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December 09, 2011
Sacramento releases no details of arena funding
Big news! According to a headline in the Sacramento Business Journal, "Sacramento releases details of arena funding," citing "a report that will be unveiled at Tuesday's City Council meeting." And what are those details?
- The city of Sacramento will contribute "between $170 million to $245 million" that it will collect in exchange for future parking revenue, less $52 million in remaining debt that it has yet to pay off on its parking garages.
- Developers ICON-Taylor, the NBA and the owners of the Kings will pay the rest via "a financing strategy that includes both private and public contributions."
So that's ... uh, exactly the same details we had last week. Only with $52 million less from the parking money. And still no indication how Sacramento will replace the $9 million a year it currently collects from parking fees. They sure don't make details the way they used to.
No details also means that our local press hasn't asked the question of how much more residents of downtown Sacramento and the 1,000s who drive in every day will pay for parking. And still, more silence from the Maloofs, who are going along for the ride, until the NBA contracts or moves the Kings.
Posted by JJO916 on December 9, 2011 12:13 PM
I've been trying to add all this up, and I can't.
First, the document says that revenues raised from parking meters must, by State law, go to specific purposes. To quote the document, "Due to limitations imposed by the State of California's Vehicle Code, it is likely that the City could not grant an operating lease for parking meter operations nor spend parking meter net revenue on an ESC."
In other words, parking meters are off the table.
That leaves a valuation of $139M-$185M.
Let's suppose they get a contract for $185M; then they must pay off current bonds on the lots for $52M, which would net them $133M.
On the other side of the ledger, we have two debts to pay off: The new arena ($406M) and the existing debt ($67M), which is a total of $473M in debt.
$473M - $133M = $340M "unfunded" balance.
Now, I know AEG and the Maloofs are planning to kick in something, but can anyone see them kicking in more than $200M in total between them? Assuming $200M, that means we'd still have to sell $140M in bonds, which would produce a $12M or so annual debt service. Oh, and we lose a $9.4M annual revenue stream (a revenue stream that is growing, by the way).
This means if the arena cannot produce $21.4M in new revenues for the City, it will not "leave the general fund whole."
It is not adding up.
If someone has an obvious correction to my math, let me hear it.
(One funny thing about the comments regarding meters: They speculate they may be able to modify State law to allow meter revenues to go to other purposes. By March 1, they're going to do this. I'm skeptical.)
Posted by MikeM on December 9, 2011 05:20 PM
Your math looks good to me. I get the sense they're hoping if they swirl the funding around on their plate enough, nobody will notice the $340m in debt left hidden under the spinach.
Posted by Neil deMause on December 9, 2011 05:43 PM
MikeM - Did you forget to put in the $30-60 million land sale?
Posted by John on December 9, 2011 06:00 PM
John, that is in the back of my mind, for sure... But such a deal would have to be completed by March 1 to avoid a bond sale, wouldn't it?
Anyway, Think Big has forgotten a few of their own details, too. This was going to be a regional effort; remember?
I suppose they could form a JPA to cover any AEG/Maloof shortfall. That is a possibility. I wouldn't call that probable, though. If we tried to include Yolo, Sutter, El Dorado and Placer counties, you'd probably be looking at all these Boards unanimously declining to participate.
Posted by MikeM on December 9, 2011 07:03 PM
Yeah no chance they are successful with a JPA this late in the game.
As for the property, yeah they would have to have bonds or try to do that whole green card thing kind of like what the Nets are doing.
Posted by John on December 9, 2011 09:42 PM
Doesn't the city also have to put the money back into the fund they used to buy the property the arena would be on?
Posted by John on December 9, 2011 11:03 PM
John, the last I heard, yes, they have to rebate Measure A.
Posted by MikeM on December 10, 2011 04:13 AM
Big meeting tonight:
blogs.sacbee.com/city-beat/2011/12/sacramento-council-on-verge-of-approving-key-arena-vote.html
I fully expect this to proceed after tonight. I have no doubt at all.
Posted by MikeM on December 13, 2011 07:09 PM