http://www.sacbee.com/101/story/418021.html
Land is the new currency in sports
Private development at Cal Expo eyed as way to pay for arena.
By Terri Hardy and Mary Lynne Vellinga - Bee Staff Writers
Published 12:00 am PDT Saturday, October 6, 2007
Story appeared in MAIN NEWS section, Page A22
Land has become the new ATM for sports team owners who want better digs but can't get voters to part with the cash to build them.
The NBA's fledgling plan to build a new Kings arena at Cal Expo and pay for it with profits from private development on the state-owned site is the latest in a series of such proposals around the country.
"It's a new model that's very common," said Andrew Zimbalist, an economics professor at Smith College and an expert on sports financing.
Instead of raising sales or car rental taxes, governments can provide sports team owners with zoning changes or, in some cases, the land itself on which to build profit-making developments.
"There has been a real pushback by the public on taxes, so they're finding a way around that," said Dennis Coates, an economist at the University of Maryland, Baltimore County.
In Sacramento, NBA consultant John Moag embraced such an approach after last year's crushing voter rejection of a sales tax increase to build an arena in the downtown railyard.
Little is known about what precisely the NBA plans to propose. Moag and Cal Expo officials have just begun talks -- and there's no guarantee they'll reach a deal. But the basic idea is this: Cal Expo would lease part of its 360 acres to a developer who would make money by building housing, offices and retail.
"I've been told by commercial real estate brokers that the (Cal Expo) freeway frontage property could be valued at anywhere from $700,000 to $1 million an acre, but that was a couple of years ago when the market was hot," said Brian May, Cal Expo's deputy general manager.
May said Moag has told him the arena itself would require 18 acres. How much additional land could be made available remains to be negotiated. The fairgrounds and associated horse racing facilities occupy all but about 100 acres of the property, not including parking.
Any developer chosen for the project would pay Cal Expo rent for the land, and these payments could be used to pay off bonds issued to build an arena and renovate the worn fairgrounds -- work that could cost more than $650 million. On Friday, Gov. Arnold Schwarzenegger signed into law a bill by Sen. Dave Cox, R-Fair Oaks, that establishes a State Fair Leasing Authority that could issue such bonds.
Elsewhere in the country, the strategy of using development to drum up sports dollars has produced little in terms of bricks and mortar so far, but numerous plans are in the works.
The Oakland A's, for instance, control about 226 acres near Interstate 880. The A's envision developing the acreage into a "baseball village" with shops, housing and a hotel near the ballpark.
The availability of land took the A's to neighboring Fremont in search of a new home, said Keith Wolff, the team's vice president of venue development.
Wolff said the project would cover about one-third of the stadium's price tag. The rest could come from the team. Already, the A's have secured a $120 million naming rights deal with technology heavyweight Cisco Systems.
Land also prompted the San Francisco 49ers to tap Santa Clara as the team's preferred location for a new stadium.
The team is proposing to build an $854 million state-of-the-art stadium on a city-owned parking lot now leased by Great America amusement park.
The mother of all the new sports/development plans, however, is the proposal for a fleet of 16 high-rises surrounding a new Brooklyn arena for the New Jersey Nets. Designed by star architect Frank Gehry, the towers would contain 6,400 apartments and condominiums.
While such development plans hold appeal because they don't raise taxes, they still can stir controversy. They often involve less obvious public subsidies -- such as the donation of land or money for streets and utilities -- that can total many millions of dollars.
The city and state of New York are collectively spending $300 million for infrastructure serving the Brooklyn project by Forest City Ratner, a development firm headed by Nets owner Bruce Ratner. Opponents assert that the true subsidies for the development, including tax breaks for the housing, top $1 billion.
In Santa Clara, the 49ers are asking the city to provide $160 million, move an electrical substation and build a new parking garage -- a commitment of $222 million, said Carol McCarthy, deputy city manager.
The plan -- still being studied by the city -- doesn't specify how Santa Clara would come up with the money. One possible source is developing a city-owned 7.6- acre parcel in another part of the community.
A city study concludes the parcel could produce $1.9 million in rent annually to help repay stadium loans. Redevelopment funds are another possible source under consideration.
Any deal at Cal Expo would likely involve significant public spending as well. NBA consultant Moag has said he's counting on the city and the Maloofs, who own the Kings, to contribute 185 acres they own side by side in North Natomas.
A recent city appraisal estimates the value of the North Natomas land at $398,057 an acre, or $73.6 million.
Councilman Rob Fong, a supporter of the Cal Expo plan, said using the Natomas land makes sense. He noted that the property is constrained by an agreement requiring the city and the Maloofs to agree on any sale or development.
"We're hopeful that the majority of folks will understand that to make an arena happen, to bring about a new and improved Cal Expo, it would be well worth an investment on the city's part," Fong said.
Improving transit service to the traffic-clogged area around Cal Expo also would require assistance, said Councilman Steve Cohn. "We're going to need to put public money into transportation at a minimum," Cohn said. "I would say there's not going to be any general fund money."
He said the city could issue bonds for transportation improvements, which could be paid back by the developer's rent.
In order to support such hefty payments, new development at Cal Expo would likely have to be much more dense than the low-slung shopping centers, office buildings and single-family neighborhoods that now surround it.
Sacramento's draft city general plan calls for a satellite downtown -- complete with high-rise buildings -- near Cal Expo.
Cohn, whose district includes Cal Expo, said he's not sure how intense the development would have to be. Although it's sure to draw some opposition, Cohn said he thinks a development could be designed to mollify concerns.
"Traffic is an issue people would care about," he said. "And views. A lot of people don't want to see high-rises next to the American River Parkway."
About the writer: The Bee's Mary Lynne Vellinga can be reached at (916) 321-1094 or mlvellinga@sacbee.com.
Land is the new currency in sports
Private development at Cal Expo eyed as way to pay for arena.
By Terri Hardy and Mary Lynne Vellinga - Bee Staff Writers
Published 12:00 am PDT Saturday, October 6, 2007
Story appeared in MAIN NEWS section, Page A22
Land has become the new ATM for sports team owners who want better digs but can't get voters to part with the cash to build them.
The NBA's fledgling plan to build a new Kings arena at Cal Expo and pay for it with profits from private development on the state-owned site is the latest in a series of such proposals around the country.
"It's a new model that's very common," said Andrew Zimbalist, an economics professor at Smith College and an expert on sports financing.
Instead of raising sales or car rental taxes, governments can provide sports team owners with zoning changes or, in some cases, the land itself on which to build profit-making developments.
"There has been a real pushback by the public on taxes, so they're finding a way around that," said Dennis Coates, an economist at the University of Maryland, Baltimore County.
In Sacramento, NBA consultant John Moag embraced such an approach after last year's crushing voter rejection of a sales tax increase to build an arena in the downtown railyard.
Little is known about what precisely the NBA plans to propose. Moag and Cal Expo officials have just begun talks -- and there's no guarantee they'll reach a deal. But the basic idea is this: Cal Expo would lease part of its 360 acres to a developer who would make money by building housing, offices and retail.
"I've been told by commercial real estate brokers that the (Cal Expo) freeway frontage property could be valued at anywhere from $700,000 to $1 million an acre, but that was a couple of years ago when the market was hot," said Brian May, Cal Expo's deputy general manager.
May said Moag has told him the arena itself would require 18 acres. How much additional land could be made available remains to be negotiated. The fairgrounds and associated horse racing facilities occupy all but about 100 acres of the property, not including parking.
Any developer chosen for the project would pay Cal Expo rent for the land, and these payments could be used to pay off bonds issued to build an arena and renovate the worn fairgrounds -- work that could cost more than $650 million. On Friday, Gov. Arnold Schwarzenegger signed into law a bill by Sen. Dave Cox, R-Fair Oaks, that establishes a State Fair Leasing Authority that could issue such bonds.
Elsewhere in the country, the strategy of using development to drum up sports dollars has produced little in terms of bricks and mortar so far, but numerous plans are in the works.
The Oakland A's, for instance, control about 226 acres near Interstate 880. The A's envision developing the acreage into a "baseball village" with shops, housing and a hotel near the ballpark.
The availability of land took the A's to neighboring Fremont in search of a new home, said Keith Wolff, the team's vice president of venue development.
Wolff said the project would cover about one-third of the stadium's price tag. The rest could come from the team. Already, the A's have secured a $120 million naming rights deal with technology heavyweight Cisco Systems.
Land also prompted the San Francisco 49ers to tap Santa Clara as the team's preferred location for a new stadium.
The team is proposing to build an $854 million state-of-the-art stadium on a city-owned parking lot now leased by Great America amusement park.
The mother of all the new sports/development plans, however, is the proposal for a fleet of 16 high-rises surrounding a new Brooklyn arena for the New Jersey Nets. Designed by star architect Frank Gehry, the towers would contain 6,400 apartments and condominiums.
While such development plans hold appeal because they don't raise taxes, they still can stir controversy. They often involve less obvious public subsidies -- such as the donation of land or money for streets and utilities -- that can total many millions of dollars.
The city and state of New York are collectively spending $300 million for infrastructure serving the Brooklyn project by Forest City Ratner, a development firm headed by Nets owner Bruce Ratner. Opponents assert that the true subsidies for the development, including tax breaks for the housing, top $1 billion.
In Santa Clara, the 49ers are asking the city to provide $160 million, move an electrical substation and build a new parking garage -- a commitment of $222 million, said Carol McCarthy, deputy city manager.
The plan -- still being studied by the city -- doesn't specify how Santa Clara would come up with the money. One possible source is developing a city-owned 7.6- acre parcel in another part of the community.
A city study concludes the parcel could produce $1.9 million in rent annually to help repay stadium loans. Redevelopment funds are another possible source under consideration.
Any deal at Cal Expo would likely involve significant public spending as well. NBA consultant Moag has said he's counting on the city and the Maloofs, who own the Kings, to contribute 185 acres they own side by side in North Natomas.
A recent city appraisal estimates the value of the North Natomas land at $398,057 an acre, or $73.6 million.
Councilman Rob Fong, a supporter of the Cal Expo plan, said using the Natomas land makes sense. He noted that the property is constrained by an agreement requiring the city and the Maloofs to agree on any sale or development.
"We're hopeful that the majority of folks will understand that to make an arena happen, to bring about a new and improved Cal Expo, it would be well worth an investment on the city's part," Fong said.
Improving transit service to the traffic-clogged area around Cal Expo also would require assistance, said Councilman Steve Cohn. "We're going to need to put public money into transportation at a minimum," Cohn said. "I would say there's not going to be any general fund money."
He said the city could issue bonds for transportation improvements, which could be paid back by the developer's rent.
In order to support such hefty payments, new development at Cal Expo would likely have to be much more dense than the low-slung shopping centers, office buildings and single-family neighborhoods that now surround it.
Sacramento's draft city general plan calls for a satellite downtown -- complete with high-rise buildings -- near Cal Expo.
Cohn, whose district includes Cal Expo, said he's not sure how intense the development would have to be. Although it's sure to draw some opposition, Cohn said he thinks a development could be designed to mollify concerns.
"Traffic is an issue people would care about," he said. "And views. A lot of people don't want to see high-rises next to the American River Parkway."
About the writer: The Bee's Mary Lynne Vellinga can be reached at (916) 321-1094 or mlvellinga@sacbee.com.
