It’s time to play “What’s Wrong With This Arena Impact Report,” with your special guest, University of the Pacific Business Forecasting Center director Jeff Michael! Take it away, Sacramento Bee:
The planned construction of a new Kings arena in downtown Sacramento should provide a significant boost for the area’s economy and job market, a University of the Pacific forecaster said today.
Although the region’s job growth will remain modest this year, the effect of arena construction should begin to be felt sometime next year, said UOP’s Jeff Michael in his quarterly forecast.
Michael, director of the university’s Business Forecasting Center, said California and the Sacramento area are experiencing another year of moderate economic growth this year. Prospects should improve statewide in 2014, he said, and the arena effect in Sacramento will bring a spark to the region’s otherwise “tepid job growth.”
I bet you’ve already spotted the problem here, but to make it easier, let’s make this multiple-choice. Is it:
- The Sacramento arena financing plan still hasn’t been approved by the city council, so it’s uncertain at best whether the project will get underway and start hiring people until well into 2014.
- Sacramento is paying for the arena out of future parking revenues (and probably hotel taxes as well), yet Michael fails to take into account the opportunity cost of the lost economic activity that would arise if the city were spending that money elsewhere (or lowering taxes with it).
- Even if the arena does start construction soon, and does front-load the 6,000 construction jobs that the city is promising, the short-term effect on unemployment may be fairly modest. The unemployment rate in Sacramento County is 9.2%, out of a labor force of 679,939. That would mean the arena could put one out of every eleven unemployed county residents to work — assuming they’re all trained construction workers, of course. If not, then the project would have to bring in workers from elsewhere, not helping Sacramentans any. And, of course, those jobs would disappear once the arena was complete — but the construction bills would keep on going.
And the answer is: all of the above!
Now, for your bonus question: When Michael wrote that the arena project “has the potential to accomplish broader city goals and help other city assets like the Convention Center,” what is the appropriate response?
Oh, I’m sorry, the correct answer was “shake your head sadly, with just the faint hint of a bitter laugh.” But we have some lovely parting gifts.