Ok, I was at the meeting. Honestly, our Crown Downtown group didn't have to ask many questions, because the presentation by Shirey and Dangberg was great, even without a term sheet yet. I had no questions and it was a time for questions, not speeches (Altho Mac Worthy got his speech in at the end as Shirey accomodated him.
). And today was a self-imposed deadline by Shirey. The city did not miss some critical deadline.
Actually this year's deal is quite different in some respects and the presentation last night was better than last year's. All of the work done last year was not wasted, particularly in terms of monetizing the parking. There were some handouts. Mike may get them up at Crowndowntown.org, but I'm sure the city will post them, too.
Different location. Will lose about 1,000 parking spaces. However, the shift in location means there will be 20,000 on- and off-street parking spaces within one half mile of the arena. The mall will not be totally lost. They are actually hoping for more businesses within the footprint and reminded one critic that they can build vertically to gain square footage for commercial. There is a potential plan for a new hotel on the site, too.
The city will set-up a nonprofit organization to operate and maintain the parking. This will allow for a mix of taxable and non-taxable bonds for financing. These will be revenue bonds. This means that repayment will be made from revenue dedicated to that purpose. All funds will "waterfall" through the nonprofit and any profit will go to the city. Part of the current hotel occupancy tax will also funnel through the nonprofit to the city. As part of the bond funds, the city the set aside part of the funds raised into a capitalization fund. This will fund future repairs/renovations to parking.
The arena will be owned by the city and the Kings will be tied to the city by a 35-year agreement.
Part of the city's contribution will likely be in the form of public property. This is tricky. Public entities can't just give away public assets. So I'm guessing that they will sell the public property (most likely to Burkle), and the money paid to the city will be part of the city's contribution to the arena. I know the city property in the 800 block of K Street is probably part of this. So the city hopes to gain not only an arena, but a developer who will redevelopment those properties. Selling the city properties also reduces the amount the city has to borrow through bonding.
I can't remember exactly how they will backfill the $9 million in parking revenue lost to the general fund. My mind is fading fast. But the explanation seemed pretty clear and logical to me. One of those is a ticket surcharge for all events at the arena. Of course, over the long term, even with conservative
estimates, they city is likely to get a lot more revenue from property taxes, sales taxes, business licenses, etc. A new hotel would mean more occupancy taxes.
Shirey is right that its more important to get the deal right that meet a self-imposed deadline. They still have time to get out a term sheet for the Tuesday council meeting. They can also hold an emergency council meeting toward the end of next week, if they really need to or they could vote on the term sheet on April 2nd, if absolutely necessary, altho that's not the preference. Maybe you have to meet and hear Shirey to appreciate the guy. He is calm, patient, really smart, well-spoken and I admire the heck out of him. He must be working practically around the clock right now.
The problem with the "opposition" is even if you answer the questions or problems they raise, they never respond back. They just change their argument. Its like trying to have a coherent discussion with someone who changes the subject constantly.
I actually hung around to talk to a couple of them directly. To the lady who thought Hansen and Ballmer could choose to operate STA after the Kings are gone (quite a few laughs, BTW) I told her the land is worth way more than the building. They can make a much bigger one time profit selling that land than trying to operate a crummy arena, even if they "renovated" it. Especially if they just held the land until the levee work gets done. Actually, she had no response to that.
Then I spoke to an older lady (apparently a lawyer) who clearly doesn't want the city to participate at all. She really hogged a lot of time. She thinks the billionaires should pay for it themselves, that the "taxpayers" shouldn't build an arena for billionaires.
I asked her if she'd read the Sac Bee article about the new multi-story, riverfront hotel that the city of West Sacramento was subsidizing. And whether she noted that the article pointed out that no hotel has been built in downtown Sacramento without a public subsidy (Hyatt, Sheraton, Embassy Suites, Citizen). I asked her if she also came down and protested those subsidies to major hotel corporations with multi-millions of dollars. Her answer? "Well, I have to pick my battles." I said, "Yeah, right." I said since the city will own the arena, we aren't building an arena for billionaires, we're building and arena for our city. She just shrugged that off, too, and said if they paid for the arena, we could still get all the benefits to the city with none of the costs. I'm thinking, "In what world do you get something for nothing?" It's really pointless to argue/discuss the issue with most of them. They just ignore or shrugged off any arguments or points the other side makes. To them it just boils down to city money to billionaires.
As to a referendum. If they can even file a referendum on a non-binding term sheet ot have to wait for the non-binding approval at a later date: They have to get 10% of city registered voters to sign a petition within 30 days. Its estimated they would have to get 20.000 to 22,000 valid signatures in 30 days. Good luck with that. I think that would be very, very difficult.
Actually Shirey responded very well, which was part of the reason I didn't feel a need to say anything. He was talking about 3 billionaires who see a city a city and market well worth investing in. He said he has been so surprised about the negativity of people in Sacramento. He doesn't understand why they don't see their own city as worth investing in. Part of the reason I hung around a few minutes, was I wanted to thank John Shirey for his and city staff's hard work on all this. He is such a nice and gracious man.
Finally, I think the addition of Ranadive is a huge boost to Sacramento's bid. Deeper pockets and a person who the NBA has vetted and who is well known by the NBA. Apparently, he had been talking to Burkle for months about joining in the bid. It is easy to see why he is taking the lead on the purchase now. He's a vice-chairman of the Warriors team and has contacts with other owners and league personnel. He's an NBA insider. Note that being the person to lead the bid does not necessarily relate to how much he is putting in or what percentage he will own. He is just taking the lead as the frontman or spokesperson. He does not have to divest himself of his Warriors ownership interest, unless and until he becomes an owner of the Kings. He's already said he will do that, if their bid is successful.
I probably didn't think of everything, but I'm fading fast now. And I still have a lot of windmills to tilt at.
