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March 09, 2008
Sacramento arena running in place
In case you've been wondering what's up with the latest Sacramento Kings arena plans, the answer is not much. The Sacramento Bee reports that negotiations between the NBA and Cal Expo, where the arena would be built, are moving slowly; furthermore, the slumping real estate market has endangered the funding plan, which would finance arena construction by using proceeds from development of Cal Expo's land. Continues the Bee:
A big hurdle is figuring out how to finance the arena and the fairground improvements upfront, when profits from building might be deferred for years.
Participants in the discussions said ideas include using Cal Expo's authority to float bonds and paying them back with revenue from the development. A surcharge on food, beverages and parking within the Cal Expo borders could be used as a revenue stream.
In other words, Cal Expo, which is a state-run agency, would use its own revenues to build the arena, and would gamble on enough development occurring over the next couple of decades to break even. With ideas like these, no wonder negotiations are going slowly.
The interesting part of this, if there is one, is that the day before the article you refer to here came out as "breaking news", and said Wilson and Moag might have something to say in about 2 weeks. Posters at the Bee website were all over that one...
Then this "permanent" article came out, painting a very, very different picture.
I'll be very surprised if anything of value comes of this at all. I guess we'll see.
I think what happened was that the "powers that be" read the "Breaking News" article and called BS, at which point the Bee writer had to retool the article. Metaphorically, the first article was the blueprint for a bridge, and the final article was the design spec for a sports car; mechanical engineering was required for each, but a sports car is clearly not a bridge.
Posted by MikeM on March 9, 2008 08:17 PM
You ommitted a few details from the story:
(from SacBee 3/11/08)
Yet both representatives of both the NBA and Cal Expo say that the state of the economy is not an insurmountable obstacle. "The current economic environment has a psychological impact, but this is a 20-30 year development project," Walsh said. "That horizon goes far beyond the current economy; so it's not a major driver." (end quote from SacBee)
Another option is to have a developer pay for the project outright in exchange for a long-term development lease, which is (in my opinion) a more likely scenario.
Posted by DFS on March 11, 2008 01:49 PM
The Walsh quote is just a weak attempt at spin - development plans are crashing and burning all over the country right now, regardless of whether they're "30-year projects" or not.
I can maybe see a developer paying for the arena up-front, but then they're taking on all the risk that the development rights will actually be worth all that. Two years ago, that might fly. Today, not so much.
Posted by Neil on March 11, 2008 02:13 PM