Field of Schemes

October 30, 2006

Secrets of the Kings MOU revealed!

The city of Sacramento lost its court case today, and was forced to reveal the details of its latest arena offer to Kings owners Joe and Gavin Maloof. The revelations, according to assemblymember Dave Jones, a prominent arena opponent, contain "a number of bombshells":

The city and county had offered to pay $45 million to build a 2,000-to-3,000-space parking garage, and to provide an additional 5,000 parking spaces within a ten-minute walk of the arena. (It looks like the Maloofs would get all the revenue from these spaces, though the MOU itself is unclearly worded on this.)
The city and county would have prohibited vendors who might compete with arena concessions from gathering on the open plaza outside during arena events. (In other words, no buying black-market kettle corn and eating it before you go in.) They also would have prohibited "inappropriate and non-compatible retail and commercial uses" from the surrounding development, although this apparently didn't go as far as the ban on competing restaurants that the Kings owners wanted.
The Kings would get all the money from selling naming rights to the plaza. And from a publicly subsidized billboard on Interstate 5. And from the governor's first movie. (Okay, I made that last one up.)

All of which seems to be the sort of stuff you'd want voters to know before casting ballots on the arena initiative. But hey - what's good enough for San Diego must be good enough for Sacramento, right?

We're No. 1!

FoS reader Bob Trumpbour notes that a new report ranks St. Louis and Detroit as the two most dangerous U.S. cities. Those are, of course, the same two cities that finished one-two in something else recently, in each case after building new baseball (and football) stadiums that were supposedly going to "revitalize" their urban cores.

The best line from the AP story on the report, though, has nothing to do with stadiums or baseball:

The bad news for St. Louis was good for Camden, N.J., which in 2005 was named the most dangerous city for the second year in a row.

Camden Mayor Gwendolyn Faison said Sunday she was thrilled to learn that her city no longer topped the most-dangerous list.

"You made my day!" said Faison, who has served since 2000. "There's a new hope and a new spirit."

Camden's new ranking: fifth-most dangerous city in the nation. They don't make hope like they used to.

October 29, 2006

Weekend update: More subsidies for Cards, Yanks

Once again, we go spanning the Internet for the latest stadium and arena news:

The St. Louis Cardinals didn't just steal a victory on the field last week; the team also won the $100 million in tax breaks they were seeking for their "Ballpark Village." According to the development plan announced on Friday, the $387 million project will get a total of $116 million in public subsidies, including $56 million in tax-increment financing from the city, $29 million in sales-tax increment financing from the state, $26 million from a 1% sales-tax surcharge in the stadium district and a $1 ticket tax on the Cardinals museum and other attractions, and $5 million in "city-issued bonds" that will apparently be paid off via elfin magic, because the Associated Press doesn't specify where the repayment funds would come from. (Of course, that's still better than MLB.com, whose allegedly "independent" reporter declared that "the project will not use any taxpayer dollars" - right before specifying that "$56 million will be requested through the City of St. Louis and another $29 million will be asked for from the state.") At least one state agency still needs to sign off on the deal.
There's finally a price tag on the new commuter rail station the state of New York is building for the New York Yankees: $45 million. In addition, according to the Journal News of Westchester County, "the platforms would be served by stairs and elevators and connected to a new 24-foot-wide overpass, which the city will pay to build" - no cost estimate mentioned. Beverly Dolinsky, who heads the MTA's Permanent Citizens Advisory Committee, told the paper: "We think the Yankees should be footing the bill. Here you have the richest team in baseball and the MTA is facing huge deficits and why aren't they footing the bill for this? I definitely think they should have a station there, and I've thought so for a long time, but I don't think [the MTA] should be paying for it."
Initiative 91 mastermind Chris Van Dyk says he's had two meetings with the owners of the Seattle Sonics in recent weeks, and is hopeful of working out a plan to renovate KeyArena without significant public dollars. "From talking to the new owners, they see different ways to skin the cat," Van Dyk told the Seattle Post-Intelligencer. "They're taking a much broader approach." One problem with I-91, though, is that in only limits city subsidies to sports teams, not state or county - which means the Sonics could always take the same "broader approach" that was used to get around the ban on city sports subsidies passed by Minneapolis voters in 1997.

October 27, 2006

As Kings vote gets going, the going gets weird

With 11 days to go before Sacramento's paired arena votes (and absentee balloting already underway), things just keep getting more bizarre. To wit:

Kings owners Joe and Gavin Maloof and negotiators for the city and county have all but given up on cutting an arena deal before the election, with Sacramento County Supervisor Roger Dickinson telling the Sacramento Bee, "We've all come to recognize we won't get a memorandum of understanding between now and the election." Dickinson, added the Bee, indicated that "the city and county were considering issuing a statement apprising voters of the status of talks."
Any statement, though, won't include any specifics of what they're talking about. Though a Sacramento judge ordered the city to reveal the contents of its latest offer to the Maloofs, the city is refusing, claiming it was only a draft document. An appeals court is scheduled to hear the case on Monday.
NBA commissioner David Stern told reporters that "in the absence of a deal between the city and the developer, I don't know what any fair-minded citizen of Sacramento is being asked to vote on."

So to recap: We have a pair of NBA team owners who are being offered possibly the most lucrative deal in league history, and are refusing to take it; a league commissioner who is effectively telling voters not to vote for said sweetheart deal; and local elected officials who are insisting on their right to throw money at a new arena for the team, even though the team insists it won't take it. All this, of course, is grandstanding to try to pressure the city and county to cut a deal before the vote, but it's pretty amusing nonetheless - assuming, that is, that you're not a Kings fan or Sacramento taxpayer.

October 25, 2006

NFL: L.A. $1B stadium price tag could prompt changes

NFL officials now estimate that a new or renovated stadium in Los Angeles could cost as much as $1 billion. While the league says it still hopes to return to the L.A. area, according to the Orange County Register, the soaring costs could lead to a change in game plan:

Commissioner Roger Goodell said Tuesday the league will "stay at it" as long as necessary to ensure the eventual return of pro football to the region. But to meet what he repeatedly termed a "challenge," the league might have to consider alternative solutions.

"We haven't been successful to date on the approach we've taken," Goodell said at the end of the league's fall meeting, his first as commissioner. "We do believe we've made some progress, but circumstances may change where we take a different approach as we go forward."

Just what sort of "alternative solutions" are we talking about here? Almost certainly, it means that the NFL will be backing away from its promise to fund the entire stadium cost itself, and instead start hitting up local governments for aid - even if only tax breaks and free land, as has become the trend.

And Dallas Cowboys owner Jerry Jones hinted at a strategy the league could take to achieve this goal: Instead of finding an ownership group and then selecting a site, pick a city first, and then find a team and an owner. This, you'll recall, is the tactic pioneered by MLB with the Montreal Expos Extortion-Go-Round; if the NFL decides to pit L.A. and Anaheim against each other in a bidding war for who can produce the most goodies in exchange for a team, maybe they should send Bud Selig a royalty check.

Washington, D.C. CFO Natwar Gandhi has come up with a figure for how much in penalties the city would face if it fails to build the Nationals the parking spaces required in their lease, and it's ... well, he's not saying exactly. The Washington Post cites unnamed government officials as saying Gandhi estimated $100 million as a worst-case scenario, but the paper backtracked to say "tens of millions of dollars" in its story on the matter.

Given that the added cost of new parking garages has been estimated at anywhere from $31 million to $75 million, the size of the penalty - and whether it would be cheaper for D.C. to just eat it - is a huge deal. For that matter, given that the city only needs to add 925 parking spaces (see comments) to meet its contractual requirement, perhaps just laying down some asphalt would do to avoid the penalty. Or maybe the Nationals owners, once they see that they're not going to get the thousands of new parking spaces that they want, could be convinced to chip in a few million more from their own massive coffers.

In any case, one thing's for sure: This project is going to be more expensive for the public than the $611 million promised back in March. Gosh, who'da thunk it?

After several rounds of subsequent e-mails with ESDC spokesperson Jessica Copen, I've finally gotten some answers:

The problems, as I've noted on the Village Voice website, include that there's no indication whether the numbers were adjusted for the substitution effect (money spent at Atlantic Yards might otherwise be spent elsewhere in the city) and leakage (money going to the Nets is less likely to recirculate in the local economy). The memo also states that all Nets players would be expected to live in New York state (and 30% of those in New York City), which is odd, considering that plenty of players on the city's existing teams choose to live in the New Jersey suburbs.

Finally, there's no way to tell how much of the "new" economic activity associated with the larger development would be cannibalized from elsewhere: Would the companies moving into the "Miss Brooklyn" office tower just be relocating from other parts of the city? Would the families moving into the new housing bring their own new jobs with them? The memo is silent on such matters, so it's impossible to say. It's just another indication of how economic impact documents are more art than science - or perhaps a careful blending of the two.

In the wake of the possibly illegal stadium finance deals worked out by the New York Yankees and Mets earlier this year, the Internal Revenue Service has proposed new regulations governing the use of payments in lieu of taxes (PILOTs) to pay off tax-exempt bonds. If the new regs go into effect following a scheduled public hearing on February 17, developers would no longer be allowed to use federally subsidized low-interest bonds for projects repaid via PILOTs unless the payments represent "a fixed percentage of, or reflect a fixed adjustment to, the amount of generally applicable taxes in each year, based on comparable current valuation assessments."

What on earth does that mean in English? First off, the basic dodge of the Yanks and Mets deals would still be intact: Developers could still use tax-exempt bonds for privately financed projects - normally a no-no - by calling their rent payments "payments in lieu of" property taxes they wouldn't have to pay regardless. What they couldn't do is set out a fixed schedule of PILOT payments ahead of time based on projected property-tax payments, as the baseball teams did. Instead, the PILOT payments would have to be pegged to actual annual property assessments, and would float year to year as the value of the property rose and fell. And since bond buyers really really don't like uncertainty in their bond payments, they'd doubtless demand that either the developer sell a smaller amount of bonds for the same projected PILOTs (to create a cushion in case of a shortfall), or buy bond insurance - either one of which would make the project more expensive to finance.

The Yanks and Mets bonds are long since sold, but the new IRS regs could come into play for the proposed Brooklyn Nets arena, which would use a similar tax-exempt bond plan. Matthew Schuerman of the New York Observer goes so far as to speculate that they may "imperil" the entire Atlantic Yards finance plan, but really, this is just a matter of forcing Ratner (or the public) to pay more to borrow the funds for it. Though it's worth recalling that this same problem - that bond buyers want to know where their money is coming from - is the same one that forced the New York Jets' Manhattan stadium plan to switch from tax-increment financing to fixed PILOT payments back in 2003. At what point might Atlantic Yards be too rich for Ratner's blood? That's between the man and his fleet of accountants.

Washington, D.C. mayor-to-be Adrian Fenty is proposing to spend an additional $31 million to build parking garages for the new Nationals stadium, but insists this wouldn't bust the $611 million spending cap the city council instituted last spring. Fenty, who was one of the strongest critics of the stadium deal when it first passed, is expected to formally introduce his bill, which as emergency legislation would require the backing of nine of 13 council members, at today's council session; I'll have more to report once further details become available.

You can probably stick a fork in the latest Sacramento Kings arena plans, after the Sacramento Bee, which has been largely supportive of the team, yesterday ran an editorial urging a no note on the arena ballot measures. "This pains us, so let's get it over with quickly," wrote the Bee editorialists, going on to note that there's still no memorandum of understanding for the project just three weeks before election day, and that city and county officials have refused to make public details of negotiations with the team. (Though the Bee did close by urging arena backers to come back with a new plan if this one loses in November.)

In response, the Sacramento city council promptly voted to continue to keep the latest arena plans a secret. "It's on the ballot; people need to know what's in it," said councilmember Steve Cohn, who argued unsuccessfully for release of the documents, which have been demanded by a lawsuit. "What are people voting on?"

Look up "train wreck" in the dictionary, and you'll find a picture of the proposed Sacramento Kings arena. Or at least you would, if anybody knew what it would look like, or even where it might be built.

And that's even before a previously threatened lawsuit that would charge that the plan to split the arena-funding vote into two measures (one to raise taxes, one to fund an arena with it) is illegal to begin with - or, as one potential litigant put it, a "transparent farce to deliberately circumvent the state constitution." See what happens when you don't pay your protection bill?

"We were told there was an offer by those in the small minority that opposed the venues to hire him if we did not. And we felt pressured to hire him because of that fact," Martins told the Sentinel. "In hindsight . . . it was an error in judgment on our part."

Martins further said that when Guetzloe recently criticized a performing-arts center that would be funded by the same tax hike as the arena, he immediately phoned the team's attorney to have him tell the commentator to cut it out, as it was a violation of their agreement.

Stop the presses! We have a price tag for the added public costs of building parking garages alongside the new Washington Nationals stadium. According to D.C. Mayor Anthony Williams, it will cost an additional $75 million to build 5,000 parking spaces, bringing the total project cost to $686 million - or just $253 million more than the mayor said it would when he first cut the stadium deal back in September 2004.

In order to get the added money, the city council would have to lift the $611 million spending cap that it approved back in March. Pro-stadium councilmember Jack Evans told the Washington Post that "under no scenario will the council raise the cap, in my view" - but then, he's said that before.

Making things even more interesting is that the next mayor of D.C. will almost certainly be Democratic primary winner Adrian Fenty, who was one of the strongest voices of opposition to the stadium deal on the council. Could Fenty tell the Nats that they'll only get the 1,225 parking spaces guaranteed in their lease, and if they want more they'll have to build them themselves? Probably not, but it does seem likely that this never-ending saga has a few more plot twists to come.

LATE NOTE: Of course, looked at another way, the latest D.C. stadium cost estimates are right on target. (Thanks, Progressive Review.)

No new reports on what the new price tag would be, but given that previous accounts have it potentially topping $700 million, that's probably a fair guess.

The Orlando Magic did indeed announce on Friday that they'd struck a deal with local officials for a new downtown arena. As for how much Magic owner (and Amway founder) Rich DeVos would be kicking in towards the $480 million project, well, that's complicated. Under the terms of the deal, the Magic would:

The actual Magic contribution toward the $480 million price tag, then, is probably somewhere around $70 million - though the Orlando Business Journal, apparently unable to tell the difference between a loan and a grant, came up with $204 million as the figure.

Local arena boosters, though, were just happy to see a deal struck, regardless of who was paying. Orlando Sentinel sports columnist Mike Bianchi was so excited that he hailed this "magical sign of the times" as having been possible "because everybody came together - [Orange County Mayor Rich] Crotty and [Orlando Mayor Buddy] Dyer, city and county, Disney and Universal - and realized it was time finally to get rid of the disco ball and join the 21st century." Actually, at a mere 17 years old, Orlando's current arena is about 90 years younger than the disco ball - but who's counting?

The early polls are in, and they show that Sacramento voters are overwhelmingly opposed to the proposed sales-tax hike to fund a Kings arena, with 58% saying they'd vote no and just 23% in favor. Reports the Sacramento Bee, which commissioned the poll:

In an attempt to sway voters, the Yes on Q & R forces are about to embark on a $2 million TV ad campaign, the largest ever conducted in California for a local ballot measure. And, of course, they can always call in The Commish.

Thanks to Andrew Pate, Trevor Mills, Mason Brown, Brian Borawski, Diane Firstman, Josh Safran, Matthew J. Wiegand, Save Fenway Park!, the NYC 20-Never Campaign, and all our anonymous donors for their generous help in making this website possible. Drops of water turn the mill...