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.

Sacramento mayor’s anti-arena-vote campaign upstaged by own goofy name

Sacramento Mayor Kevin Johnson has announced the launch of his campaign for a “no” vote on next June’s likely ballot measure on rescinding the Kings arena deal, and the big surprise is the absolutely nutso name he chose for it:

Flanked by labor, business and political leaders from throughout the city and region, Johnson said the new group – called The4000 – would work to protect the planned Downtown Plaza arena project, which he called a “once-in-a-lifetime economic game-changer that has an opportunity to transform downtown forever.”

No, KJ’s group isn’t based on a Frank Miller comic book: That “4000″ refers to the number of jobs that he says the arena construction will create. This is a claim that goes back quite a while, so far that I’m not exactly sure where it originated, or how many of those jobs would be 1) part-time, 2) short-term construction jobs, or 3) merely transferred from the Kings’ current home across town. A 2010 report on a previous Kings arena plan concluded that it would create only 229 jobs, which isn’t even enough to fight off an army of Persians — not to mention that “The229″ would sound … okay, not a whole lot dumber than The4000, actually. But I guess you have to take your memes where you can find them, and clearly somebody on Team KJ decided that having a reference to “JOB CREATION!!!” in the group’s title would be a good way of shifting the debate. Now to see if the arena opponents change their acronym from STOP to The$334Million.

Sacramento arena petitions delivered as city discusses debt plan

All kinds of micro-news in the Sacramento Kings arena deal:

  • Sacramento Taxpayers Opposed to Pork and Voters for a Fair Arena Deal delivered more than 35,000 petition signatures to City Hall yesterday. If 22,000 of those are validated, Sacramento voters will cast ballots next June on the Kings arena plan.
  • Sacramento’s debt issuance plan for the arena has been released. I just skimmed it and didn’t notice any significant new news, but it’s long and technical and has lots of tables with tiny type; I’ll give it another read later and see if anything else jumps out.
  • A report by a health care consultant (yeah, I don’t get it either) commissioned by a Sacramento city councilmember says that the arena deal won’t be any worse than some other deals, but could force Sacramento to dip into its general fund, but maybe not that much? I can’t actually find the report, but given that Sacramento Business Journal says it also cites “Memphis’ and Kansas City’s new arenas as net positives for their cities,” I’d rate its accuracy as questionable anyway. [UPDATE: The report is here. By "net positives" it actually means that in Kansas City and Memphis, the cities raised enough new taxes (mostly hotel taxes) that the arenas aren't going into default or dipping into the general fund. Yay?]
  • The Kings have revealed that their “minimum asking price” for naming rights to the new building is $120 million over 20 years. Which is a nice ask, and they might get it, but as anybody who’s sold anything on eBay knows, you don’t always get what you ask for. Or in this case, you might get it but only by kicking in other rights (additional ad boards, sponsorship rights, whatever) that would make the deal more valuable to your sponsor.

Post-Thanksgivukkah stadium news roundup: Cubs beer sales, World Cup crane collapse, Vikings steel imbroglio

So it’s Thanksgivukkah+1, meaning that most of you are either sleeping off turkey latke comas or looking for Black Friday deals on smartphone-enabled Furbies. But there might be somebody sitting in an otherwise-empty office today scouring the web for things to read, so what to do? I know — bullet points, to cover some items that slipping through the cracks while we were focused on more urgent (or at least more bizarre) matters:

  • Chicago alderman Tom Tunney, the sometimes-nemesis of Cubs owner Tom Ricketts’ Wrigley Field renovation plans, has proposed a new “sports venue plaza liquor license” that would allow any sports stadium with a capacity of 30,000 or more — in other words, the Cubs, White Sox, or Bears — to sell alcohol in adjacent pedestrian plazas. This isn’t necessarily a bad thing or anything — given Wrigley’s small footprint, it wouldn’t hurt to get some of the beer-buying activity out of the baseball-watching part of the building — but it is a concession to the team, just as the Boston Red Sox‘ ability to use Yawkey Way for food sales is — and at the very least something you’d think the city could trade off with Ricketts in exchange for, say, not putting up illuminated ad archways over city streets. It also probably won’t make local bars too happy that Cubs fans will have more places to drink inside the park, but them’s the breaks.
  • Brazil’s much-beleaguered World Cup preparations got even more beleaguered on Wednesday when a crane collapsed at a stadium under construction in São Paolo, killing two workers and likely delaying the stadium’s opening until at least February. The World Cup doesn’t start until June, but still, the crane accident is only likely to exacerbate the cost overruns that have many Brazilians wondering why the hell anybody would want to host a World Cup anyway?
  • Construction is about to begin on the new $1 billion Minnesota Vikings stadium, and former state representative who Tom Rukavina is upset that the structural steel will be imported from Europe instead of brought in from Minnesota’s Iron Range, as required “to the extent practicable” by a provision that Rukavina inserted in the stadium bill. Only problem: The Iron Range doesn’t actually directly produce structural steel. Anyway, the Gov. Mark Dayton has promised that Minnesota firms will be on the job fabricating parts from the steel, so everyone can rest easy about the project. Except for, you know, all the money it’s costing Minnesota taxpayers to create a few steel-fabricating jobs.

And that’s enough for now — if you really want to read Marcos Breton’s latest puff piece talking about how awesome the Sacramento Kings arena will be for downtown, do it on your own time. See you Monday.

The latest Sacramento Kings arena plans, presented entirely in attempts at spin

Sacramento Kings officials presented arena “concepts” to the city council yesterday, including a bunch of renderings that, the Sacramento Bee stresses, “are not arena renderings.” Presumably this means “they’re just a bunch of random sketches that the Kings threw together so that we could put up a slideshow, because man, do slideshows bring in the hit counts — hey, have you looked yet at our slideshow of not-arena-renderings?”

So if the drawings aren’t meant to look like what the arena actually will, we’re left with what Kings officials said at the presentation. Which was apparently such a tsunami of p.r. verbiage that it’s best just to present it with no context or attribution or anything, just as pure unadulterated spin:

“We want to figure out how to knit the street grid back together. We can’t do that literally – (the arena) is bigger than any city block – but you can create the possibility of moving through the site.”

“We want people to walk there at 2 o’clock on a Thursday afternoon and enjoy being there.”

“We want to blur the lines of whether you’re sitting inside the arena or you’re outside.”

“It doesn’t make sense for us to build a big, giant building. When we go to the (NBA) Finals, and we will get to the Finals, we know we can address (the need for more seating) to pump up the crowd.”

What this seems to add up to, reading between the lines, is: “We don’t want to spend a lot of money building a building that we can’t sell out on a nightly basis, so instead we’re going to put some folding chairs outside and let people peek in through a window. Also, we know that arenas create giant obstructions to the streetscape, but this one will be different because, um, architecture!”

Which is a nice goal, but it’s far easier said than done. Kings officials are getting really good at the saying part, though.

Sacramento arena gets new opponents, outdoor “seats”

Now that the disputed Sacramento Kings arena referendum petitions that were gathered by signature gatherers who were paid with money wannabe Seattle arena builder Chris Hansen are being submitted anyway, you might think that Sacramento is finally over this whole referendum-signature-controversy mess. But no, because apparently whoever is scripting this show has decided to throw in one more incomprehensible plot twist:

With support from nonunion contractors who have been locked out of the project, a new Sacramento citizens’ group was formed today to fight the proposed $258 million taxpayer subsidy for the new Kings arena downtown.

The new group, Voters for a Fair Arena Deal, will gather signatures for a ballot initiative launched months ago by another group opposed to the arena subsidy. But Voters for a Fair Arena Deal took pains to separate itself from the original effort and said it will “limit communications” between itself and the first group, Sacramento Taxpayers Opposed to Pork.

That’s right, the Kings arena has pulled off the rare feat of being opposed by a group of construction companies. But they’re construction companies that aren’t going to get a cut of the swag, so they’re all mad and stuff.

The new group was actually announced by Craig Powell, head of the watchdog group Eye on Sacramento, which you’ll recall from its excellent report on why the arena deal was a hot mess. Joining with a nonunion labor group seems a bit of a case of odd bedfellows — Powell said yesterday that “we are not opposed to a public subsidy for an arena, [but] what we are in favor of is an arena subsidy we can afford,” then declined to give specifics, other than that the group would push for eliminating the “project labor agreement” that gives preference to union contractors, because duh.

Meanwhile, Kings president Chris Granger announced that the proposed arena would have its seating capacity scaled down from a planned 18,500 to 17,500 or even less, possibly making it even smaller than the Kings’ current arena, which holds 17,317 and has been derided by the team as too small. But no worries, as according to the Sacramento Bee, the Kings have dispensed with the old notion that fans watching the game actually have to be at the game:

the $448 million Downtown Plaza facility may have far fewer seats than originally proposed, possibly fewer than at old Sleep Train Arena, but could pack more patrons in, nonetheless, by offering special standing-room-only ticket sections and a dramatic outdoor plaza seating area…

The Kings are talking about offering a number of standing-room-only tickets for fans to watch the game in open areas behind the arena’s lower seating bowl or on what officials say would be a dramatic “bridgeway” over one end of the arena, offering bar seating, couches, and a railing overlooking the event floor.

At one end of the arena, the Kings say they envision a glass wall that slides open onto a plaza at Sixth and K streets, making the arena an indoor-outdoor facility. Ticket buyers for some events, such as concerts, would be able to sit in the plaza with a view of the stage through the open glass wall, as well as via video screens in the plaza. The outdoor area could boost arena capacity by thousands for some events, Kings officials said.

Hey, here’s an idea: How about selling tickets to watch events on padded seats, in private suites among the company of your selected guests, via state-of-the-art high-definition video technology? We could call it tele-vision.