November 04, 2011
Sacramento floats using parking meters to pay for Kings arena
With time running out for the mayoral public-private task force Think Big Sacramento to come up with an actual funding plan for a new Sacramento Kings arena, city officials have a new idea for raising money. Let's try to understand it, with the help of the Sacramento Bee's Tony Bizjak:
City officials said Thursday they are looking at ticket revenues as part of a still-forming plan to lease city parking services to a private company for cash.
Assistant City Manager John Dangberg said a consultant's early analysis has found that the value of city garages, parking meters and ticketing revenues is significant — perhaps hundreds of millions of dollars — and could play a key role in generating upfront cash to launch construction of an arena.
Okay, so the city would effectively sell its future parking revenues to a private company in exchange for an up-front cash payment, which would be used to help pay for an arena. So then what happens when the city notices it's no longer getting those parking revenues?
City Councilman Rob Fong said any parking funds used for an arena would have to be replaced by revenues from other sources to replenish any annual parking revenue loss to the city general fund, which pays for basic city services. That amount is undetermined, but could be at least $6 million annually.
Er, what? So in order to solve the problem of where to get money for an arena, the city would sell off its parking meters, and then would instead only be left with the problem of where to get money to replenish its parking-meter fund. That's some kind of contest, but it's not basketball.
Two questions for the peanut gallery.
In one of Neil's previous posts on Sacramento he wrote the following:
"A reader who was at last night's council meeting further reports that it's against state law to selling parking meters to a private entity, which would rule out that form of arena funding ... and that Sacramento doesn't have the bonding capacity to finance an entire $400 million arena, so would need other local governments chip in as well."
Is there any way of finding out how much bonding authority Sacramento has? Further, does anybody know what and where the mystery meter law is that prevents public parking from being sold or leased to a private company. It just seems like answers to these two questions are somewhat germane to this particular post.
By the way, over at ThinkBig they have "The Model Parking Concession Agreement" if anybody is interested at glossing over it (November 3rd, 2011).
www.thinkbigsacramento.com/informed/press
Posted by John on November 4, 2011 11:46 AM
John, after looking in the State code (posted in snippets in Bee comments yesterday), it seems like it's legal for Cities in California to sell its meters. I got that wrong in my original comments on this.
Posted by MikeM on November 4, 2011 12:04 PM
Mike: Been trying to figure out some of the parking numbers here in Sac and some of the regulations and what can and can't be done. Neil has already forwarded you my email address if you are interested in trying to figure some of this stuff out.
Posted by John on November 4, 2011 04:21 PM
In any event, Neil has this exactly right in his comments. Right now, the City realizes a "profit" of $6M/year on its parking operations. This money funds other things this government does. Whether those other things are appropriate or not is a topic for another day.
The City wants to preserve that $6M. So, fine, the lease will be written so that the purchase price is $X, and the company that leases the operations will agree to replace that $6M.
My position is that this will either leave the company that leases these operations with zero profits, or that parking regulations will have to expand by a huge amount, or that rates will go up. If I had to eliminate any of these three possibilities, it'd be the profit thing -- which means will see a sharp increase in number of tickets written and also in parking rates.
This is a way to raise money from the public without actually calling it a tax, and my guess is that it's completely legal. So, congratulations, they found a way to make the public pay more without actually raising taxes. There will be an opportunity cost here, but, eh, details.
It will ruin commerce downtown. They envision most people will park under a currently-existing mall. But if parking there is $20 on event nights, who will go to this mall to shop on event-nights? If that mall is empty on event nights, my guess is that it won't take long for this mall to be empty 100% of the time -- it will go under.
Same goes for Old Sac.
It's also within 1 mile of the Convention Center Theater, where parking rates will also rise a lot. So people going to take in a musical will also get to help pay for the ESC. That's bad enough, but also adds to a revenue stream the ESC proposes to take away from the Theater.
Also, read the Think Big document carefully. They're not just talking about lots and meters -- they're talking about ALL parking within City limits.
This is all such a poor idea. I hope Sandy Sheedy manages to get the vote she wants.
www.sacbee.com/2011/11/04/4029296/sacramento-taxpayers-should-get.html
Posted by MikeM on November 4, 2011 05:48 PM
It doesn't get said enough on this website (if ever)- Neil, you are one funny dude! That "it's not basketball" link was awesome!
Posted by Andrew T on November 4, 2011 07:25 PM
Chicago tried the same thing.
They sold the rights to city parking meter revenue for 75 years to some multinational conglomerate for around $1Billion to form some sort of... fund.
The company promptly jacked up parking rates, made the meters operate 24 hours a day, 365 days a year and is expecting to realize around $5Billion on the deal over the next 75 years.
And the money Chicago got? They're using it to plug holes in their budget deficits. It won't last more than a few years.
And something tells me Sacramento won't see such a lucrative offer as Chicago did...
It looks as though the Sacramento arena deal has claimed its first political victims:
www.sacbee.com/2011/11/07/4036876/group-targets-united-auburn-indian.html
Posted by MikeM on November 7, 2011 08:01 PM
Finally, someone in Sacramento talks sense:
www.sacbee.com/2011/11/09/4040393/financing-deal-for-arena-needs.html
I fully expect now that Robert Fong, Jay Scheniner and KJ will all get together and co-write a rebuttal.
Marcos Breton seems to be softening a bit, too:
www.sacbee.com/2011/11/09/4040555/marcos-breton-what-do-nbas-negotiating.html
Posted by MikeM on November 10, 2011 12:16 AM
FYI - The John above is very much not me. I know I have an ambiguous name but still just want to point that out because ... well yeah that is pretty weird.
Posted by John on November 10, 2011 11:58 AM
I don't know what kind of spam that was - logorrhea spam? - but suffice to say they've been, um, purged now.
Posted by Neil deMause on November 10, 2011 02:15 PM