New arena cost revealed at near $400M

PurpleHaze said:
Yep, I saw the number but we all know that with inflation that's currently on the rise and assorted cost overruns it will surely not come in under $370M.
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But construction costs are going down due to lower labor costs. Inflation should be factored in if the project is delayed. Orlando's entire project was only $10 mil over. That included the parking etc.
 
It is good to have a number. I have seen the skeptics take this number and inflate it themselves. I watched the number grow from $350 million to over $500 million with just a posts. The fish just kept getting bigger and bigger.
 
lol that retarded BBBgirl or whatever on sacbee put the cost at over a billion rofl... What a dummy.
 
Sort of a transparent tactic. Just inflate the numbers to scare people. As if 370 million isn't scary enough! I'm looking forward to seeing this report on Thursday.
 
When Taylor/ICON made the presentation that got them selected to do the feasibility study, they estimated between $350-400 million. So they were pretty much right on. They said the $500 million that kept being tossed around was ridiculous.

Governement and construction were the main drivers of the Sacramento region's economy. Construction is still way down in this area. Housing was a big part of the construction boom and that's just not really an option right now, with so many distressed properties on the market. Housing prices are still going down right now. I don't think we'll see much of an increase in construction costs any time soon. Certainly nowhere near what costs were before the crash.

The contractors working on my current government subsidized construction projects are ecstatic to have the work and that includes their suppliers and subs, too. Most of the bids on my projects have come in well under pre-bid estimates. Sometimes, that has enabled more work to be done than planned. This is a good time to invest in building/construction.

I can hardly wait to hear the presentation to the city council this Thursday. Then maybe we can start the campaign rolling. :)
 
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Gary said:
lol that retarded BBBgirl or whatever on sacbee put the cost at over a billion rofl... What a dummy.
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Some people count the infrastructure costs. I don't know if BBBgirl did. However, that's still stupid, because the city already has committed to providing $1 billion to infrastructure in the railyards over the period of buildout. That's with or without an arena downtown. To build anything there, you have to have insfrastrucure. I can't remember what the estimated buildout time is, but it's at least 20 years; maybe 30?
 
Cowboys Stadium went over budget by $500 million, so it's entirely possible for the initial figure to increase. It's also unlikely, given that the entire project would be under intense scrutiny.

Also, kennadog is right. This is the ideal time to have construction labor done, because costs are low.
 
Superman said:
Cowboys Stadium went over budget by $500 million, so it's entirely possible for the initial figure to increase. It's also unlikely, given that the entire project would be under intense scrutiny.

Also, kennadog is right. This is the ideal time to have construction labor done, because costs are low.
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You probably know this but others may not: the cost over-runs on Cowboy stadium were done at Jerry Jones expense because he wanted to have the grandest stadium in the history of the world.
 
kupman said:
You probably know this but others may not: the cost over-runs on Cowboy stadium were done at Jerry Jones expense because he wanted to have the grandest stadium in the history of the world.
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They accomplished what they set out to do. Cowboy stadium is the grandest most magnificent stadium in the world.
 
fansinceday1 said:
They accomplished what they set out to do. Cowboy stadium is the grandest most magnificent stadium in the world.
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Yep. We just need a basic sports & entertainment arena that will work for our town and not something Jerry Jones might dream up. Maybe later down the line we can think about replacing Raley Field with a big stadium that would actually impress 'ol Jer.
 
Construction costs are not going to be significantly lower at all on a project like this than any time in the recent past. At first glance, someone would say of course, construction is slow, so obviously the contractors will drop their prices because they all need the work. This is true to an extent, but not enough to make any discernible difference to the public.

As this project will be at least partially public funded, all the labor will be subject to prevailing wage rates, which is a predetermined wage rate negotiated for the most part between labor unions and the state. These rates include a certain amount of raise every year, which once again is predetermined, and will take effect no matter how good or bad the construction industry is doing at the time.

Material prices really aren't much lower, for the most part, than they have been in the past. In fact, metal prices are once again on the rise, which affects everything from copper wire to rebar to ductwork to the structural steel in building, and concrete is also on the rise again. Add to that the rising fuel costs and I would expect the material costs for this building to be as high as they have ever been, possibly barring acouple years at the peak of the boom. These suppliers have had plenty of time to adjust, and have just backed off their production in order to keep the prices as high or near as high as they have ever been.

So with not much chance of saving money in either labor or material costs, the only real way to save at all is by the contractor/subcontractors willing to lower their profit margins in order to get the job. The problem here is that this project will be huge, and there are only a limited number of companies in each phase of the construction that are able to do a job this big. Sort of an oligarchy if you will, and of these few companies able to do the work, these were exactly the business model that was hit the hardest by the construction slowdown, and where there were maybe 4 masonry contractors 6 years ago in Northern California that could handle a job like this, now there are probably only 2, and both of these guys need all the profit they can get, so you're not really going to see much savings here either. (This was just hypothetical, I'm not sure how much masonry will even be in the building, but its the same for most trades)

Bottom line here is that prices are always rising, and just because there are a bunch of out of work house framers around doesn't necessarily mean that anything will cost less.
 
kpm308 said:
Construction costs are not going to be significantly lower at all on a project like this than any time in the recent past. At first glance, someone would say of course, construction is slow, so obviously the contractors will drop their prices because they all need the work. This is true to an extent, but not enough to make any discernible difference to the public.

As this project will be at least partially public funded, all the labor will be subject to prevailing wage rates, which is a predetermined wage rate negotiated for the most part between labor unions and the state. These rates include a certain amount of raise every year, which once again is predetermined, and will take effect no matter how good or bad the construction industry is doing at the time.

Material prices really aren't much lower, for the most part, than they have been in the past. In fact, metal prices are once again on the rise, which affects everything from copper wire to rebar to ductwork to the structural steel in building, and concrete is also on the rise again. Add to that the rising fuel costs and I would expect the material costs for this building to be as high as they have ever been, possibly barring acouple years at the peak of the boom. These suppliers have had plenty of time to adjust, and have just backed off their production in order to keep the prices as high or near as high as they have ever been.

So with not much chance of saving money in either labor or material costs, the only real way to save at all is by the contractor/subcontractors willing to lower their profit margins in order to get the job. The problem here is that this project will be huge, and there are only a limited number of companies in each phase of the construction that are able to do a job this big. Sort of an oligarchy if you will, and of these few companies able to do the work, these were exactly the business model that was hit the hardest by the construction slowdown, and where there were maybe 4 masonry contractors 6 years ago in Northern California that could handle a job like this, now there are probably only 2, and both of these guys need all the profit they can get, so you're not really going to see much savings here either. (This was just hypothetical, I'm not sure how much masonry will even be in the building, but its the same for most trades)

Bottom line here is that prices are always rising, and just because there are a bunch of out of work house framers around doesn't necessarily mean that anything will cost less.
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Well put. On a little side note, I recently had a 8'x12' shed built on my property by solid, very well known company. The two man work crew told me they were one of six teams locally remaining on payroll out of sixteen that were hired during much better times. Early on, I negotiated with the sales manager but only got small break on the price because he said their materials cost were rising fast as they downsized their work force trying to stay in business. He said sales were down 30%-40% from two-three years ago and 60%-70% from five-six years ago. It seems great recession is far from over and just more evidence of a very slow to non-existant recovery.
 
It won't be a cheap building. The Maloofs and the NBA won't buy into a deal where it looks like a cheap quality facility. I don't expect Italian marble everywhere and a 32" LCD monitor for every bathroom stall. But it will look like a damn nice arena or it won't get built. Based on buildings that got finished recently, I think 370 million will be just perfect.
 
My wishlist for a new arena:

Wider seats and more room between rows. At 5'11", I shouldn't feel like I have to turn my legs to the side to be comfy.

Wide grand concourse with lots of room.

State of the art video and scoreboard. Spend the budget money here so everyone can enjoy this. Don't give every club level seat their own personal TV monitor. Save those for the suites.

Nice clean loudspeaker system.

Great acoustics for concerts.

Good food and beer!

Playoffs every year. :)
 
PurpleHaze said:
Well put. On a little side note, I recently had a 8'x12' shed built on my property by solid, very well known company. The two man work crew told me they were one of six teams locally remaining on payroll out of sixteen that were hired during much better times. Early on, I negotiated with the sales manager but only got small break on the price because he said their materials cost were rising fast as they downsized their work force trying to stay in business. He said sales were down 30%-40% from two-three years ago and 60%-70% from five-six years ago. It seems great recession is far from over and just more evidence of a very slow to non-existant recovery.
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Not to get too off topic here, and I think we are both saying the same thing in different ways, but from my point of view the recession is not far from over, it is already over, where we are right now is where things are going to be from now on. The NBA has seen it as well, that is why we are seeing a lockout. These guys are too smart to keep holding on the way it is waiting for some miraculous recovery to bring their heads back above water. They are willing to take whatever licks they have now, get it over with and restructure to a point where they can make money the way things are.

I made a point in my first post about how suppliers are doing or have already done the same thing. Timber companies are cutting down less trees and using their most efficient equipment to mill it, and are making a profit. Yeah it sucks to see half the equipment they spent money on sitting around doing nothing, but that's the hit you have to take right now if you want to stay around. I really disagree with the model that the shed builders you mentioned are following at the moment.

To bring this all back to the Kings, basically, if you are going to build a new arena, its going to cost what it costs, whether its 350 million or 500 million. If they are going to have to get it done at some point, they just need to get it done, regardless of the state of the economy
 
kpm308 said:
Not to get too off topic here, and I think we are both saying the same thing in different ways, but from my point of view the recession is not far from over, it is already over, where we are right now is where things are going to be from now on. The NBA has seen it as well, that is why we are seeing a lockout. These guys are too smart to keep holding on the way it is waiting for some miraculous recovery to bring their heads back above water. They are willing to take whatever licks they have now, get it over with and restructure to a point where they can make money the way things are.

I made a point in my first post about how suppliers are doing or have already done the same thing. Timber companies are cutting down less trees and using their most efficient equipment to mill it, and are making a profit. Yeah it sucks to see half the equipment they spent money on sitting around doing nothing, but that's the hit you have to take right now if you want to stay around. I really disagree with the model that the shed builders you mentioned are following at the moment.

To bring this all back to the Kings, basically, if you are going to build a new arena, its going to cost what it costs, whether its 350 million or 500 million. If they are going to have to get it done at some point, they just need to get it done, regardless of the state of the economy
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I agree, lets stay on topic and I think we are. But how can this great recession (not just some average recession) be over. The area unemployment rate is 12.7% last time I looked at the number. Of course, that's just the official rate counting only those drawing unemployment insurance. The unoffical rate is close to a staggering 20%! Even during the last really deep recession in early 1980s the highest local unemployment rate ever got was just above 10%. Maybe I cite some anecdotal things such as fact ever single street I drive on almost everywhere in Sac County has a foreclosed property or two or three.

This is going to be a monumental battle going forward to win the war against hoards of naysayers who will bring up every possible strawman argument to defeat those of us in favor of a new arena. But in the end the question will be as it always has been - who pays for it and how, great recession, little recession, or no recession.
 
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JB_kings said:
It won't be a cheap building. The Maloofs and the NBA won't buy into a deal where it looks like a cheap quality facility. I don't expect Italian marble everywhere and a 32" LCD monitor for every bathroom stall. But it will look like a damn nice arena or it won't get built. Based on buildings that got finished recently, I think 370 million will be just perfect.
Click to expand...

I agree the NBA won't let us go cheap. Why should we? We could end up needing a new arena in 15 years if we did. Have to learn from mistakes of the past.
 
JB_kings said:
It won't be a cheap building. The Maloofs and the NBA won't buy into a deal where it looks like a cheap quality facility. I don't expect Italian marble everywhere and a 32" LCD monitor for every bathroom stall. But it will look like a damn nice arena or it won't get built. Based on buildings that got finished recently, I think 370 million will be just perfect.
Click to expand...

I agree with most you say about the new arena, except that the Maloofs have to buy into the plan. Stern has to buy into the plan. If Stern thinks its fair, the Maloofs have to pay. If Stern like the deal, and the Maloofs don't, he'll like pressure them to sell. Its' really between KJ/ICON/Taylor/Sac and Stern. Maloofs lost most of their negotiating power.
 
rainmaker said:
I agree with most you say about the new arena, except that the Maloofs have to buy into the plan. Stern has to buy into the plan. If Stern thinks its fair, the Maloofs have to pay. If Stern like the deal, and the Maloofs don't, he'll like pressure them to sell. Its' really between KJ/ICON/Taylor/Sac and Stern. Maloofs lost most of their negotiating power.
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I totally understand your point. I hesitated in including the Maloofs name in there. Stern's crew will have their guiding hands along the way. But they will have some input. Just not carte blanche to stick up the city for gold plated cup holders. ;)
 
kpm308 said:
Construction costs are not going to be significantly lower at all on a project like this than any time in the recent past. At first glance, someone would say of course, construction is slow, so obviously the contractors will drop their prices because they all need the work. This is true to an extent, but not enough to make any discernible difference to the public.

As this project will be at least partially public funded, all the labor will be subject to prevailing wage rates, which is a predetermined wage rate negotiated for the most part between labor unions and the state. These rates include a certain amount of raise every year, which once again is predetermined, and will take effect no matter how good or bad the construction industry is doing at the time.

Material prices really aren't much lower, for the most part, than they have been in the past. In fact, metal prices are once again on the rise, which affects everything from copper wire to rebar to ductwork to the structural steel in building, and concrete is also on the rise again. Add to that the rising fuel costs and I would expect the material costs for this building to be as high as they have ever been, possibly barring acouple years at the peak of the boom. These suppliers have had plenty of time to adjust, and have just backed off their production in order to keep the prices as high or near as high as they have ever been.

So with not much chance of saving money in either labor or material costs, the only real way to save at all is by the contractor/subcontractors willing to lower their profit margins in order to get the job. The problem here is that this project will be huge, and there are only a limited number of companies in each phase of the construction that are able to do a job this big. Sort of an oligarchy if you will, and of these few companies able to do the work, these were exactly the business model that was hit the hardest by the construction slowdown, and where there were maybe 4 masonry contractors 6 years ago in Northern California that could handle a job like this, now there are probably only 2, and both of these guys need all the profit they can get, so you're not really going to see much savings here either. (This was just hypothetical, I'm not sure how much masonry will even be in the building, but its the same for most trades)

Bottom line here is that prices are always rising, and just because there are a bunch of out of work house framers around doesn't necessarily mean that anything will cost less.
Click to expand...
Prices are not always rising. I am overseeing rehab projects being funded by my agency and, even with prevailing wage rates (which can go down), costs are definitely lower now on materials and labor.

One of my projects is getting locally hand-made cabinetry that is now cheaper than the imported cabinets shipped from China that developers were using a couple of years ago. Some materials have gone up or at least fluctuated, but others have gone down.

Also, while prevailing wage definitely increases labor costs and that shows up in the development costs, unless ICON is ignorant (which I doubt) those wages are included in the $370 million estimate. What doesn't show up in the estimate of costs is the savings long-term in interest on loans associated with government loans.

The government can give grants (no principal or interest payments), they can give below-market interest rates on loans, or even deferred payments. I'm sure most of us look at the truth-in-lending statements and shake our heads at how much we're really going to pay for that house or car when interest payments are added in. So government financing can reduce long term debt service costs. That is why it is so desirable. Believe me, applying for government financing is highly competitive. We never have enough money available to meet demand.

Just a simplified example: $370,000,000 borrowed for 30 years at 4% versus 5% = $79,129,080 in savings on interest.

It's still a great time to build. Also, you cannot ignore two other factors. Size of a project impacts cost. Smaller projects tend to cost more. Also, experienced and well-capitalized developers that have long-term relationships with suppliers and subs can usually get a better deal than most.
 
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The real job is to harness what we have. Let's get going. The city will come up with some, the county will come up with some, Placer Co. will help, the Maloofs will come up with some, the Hotel industry will come up with some, the convention industry will come up with some, Yolo will help, private investors will help, Apple will put up some. Hey, all we need is to roll up our sleeves and go to work! Go Kings.
 
Change orders will be at least 10% of the cost. (Cha-ching for the contractors.) The engineers and architects better not miss too much details on the plans :p It would be great if the new arena was to be a green building (LEED certified building). The up-front costs of a LEED building are higher but through the life cycle of the building costs get lower. Nothing like solar, green roofs, environmentally friendly lighting, reclaimed water, water storage tanks for collecting rain, recycled materials, etc., etc. I think Miami's arena is LEED certified.
 
The 300-400 mil range was expected considering the penguins arena that was done for around that price. But the question remains: is this venue going to be viable for another 20-30 years? They can't afford to make this big of a deal and be right back here in 10-15 years. They can't expect to build a lower-end venue in this city, because there's no way this city pays up again in the near future for another arena.
 
I wish I knew the finances involved in building such an arena. I presume I am not alone in this.

I see Sacramento as a city with no identity. It has nothing to draw tourists. It is a stop off for people heading elsewhere. As such it will never draw huge conventions on the one hand or the casual tourist on the other. The rail road yards offer a place to build multiple buildings that could be a convention/tourist attraction. The city is in trouble with a high unemployment rate and pretty soon people will be leaving if they already aren't. People SHOULD be leaving as they need to make a living.

Sacramento needs to become attractive to businesses and people.

My thoughts may be a bit pie in the sky but ideally for the city, something spectacular should be built. The arena and other buildings could be constructed around it to create a large attraction for the citizens of the area and also a place that might attract tourists. I am basing this idea on what was done in St. Paul and I am sure people are tired of hearing this. They built an arena, a convention hall, a museum, a theater, and parking surrounded by parks and other niceties. Most of these entities already had existed in various unconnected parts of St. Paul but the old buildings were torn down or converted to something else and new buildings were built in one central area. This a place to go in a city that had nothing attractive to visit until now. They attracted the Republican National Convention. That's major $$$ for St. Paul and not Minneaplis for those who might see these Twin Cities as one entity. They aren't.

My vision would be either to build something noteworthy as an arena which might be more expensive than already mentioned or as a bigger project, have a long range plan to have a convention center, etc. This would attract tourists and not just be a great place for young people to go at night. Heck, move the zoo. I don't know. There already is Old Sac in the area as well as a world class railroad museum. This is a start but not a major tourist magnet. These are simply places that we show visitors when we show them the city.

Make this area a place where outsiders might be willing to visit. Perhaps the arena would be more expensive but the arena in St. Paul which probably is not up to NBA standards yet is up to NHL standards cost $130 million 10 years ago. There is an opportunity for Sacramento, the city and the area, to become something different than the sleepy town it is that cannot attract enough business to employ its citizens to something else. To clarify, the arena could be noteworthy which I think is unlikely or the immediate vicinity needs to be noteworthy.

Start with the arena but don't stop there. I think the citizens would be more onboard with this idea as building an arena has been short sightedly slammed as a gift to billionaires.

From what I have seen, the will or vision is not here. Perhaps KJ will have an impact on the view of the area. This is my hope. He has the charisma for want of a better word to get things moving and not just sit back and let this city rot.

Bottom line: build a spectacular arena or have a predetermined plan to create an area that can draw people from far and wide.

My opinion is based on an on incomplete knowledge of downtown Sacramento, the state of the zoo, whether it is practical to move Crocker and the convention center but Sacramento looks like St. Paul 20 yars ago. It is more moved by the "oh, my goodness" reaction I had to downtown St. Paul when I drove through a few years ago. The city was transformed. Sacramento needs to be transformed.

Imagine all those entities within closs proximity. The whole becomes greater than each individual part as visitors to one might become visitors to the other. As it is, that is not so.
 
I want to be optimistic, I really do, but I just don't how on earth we are going to up come up with the amount of money that's required with a city that's extremely in debt...
I want to believe, but I'm trying to keep my heart separate from my brain...
My heart says an arena will get build, but the logical part of my brain thinks that there's no way we can get an arena built with the Debt and the arena cost.... This is one time in life that I really really hope that I'm wrong
 
Glenn said:
I see Sacramento as a city with no identity. It has nothing to draw tourists. It is a stop off for people heading elsewhere. As such it will never draw huge conventions on the one hand or the casual tourist on the other. The rail road yards offer a place to build multiple buildings that could be a convention/tourist attraction. The city is in trouble with a high unemployment rate and pretty soon people will be leaving if they already aren't. People SHOULD be leaving as they need to make a living.

Sacramento needs to become attractive to businesses and people.

My thoughts may be a bit pie in the sky but ideally for the city, something spectacular should be built. The arena and other buildings could be constructed around it to create a large attraction for the citizens of the area and also a place that might attract tourists.
Click to expand...

I agree with this bit, but also I caution against others who think size will indicate greatness (not that you have made this remark). I think the creation of an arena will stimulate and revitalize THIS area, and THIS community, and as such, it needs to be well-done the first time. It can be an arena with a smaller footprint, and still have the impact necessary to stimulate and revitalize, especially if it is downtown.
 
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