Project Arena, Part I: How much time does Sacramento really have?

#1
Good article by Rob McAllister on the process.

http://www.cowbellkingdom.com/2012/...-i-how-much-time-does-sacramento-really-have/

I am asked at least once a day, “What’s new with the arena?”

It is a complicated answer.

With so many moving parts, all working on parallel timelines, there appears to be something “new” each day.

All that really matters is how the financing plan comes together. And so far, it appears the money is starting to fall in line.


“We are closer than ever to finding a way to pay for the facility in a way that protects taxpayers, works for all parties and ensures a true public-private partnership,” Sacramento Mayor Kevin Johnson said yesterday during his State of the City address.

This is why you can expect to see the Kings in Sacramento at least through the 2012-13 NBA season.

As Johnson said, the public arena effort is further along this time than it was all previous 12 attempts combined.

Many are nervously awaiting the sale of public parking garages and spaces. The “deal-breaking” proposal is expected to net the city more than $200-million once the bonds are paid off.

Several companies are showing interest and a select few will soon begin the request-for-proposal process. Those companies chosen will bid on assuming control of the parking garages and spaces. It seems daunting to get this done just one month before the NBA relocation filing deadline.

However, the Maloofs have stated that the March 1st date is “flexible” and it seems NBA Commissioner David Stern is willing to give Sacramento a longer leash after seeing what Johnson and his Think Big Sacramento team have accomplished in just ten months. The mayor has likely earned the city until March of next year before a move is discussed again. (I also believe further studies on Anaheim or other locations will be done now that there is revenue sharing to help small-market cities.)

Even with the extra time, Johnson will not go public stating the March 1st deadline is workable. He does not want to give opponents a chance to delay or hinder progress on the project.

Expect financing to fall in place sometime in May. The city will have a firm figure on the parking sale, hotels will make up their minds on how much they’ll fork over, Anschutz Entertainment Group will negotiate a price to operate the arena, and the NBA/Kings will come to the table to discuss their contribution. All these pieces need to add up to $406-million or more.

Think Big gets big boost

Peering in a bit closer, it does seem the Think Big Sacramento group is confident the money is there.

While working for “free,” a powerful trio of political consultants is now on board. Aaron McLear and Josh Ginsberg, two aides to former California Governor Arnold Schwarzenegger, as well as Brian Brokaw, who ran Kamala Harris’ campaign for State Attorney General, have joined the effort.

Think Big Executive Director Chris Lehane said after last Thursday’s announcement, “The fact that you have such prominent Democratic and Republican political consultants coming together to form a Purple SWAT team as we head into the fourth quarter of this effort will be a huge boost to move the arena forward…”

Don’t fool yourself – these three consultants were brought in to squash any opposition and spread goodwill about the arena plan. They’ll make sure the project doesn’t turn into an issue of “Public Safety versus Entertainment”.

With Sacramento Police Chief Rick Braziel publicly backing what an arena could generate in tax dollars, expect the opposition to have a tough time selling the public-safety angle.

McLear, Ginsberg and Brokaw will be on hand to put out any other fires and maybe even start a few of their own.

Public perception can make or break this deal, but so can timing.

This is why there is no way these top-flight, political strategists sign up for something of this magnitude if it is going to fall apart in 30 days.

Kings look local

With the relocation deadline looming, the Kings appear to be downplaying the hiring of Michael Faust, who served as vice president of public policy for the Sacramento Chamber. He will now be taking on corporate development and relations in the franchise.

This is a position that requires someone with strong connections and relationships to local businesses. You just don’t hire someone to a full-time gig like this if you plan on leaving within the next month. Faust will be used to secure larger corporate sponsorship deals for the 2012-13 season.

Too many signs point to a return next year. Nothing is guaranteed, but a move would be surprising given the astounding progress on the arena project in such a short timeframe. Although the mayor probably wishes otherwise, the financing plan may not be in place by March 1st. But, the relocation date is no longer the death sentence it appeared to be just a few months ago either.
 
#3
"Its going to happen! Dont try to stop it"

American me
I was reading some comments on the Bee the other day. The anti-arena folks are really losing it as they begin to realize that they're not going to be able to quell this deal with their hand waiving and bleating about cops, schools, and firemen. it's gotta be a big blow to them to hear that the Sacramento police support this now! Some of them were still crying "We gotta get this parking thing on the ballot, we can't allow these crooks to do this." though. i've never seen anything in my life where so many people cared so much about something that will have absolutely no effect on their lives. Don't like the Kings? Don't care about the arena? Fine, no one has to. But to make it your life's goal to sabotage them is straight up Grinch like.
 
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#4
I was reading some comments on the Bee the other day. The anti-arena folks are really losing it as they begin to realize that they're not going to be able to quell this deal with their hand waiving and bleating about cops, schools, and firemen. it's gotta be a big blow to them to hear that the Sacramento police support this now! Some of them were still crying "We gotta get this parking thing on the ballot, we can't allow these crooks to do this." though. i've never seen anything in my life where so many people cared so much about something that will have absolutely no effect on their lives. Don't like the Kings? Don't care about the arena? Fine, no one has to. But to make it your life's goal to sabotage them is straight up Grinch like.
Bee commenters, for the most part, are the lowest form of pond scum. Thankfully the Bee site has a "Hide comments on sacbee.com" button. They've got to be the angriest, nastiest folks on the planet (and not just on the subject of the arena).
 

Warhawk

The cake is a lie.
Staff member
#5
Bee commenters, for the most part, are the lowest form of pond scum. Thankfully the Bee site has a "Hide comments on sacbee.com" button. They've got to be the angriest, nastiest folks on the planet (and not just on the subject of the arena).
I've stopped posting there, as it doesn't matter anyways. The real battle is in City Hall, and that is why we need folks to show up with the FANS effort Mike is heading. Please make the effort to go! Contact Mike for details.
 
#6
Bee commenters, for the most part, are the lowest form of pond scum. Thankfully the Bee site has a "Hide comments on sacbee.com" button. They've got to be the angriest, nastiest folks on the planet (and not just on the subject of the arena).

Yes sir I have read some nasty stuff on there and i always ask myself who are these people because you know there not making comments like that face to face.
 
#7
What I'm worried about, is what happens if Kevin Johnson isn't reelected? Will the arena process be far enough along by then that it won't matter? Or could it be a situation where losing a mayor who supports a new ESC could sink the process? What if the new mayor is anti-arena? Appreciate any insight from those with more knowledge of politics.
 
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#8
What I'm worried about, is what happens if Kevin Johnson isn't reelected? Will the arena process be far enough along by then that it won't matter? Or could it be a situation where losing a mayor who supports a new ESC could sink the process? What in the new mayor is anti-arena? Appreciate any insight from those with more knowledge of politics.
If the parking is sold and part of the condition is for the arena then it would be very difficult to back out on. Especially if the NBA/Maloofs have made commitments.
 
#9
What I'm worried about, is what happens if Kevin Johnson isn't reelected? Will the arena process be far enough along by then that it won't matter? Or could it be a situation where losing a mayor who supports a new ESC could sink the process? What in the new mayor is anti-arena? Appreciate any insight from those with more knowledge of politics.
Who is going to beat him out? Who is the opposition? No one serious that I've heard of.
 
#12
Actually he has nobody running against him at this time. If somebody does run, they better have a huge war chest. Because KJ has some deep pockets backing him.
Wow that's good to know. Because that same question has been in the back of my mind and I don't really know much about the situation either.
 

Kingster

Hall of Famer
#13
Good article by Rob McAllister on the process.

http://www.cowbellkingdom.com/2012/...-i-how-much-time-does-sacramento-really-have/

I am asked at least once a day, “What’s new with the arena?”

It is a complicated answer.

With so many moving parts, all working on parallel timelines, there appears to be something “new” each day.

All that really matters is how the financing plan comes together. And so far, it appears the money is starting to fall in line.


“We are closer than ever to finding a way to pay for the facility in a way that protects taxpayers, works for all parties and ensures a true public-private partnership,” Sacramento Mayor Kevin Johnson said yesterday during his State of the City address.

This is why you can expect to see the Kings in Sacramento at least through the 2012-13 NBA season.

As Johnson said, the public arena effort is further along this time than it was all previous 12 attempts combined.

Many are nervously awaiting the sale of public parking garages and spaces. The “deal-breaking” proposal is expected to net the city more than $200-million once the bonds are paid off.

Several companies are showing interest and a select few will soon begin the request-for-proposal process. Those companies chosen will bid on assuming control of the parking garages and spaces. It seems daunting to get this done just one month before the NBA relocation filing deadline.

However, the Maloofs have stated that the March 1st date is “flexible” and it seems NBA Commissioner David Stern is willing to give Sacramento a longer leash after seeing what Johnson and his Think Big Sacramento team have accomplished in just ten months. The mayor has likely earned the city until March of next year before a move is discussed again. (I also believe further studies on Anaheim or other locations will be done now that there is revenue sharing to help small-market cities.)

Even with the extra time, Johnson will not go public stating the March 1st deadline is workable. He does not want to give opponents a chance to delay or hinder progress on the project.

Expect financing to fall in place sometime in May. The city will have a firm figure on the parking sale, hotels will make up their minds on how much they’ll fork over, Anschutz Entertainment Group will negotiate a price to operate the arena, and the NBA/Kings will come to the table to discuss their contribution. All these pieces need to add up to $406-million or more.

Think Big gets big boost

Peering in a bit closer, it does seem the Think Big Sacramento group is confident the money is there.

While working for “free,” a powerful trio of political consultants is now on board. Aaron McLear and Josh Ginsberg, two aides to former California Governor Arnold Schwarzenegger, as well as Brian Brokaw, who ran Kamala Harris’ campaign for State Attorney General, have joined the effort.

Think Big Executive Director Chris Lehane said after last Thursday’s announcement, “The fact that you have such prominent Democratic and Republican political consultants coming together to form a Purple SWAT team as we head into the fourth quarter of this effort will be a huge boost to move the arena forward…”

Don’t fool yourself – these three consultants were brought in to squash any opposition and spread goodwill about the arena plan. They’ll make sure the project doesn’t turn into an issue of “Public Safety versus Entertainment”.

With Sacramento Police Chief Rick Braziel publicly backing what an arena could generate in tax dollars, expect the opposition to have a tough time selling the public-safety angle.

McLear, Ginsberg and Brokaw will be on hand to put out any other fires and maybe even start a few of their own.

Public perception can make or break this deal, but so can timing.

This is why there is no way these top-flight, political strategists sign up for something of this magnitude if it is going to fall apart in 30 days.

Kings look local

With the relocation deadline looming, the Kings appear to be downplaying the hiring of Michael Faust, who served as vice president of public policy for the Sacramento Chamber. He will now be taking on corporate development and relations in the franchise.

This is a position that requires someone with strong connections and relationships to local businesses. You just don’t hire someone to a full-time gig like this if you plan on leaving within the next month. Faust will be used to secure larger corporate sponsorship deals for the 2012-13 season.

Too many signs point to a return next year. Nothing is guaranteed, but a move would be surprising given the astounding progress on the arena project in such a short timeframe. Although the mayor probably wishes otherwise, the financing plan may not be in place by March 1st. But, the relocation date is no longer the death sentence it appeared to be just a few months ago either.
Thanks for the update. Success sounds like an inevitability. What are you looking at, if anything, that could stop this thing from happening?
 
#14
Thanks for the update. Success sounds like an inevitability. What are you looking at, if anything, that could stop this thing from happening?
Not at all inevitable. There is still votes on the council that could go either way. A few of the council members who might be needed for votes to gain a majority would like to see the parking deal at 30 years and not 50. Cohn being one of those. The other concern is to fill the 9 million gap a year that parking currently feeds into the general fund. There has to be a reliable back fill of that in order to get the majority vote in council.

And if that doesn't make your head spin, consider that the negotiations with the Kings/NBA will involve some sort of parking concession. Either from the local garages in the deal or a new premium parking garage for the ESC. And if you are bidding on the parking, there could be a clause in the deal that states no new garages be built without approval of the vendor. They need to protect their competition from making their investment decline in value.

They could work a deal where the winning vendor is included in the building of a new premium ESC parking garage. Of which possibly part of the 9 million backfill can be drawn from. And of course splitting that with the Kings since they will want that revenue from Kings related events and the parking vendor for non-Kings related events.

It's a complex deal and that is why consultants were hired.
 
#15
The parking lease is the biggest source for city funds and it sure isn't a slam dunk. Reducing the lease from 50 to 30 years would reduce the value considerably, hence less money for the arena. Any and every condition can either make the deal worth more or worth less. I would assume the RFP is going to have to have the details on what they are bidding for.

Sheedy and D. Fong are almost 100% sure to vote no. They haven't voted yes on anything related to the arena yet. Also, Sheedy is going to ask that a decision on the parking be put on the ballot. I don't think she has the votes to force that. At least I hope not or we're dead.

Besides back-filling the $9 million parking revenue that currently goes to the general fund, they still haven't explained what will be done about the prior city loan to the old arena ownership, the $70 million. That has to be paid back somehow.

It sill be interesting to see whether any other regional governements will contribute anything, too. That seems important to Cohn ( and D. Fong, but he'll vote no anyway).
 
#16
Besides back-filling the $9 million parking revenue that currently goes to the general fund, they still haven't explained what will be done about the prior city loan to the old arena ownership, the $70 million. That has to be paid back somehow.
Why does something have to be done? As long as they agree to stay for the remaining term at minimum on the outstanding bonds in the new building then they just keep doing the status quo. Keep the surcharge on the tickets that's paying for the bonds. Any new surcharge would be in addition to the current.
 
#17
The parking lease is the biggest source for city funds and it sure isn't a slam dunk. Reducing the lease from 50 to 30 years would reduce the value considerably, hence less money for the arena. Any and every condition can either make the deal worth more or worth less. I would assume the RFP is going to have to have the details on what they are bidding for.

Sheedy and D. Fong are almost 100% sure to vote no. They haven't voted yes on anything related to the arena yet. Also, Sheedy is going to ask that a decision on the parking be put on the ballot. I don't think she has the votes to force that. At least I hope not or we're dead.


Besides back-filling the $9 million parking revenue that currently goes to the general fund, they still haven't explained what will be done about the prior city loan to the old arena ownership, the $70 million. That has to be paid back somehow.

It sill be interesting to see whether any other regional governements will contribute anything, too. That seems important to Cohn ( and D. Fong, but he'll vote no anyway).
Just a little correction. Even if the council approves a parking measure on the ballot. They cannot put a regular measure vote for the parking deal to a public vote on the ballot. It would have to be an advisory measure vote for the council. In other words, the council still has to vote and the public vote result is just advisory. It amounts to delaying the vote.

I see it as:

Assumed Yes votes: KJ, R Fong, Pannell, Ashby
Maybe leaning Yes if Parking deal addresses concerns: Cohn
Uncertain: McCarty, Schenirer
Assumed No: Sheedy, D Fong

Make Cohn happy and they have the majority. But I still don't have trust for Cohn after watching him on this arena thing for too many years.
 
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Kingster

Hall of Famer
#18
Not at all inevitable. There is still votes on the council that could go either way. A few of the council members who might be needed for votes to gain a majority would like to see the parking deal at 30 years and not 50. Cohn being one of those. The other concern is to fill the 9 million gap a year that parking currently feeds into the general fund. There has to be a reliable back fill of that in order to get the majority vote in council.

And if that doesn't make your head spin, consider that the negotiations with the Kings/NBA will involve some sort of parking concession. Either from the local garages in the deal or a new premium parking garage for the ESC. And if you are bidding on the parking, there could be a clause in the deal that states no new garages be built without approval of the vendor. They need to protect their competition from making their investment decline in value.

They could work a deal where the winning vendor is included in the building of a new premium ESC parking garage. Of which possibly part of the 9 million backfill can be drawn from. And of course splitting that with the Kings since they will want that revenue from Kings related events and the parking vendor for non-Kings related events.

It's a complex deal and that is why consultants were hired.
That makes no sense to me. Why should local vendors be protected from risk? Of course they are going to be affected one way or another, but I don't see why it should be our (the publics) problem.
 

Kingster

Hall of Famer
#19
Just a little correction. Even if the council approves a parking measure on the ballot. They cannot put a regular measure vote for the parking deal to a public vote on the ballot. It would have to be an advisory measure vote for the council. In other words, the council still has to vote and the public vote result is just advisory. It amounts to delaying the vote.

I see it as:

Assumed Yes votes: KJ, R Fong, Pannell, Ashby
Maybe leaning Yes if Parking deal addresses concerns: Cohn
Uncertain: McCarty, Schenirer
Assumed No: Sheedy, D Fong

Make Cohn happy and they have the majority. But I still don't have trust for Cohn after watching him on this arena thing for too many years.

What's the argument against? That city can utilize parking revenue for something else othe than the arena? But if there is no arena, then doesn't parking demand go down? And then you don't have parking revenue that you would have otherwise?
 
#20
Why does something have to be done? As long as they agree to stay for the remaining term at minimum on the outstanding bonds in the new building then they just keep doing the status quo. Keep the surcharge on the tickets that's paying for the bonds. Any new surcharge would be in addition to the current.
Because the collateral for the bond funds sold for the original loan is the old arena site and a percent interest in the team. Currently it may not be worth what's owed on the bonds. The arena ownership could sign over the deed, but payments are still owed on the bonds and the old arena site would no longer be producing any revenue.

The bond investors agreed to accept the land/arena and an interest in the Kings as collateral. Bond funds cannot be used for any other purpose than what it was issued for. You could issue new bonds on the new arena to repay the debt, but I suspect there won't be enough collateral and/or revenue to do that and sell new bonds for construction of the new arena.
 
#21
Just a little correction. Even if the council approves a parking measure on the ballot. They cannot put a regular measure vote for the parking deal to a public vote on the ballot. It would have to be an advisory measure vote for the council. In other words, the council still has to vote and the public vote result is just advisory. It amounts to delaying the vote.
.
This is true. It means the council wouldn't vote on issuing a request for bids, until after the public advisory vote.

Ballot in June. City vote council in July . Issuance of RFP in July/August. Bids received maybe by Oct/Nov 2012 (that's when you'll know the true amount the city will receive). Approval of selected bidder by council maybe Dec 2012. It's a major delay and if the team wants to move, I think it would be enough to lose the team. And I'm being optimistic on that possible timeline.

Also, if the public advisory vote was no, then we're really dead on an arena. You'd have to have a majority of the council members go against the public advisory vote. Most of our council members are too weak to do that.
 
#22
That makes no sense to me. Why should local vendors be protected from risk? Of course they are going to be affected one way or another, but I don't see why it should be our (the publics) problem.
Sure it makes sense. When you bid on the parking concession, it details which lots are involved. The risk on the vendor side is they put up a huge amount of money upfront in the sale. What would happen if the city or some other entity builds 3,000 new parking spaces in the same area and charges a lower fee? It undercuts them. They run projections based upon # of spaces used versus available over the term of the deal. In a 50 year deal, much could change if you don't have some control over new parking coming into their territory. The whole goal is to get that number they pay upfront as high as you can. Thus it needs to be almost a guarantee of ROI. Seriously, nobody would risk over 200 million unless they had all bases covered.
 
#23
What's the argument against? That city can utilize parking revenue for something else othe than the arena? But if there is no arena, then doesn't parking demand go down? And then you don't have parking revenue that you would have otherwise?
Practical argument against is that there is a steady 9 million from parking revenue going into the general fund today. How that is back filled is an open question that I have not heard a firm answer.
The other argument is some fear that 50 years is too long of a deal.

There are other reasons that certain people oppose this based on an anti-whatever-it-is type attitude. They aren't now or will ever be objective on this.
 
#24
I thought it was intyeresting that the appraisal the city got said Sacramento's parking is currently priced below comparable market average. I keep telling people parking here is cheap, but everybody complains. Heck $10 bucks at PBP is a steal compared to arena/stadium parking in a lot of cities.
 
#25
I thought it was intyeresting that the appraisal the city got said Sacramento's parking is currently priced below comparable market average. I keep telling people parking here is cheap, but everybody complains. Heck $10 bucks at PBP is a steal compared to arena/stadium parking in a lot of cities.
I paid $30 for parking at Oakland for a Kings at Warriros game.

I believe I also paid $30 to park a few blocks away from AT&T Park for a Paul McCartney concert and SF Giants games.

$10-12 is nothing compared to the prices above.
 

Kingster

Hall of Famer
#26
Sure it makes sense. When you bid on the parking concession, it details which lots are involved. The risk on the vendor side is they put up a huge amount of money upfront in the sale. What would happen if the city or some other entity builds 3,000 new parking spaces in the same area and charges a lower fee? It undercuts them. They run projections based upon # of spaces used versus available over the term of the deal. In a 50 year deal, much could change if you don't have some control over new parking coming into their territory. The whole goal is to get that number they pay upfront as high as you can. Thus it needs to be almost a guarantee of ROI. Seriously, nobody would risk over 200 million unless they had all bases covered.
I'm a little confused here. Are you talking about existing parking lot owners? If so, do they have contractual guarantees that the City will not build out additional supply?

Or, are you talking about the proposed parking lot owners who desire to have contractual promises from the City not to build out additonal supply?

Either one is problematic to my mind, but I'd appreciate clarification on this, regardless.
 

Kingster

Hall of Famer
#27
Practical argument against is that there is a steady 9 million from parking revenue going into the general fund today. How that is back filled is an open question that I have not heard a firm answer.
The other argument is some fear that 50 years is too long of a deal.

There are other reasons that certain people oppose this based on an anti-whatever-it-is type attitude. They aren't now or will ever be objective on this.
How about the tax revenue generated to the City from the project? Higher property taxes, right?
 
#28


I'm a little confused here. Are you talking about existing parking lot owners? If so, do they have contractual guarantees that the City will not build out additional supply?

Or, are you talking about the proposed parking lot owners who desire to have contractual promises from the City not to build out additonal supply?

Either one is problematic to my mind, but I'd appreciate clarification on this, regardless.
These vendors bidding on the parking contract with the city know exactly what how many parking spots are downtown today. Whether that is city owned which is up for bidding or private owned which is considered competition. They can project their revenues long term based on this known data.

So say you win the bid to take over these city owned parking assets. If you don't cover your rear and make sure the city or any other private entity cannot come in and build a large number of new spots that are now your competition, your revenue projections just took a dive. And 50 years is a very long time to take a dive and lose money when you wrote the city a check for over 200 million.

In order to make sure that these vendors have secure knowledge that what they just paid you hundreds of millions for won't suddenly become money loser, they have to make certain promises that the city will control the number of new spots being built by competitors. And by control I mean the city won't build them or permits to build will not be granted to private companies unless it meets approval with the winning bidder.

The larger the deal, the more certain you have to be about risk. There are going to be a huge number of these issues that are meant to mitigate risk on either side of the deal. This is why it was worth hiring consultants so that the city was aware of what they were getting into and protect their interests. What we are talking here is only a small part of how complex this deal is going to get.
 

Kingster

Hall of Famer
#30
These vendors bidding on the parking contract with the city know exactly what how many parking spots are downtown today. Whether that is city owned which is up for bidding or private owned which is considered competition. They can project their revenues long term based on this known data.

So say you win the bid to take over these city owned parking assets. If you don't cover your rear and make sure the city or any other private entity cannot come in and build a large number of new spots that are now your competition, your revenue projections just took a dive. And 50 years is a very long time to take a dive and lose money when you wrote the city a check for over 200 million.

In order to make sure that these vendors have secure knowledge that what they just paid you hundreds of millions for won't suddenly become money loser, they have to make certain promises that the city will control the number of new spots being built by competitors. And by control I mean the city won't build them or permits to build will not be granted to private companies unless it meets approval with the winning bidder.

The larger the deal, the more certain you have to be about risk. There are going to be a huge number of these issues that are meant to mitigate risk on either side of the deal. This is why it was worth hiring consultants so that the city was aware of what they were getting into and protect their interests. What we are talking here is only a small part of how complex this deal is going to get.
Wow. I didn't even know that a city could legally do that. I've never heard of such a thing. In effect, then, they probably end up lowering the value of private land that heretofore may have been able to have partaken in building parking structures. Oooo. That sounds pretty dicey on a lot of levels.

Leaving aside the legalities, let's say the city of Sacramento promises such a thing. The city of West Sacramento isn't part of the agreement, right? So what's to prevent them from permitting a ton of parking structures to increase their own revenue (and eventually reach economic equilibrium)? Those structures wouldn't be in as close proximity, obviously, but if the price is lowered to account for that, I would think people might want to take a short bus ride.