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

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

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.

Sacramento spending $4m in public funds on giant poorly-colored Piglet

Sacramento is spending $8 million, half of it public money the rest contributed by private donors, to buy a Jeff Koons sculpture to put outside the new Kings arena, plus another $1.5 million in private funds to buy some local art so that local artists don’t feel put out about a guy from New York getting all the money.

And really, that’s all I have to say, except that finally Red Grooms has a shot at being displaced for the ugliest piece of sports venue art.

Everybody suing everybody else over everything, same as usual

Lawsuit news! Nothing but lawsuit news!

Yeah. I think you can see why I don’t always report on every piece of lawsuit news: There’s nothing stopping anyone from filing suit for any reason, so while it’s often interesting to know what’s being challenged in court (hey, you never know what might succeed), most of it ends up being just a lot of legal fees signifying nothing, and there are more important things going on. Today’s a slow news day, though, so a perfect day to play catchup, and give you all some information for filling out your restraining order brackets.

Business prof says Kings arena could bring MLS team, TV station gets all excited

What the what, CBS Sacramento?

Economists: Downtown Sacramento Kings Arena Could Pave Way For MLS Franchise

That … doesn’t even make any sense? Certainly Sacramento is vying for an MLS expansion franchise, along with everyone else on the planet, and maybe having successfully thrown a whole lot of money at the Kings would help convince the soccer league that they could have money thrown their way, too. But from an economic perspective, what does one have to do with the other? What kind of economists are these, anyway?

Sacramento State economics professor and Wells Fargo wealth adviser Sanjay Varshney says if that arena wasn’t under construction, there’s no way anyone would be talking about the possibility of an MLS stadium coming to the railyards.

“The fact that Sacramento succeeded in keeping the Kings here and are putting in a new arena will be a factor in whether or not we actually get soccer now,” he said.

So, first of all, that’s not economists, plural, it’s one economist. (No one else is cited by name in the CBS Sacramento story.) And second, it’s arguably not even one economist, because while Varshney does have a master’s in economics, he’s actually he’s a finance professor at Sacramento State’s business school, who recently stepped down as dean to work as an investment advisor for Wells Fargo’s wealthy clients.

Not that this makes Varshney unqualified to speculate wildly about how MLS will pick which cities to expand to, any more than any of the rest of us are. But hanging an entire story on this, and spinning it as something “economists” predict, is a low point even for TV news.

Back in the real world, meanwhile, MLS officials heard pitches from would-be owners in Sacramento, Minneapolis and Las Vegas for the last expansion team of the passel being handed out by the league this decade. A decision could be made by the league Board of Governors meeting on December 6, or not.

Downtown Sacramento traffic, already getting F grade, to get super-double-F once Kings arena built

The new downtown arena for the Sacramento Kings is going to cause lots of traffic in downtown Sacramento. I know, duh, but there are, like, official traffic guys saying this, so:

Jim Calkins, the head of freeway operations for the Sacramento area, wrote in one email, “I think the minimum number of vehicles would be 8,000 — not 3,600.”

In another email, a transportation planner for Caltrans wrote, “There was no feasible way to mitigate those impacts.”…

The Kings, as the developers of the new arena, are required to pay impact fees to mitigate the costs of traffic projects.

The initial calculations based on the building size required a $310,000 fee.

The Kings have agreed to pay more: $500,000.

But Caltrans officials said that’s a drop in the bucket compared to what any other transportation project would cost.

There are plans for a new streetcar line and expanded highway ramps, but neither will be in place by the time the new arena opens in 2016, so there are likely to be some decent-sized traffic nightmares, at least at the start. Think this is maybe something that Cobb County should be paying attention to as well?

Free luxury suite for Sacramento pols in Kings arena deal raises eyebrows

We’re starting another travel week for me, so expect posts to be somewhat sporadic and abbreviated — like this one:

As part of Sacramento’s deal to spend $226 million (or more, depending on how you count) on the new Kings arena, the Sacramento mayor’s office will be getting a luxury suite of its own to be used for “city business.” Some people are not happy:

“For me,  I didn’t feel it was appropriate,” said outgoing city councilman Darrell Fong.  “I think it’s a perk, and I saw this, and I’m definitely not going to use this. If the city has business there, that’s great. But how does the public benefit from that?”

Which was entirely predictable:

Roger Noll, a Stanford economics professor who has researched arena deals, told KCRA 3 that suites aren’t given to all cities during arena negotiations.

“Most cities don’t do that, but some do, because usually it’s a political hot potato. But if you can get away with it, you do,” he said.

It’s entirely possible that City Hall will end up deciding to give the suite to charity or something, as has happened in other cases. (Which I don’t have time to look up right now. Abbreviated, remember?) But for now just add it to the list of ways that City Officials Do Things That Make It Look Even More Like They’ve Been Bought Off Than It Did Already.

Kings say new arena will be bigger, smaller, more expensive, not more expensive

According to the Sacramento Bee, the new $477 million Kings arena, being built with about $226 million in public subsidies after years of bitter fighting, is needed to replace the “outmoded and inadequate” Sleep Train Arena that had among the fewest seats in the NBA, even though the new arena will also have among the fewest seats in the NBA, but that won’t matter because it will have more luxury suites, but only 34 instead of 30 because NBA teams have learned it’s not good to have too many luxury suites especially in a city like Sacramento with no major corporations, but there will be more high-priced seats anyway but there won’t be a “massive” price increase but listen it will make more money it just will that’s the whole point don’t ask questions okay?

Anyway, Kings President Chris Granger promises that the lower seating bowl at the new arena will hold 10,000 fans instead of 7,800 at the old one, which will bring fans closer to the action because being at the back of a larger lower bowl is somehow better than being at the front of a closer upper bowl? It must be some kind of non-Euclidian geometry thing. I hear modern architects are doing great things with toroidal space.

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:

Kings arena approved, Sacramento pols stare at skies awaiting manna

As expected, the Sacramento city council approved the final Kings arena plan last night, by the same 7-2 vote that they always do. The city will now go ahead with selling $298.4 million in bonds for the $477 million project, with about $226 million of that ultimately coming out of the public’s pocket.

For arguments why this is a terrible idea, see Eye on Sacramento’s lengthy report on the final arena deal. Meanwhile, everyone else is too busy celebrating:

Mayor Kevin Johnson declared “Long live the Kings” after the final vote, and the chamber erupted in cheers along with team owners…

“This is certainly bigger than basketball,” [Kings president Chris] Granger said. “But it doesn’t just end there. At the very core, this project is about community.”…

“It’s not just about a venue for entertainment and sports; it’s about the type of life that people get to have when they choose to live in our region,” Councilwoman Angelique Ashby said.

And then there’s this report, also from KCRA:

Developers are getting ready to drop millions of dollars to change nearly everything immediately around the site of a new arena, the Downtown Plaza shopping center.

Across the street from the shopping center on its west side and its east side — Third and Seventh streets – developers are hoping to turn empty store fronts and empty buildings into stores, restaurants or apartments.

Normally I would say “don’t hold your breath,” but — actually, let’s go ahead and say it, because there’s no reason to build stores, restaurants, and apartments just because there’s an arena nearby that will have activity, say, 100 or so nights a year. But moving the Kings from the outskirts of town to downtown will shift some spending, so if there have been developers licking their lips and waiting for a reason to put up some new buildings downtown, a couple nights a week of NBA and concert fans traipsing through is not the worst excuse, maybe?

The bigger question, if this development does materialize, is whether a Kings arena was the best way to jump-start construction downtown, and whether the overall benefits to the city end up being worth $226 million. Again, I wouldn’t go holding my breath, but we’re going to find out one way or another, because the Jiffy Pop Arena is now set to become reality.