then ignore that. If you have numbers for a “catalyst” effect, then by all means use them, but counting up every dollar spent in and around an arena and then declaring all of it to be the result of the arena when your own study shows that nearly 90% of it would be redirected from elsewhere … think we can get Cathy Dominico’s face on this page? I mean, what more could she do to deserve it?

Cathy Dominico, managing partner at Roseville-based Capitol Public Finance Group, which wrote the report on behalf of The4000 arena support coalition, said if anything, some of the estimated economic impacts in the report are on the conservative side.

“It’s spelled out to show we’re not using ridiculous numbers,” Dominico said.

For a report from the reality-based community, we’ll have to turn to the Sacramento News & Review’s Cosmo Garvin, who helpfully provided a long, in-depth analysis of the Kings arena numbers yesterday that included the following:

  • The city of Sacramento is planning to backload its arena construction debt, starting with $6.5 million a year in bond payments in 2016, and eventually rising to $23 million by 2035. This is in part so that about $3 million a year that’s currently being used to pay off downtown parking garages can be shifted over to help pay off the arena.
  • Mayor Johnson has claimed that these bond payments won’t affect the city’s general fund, but Sacramento State University economist Rob Wassmer says, “This is wordplay. The city’s current general fund will not be hurt by this—but the city’s future general fund will be hurt.” That’s because the new revenue (from ticket taxes and other fees) is only expected to amount to about $6 million a year, which isn’t even enough to pay off the arena bonds in the early years, much less the later ones. The city says that $6 million number will grow as city parking revenues grow, but unless you assume that all that growth comes as a result of the new arena, that ends up being money that would have gone into the city’s general fund if not for the arena debt. “There is a diversion of future general-fund dollars to this arena project that could be used for other city expenditures, or cuts to taxes or fees for city residents or businesses,” says Wassmer.
  • As for the projected economic-impact figures, “I’m open to some wild ideas, but that one just defies belief,” arena economic impact expert Geoffrey Propheter says of an earlier study’s claims of $7 billion in economic activity over 30 years. “A number like that gets pumped into the political system, people start parading it around as if it were gospel. Pretty soon, it’s ’Let’s rubber stamp this sucker.’ That’s a travesty.”
  • “Economic activity” just counts up how much money is spent within a city’s limits. How much of that would actually accrue to the people of Sacramento via new tax receipts that could be spent on actual services (or tax cuts)? Garvin notes that if the arena generates as much in sales taxes as the city’s current biggest sales-tax generator, the Arden Fair mall, it would add about $4 million a year in sales taxes: “Not nearly enough to cover the debt service on the arena, but every little bit helps.”

Perhaps Garvin’s most important point, though, is that even if there are some public benefits to spending money on a Kings arena, you have to compare them not to a baseline of doing nothing, but of what else you could be doing with the same money. “You’ve got to ask, ’Could we do something else with that $258 million?’” says Propheter. “Politically, that’s not a very appealing question, and no one asks it.”

It’s an important answer, though, to The4000 director Joshua Wood’s assertion: “I would honestly challenge anyone from the opposition – what is your plan for generating $11.5 billion?” Given that there’s a non-zero economic benefit just to lowering taxes — let alone doing something more targeted with the money that might generate more bang for the buck — it seems something worth exploring.

And as Propheter tells Garvin, it’s worth exploring even if it takes some time: “I’m a big fan of having a long, drawn-out conversation when you are making a policy choice to spend $258 million. It’s frustrating when these things get pushed through without a discussion.”

 

Kings arena deal tweaked again, media losing interest in explaining it

The Sacramento city council voted last night to change the list of properties being given to the Kings owners in a land swap, substituting three downtown parcels for 60 acres at Haggin Oaks golf course, and … man, even I’m having a hard time caring about this, especially considering that the new parcels are estimated to be about equal in value to the old one, and either way it’s only about $3 million, which is a drop in the bucket compared to all the money Sacramento would already be spending in the deal. What else you got?

The council also voted Tuesday to change the arena term sheet to allow the city to own the land under the planned arena; the city had already decided to own the arena itself.

Wait, now this is interesting! Would it change the property tax payments the Kings would be responsible for? Give the city a new asset that it could use if the Kings eventually move out? Tell us, Sacramento Bee!

Dangberg said allowing the city to control both the land and arena will “greatly simplify our agreement.”


Call The Bee’s Ryan Lillis, (916) 321-1085. Read his City Beat blog at www.sacbee.com/citybeat.

Nooooooooooo!
The draft environmental impact report for the Kings arena was also released this week; you can read it here in advance of tonight’s Sacramento council meeting, or just wait for the terrible coverage in tomorrow’s Bee.

Sacramento pro-arena group wants opposition to pay $100k cost of validating signatures

Sorry, neglected this weekend story out of Sacramento yesterday:

As elections officials took custody of 34,000 signatures demanding a public vote on the proposed subsidy for Sacramento’s new NBA arena, the two sides of the arena issue got into a squabble Friday over who should bear the costs of validating the petitions…

Earlier Friday, the pro-subsidy political committee formed by Mayor Kevin Johnson threw its first official jab, demanding that STOP pay the cost of validating the signatures. STOP’s president said his group wouldn’t pay.

On the face of it, this sounds insane — if groups that petition for ballot measures had to pay the cost of validating them, that would be a huge monetary hurdle — but the Sacramento Bee reports that the city “is responsible for the cost of validating the signatures but can ask one of the parties involved in an election to pay.” That’s clear as mud (is that “ask” as in “require” or “ask” as in “mother, may I?”), but so far no formal request has been made, anyway. The cost of the petition count is expected to be about $100,000.