A new financing plan has been pitched for a proposed new Sacramento Kings arena, with the team committing to pay more toward the increased cost of the facility.
The response from city officials was mostly positive, according to the Sacramento Bee:
A report released Monday shows that the project cost has increased from $448 million. The added price tag will be covered by the Kings, who said they are dedicating an additional $30 million to the project to fund a team practice facility and upgrades to L Street on the southern edge of the arena site.
At the same time, the city’s contribution has decreased by $3 million, to $255 million. That total includes roughly $223 million in cash and $32 million worth of properties that will be granted to the Kings’ ownership group. The Kings are contributing $222 million….
Using parking revenue to pay off the arena debt leaves a hole to fill in the city’s general fund budget, and city officials said they have developed a plan to address that gap. The Kings have agreed to make annual lease payments to the city that will start at $6.5 million and climb to at least $18 million by the time the bonds are paid off in 36 years.
But not everyone is happy with the revised numbers for the new Sacramento Kings arena: the local alternative weekly says the plan is a step backwards and exposes the city to more risk:
According to City Treasurer Russell Fehr’s estimates, the debt service on the bonds will cost the city $21.9 million a year. That’s a lot more than the $9 million in parking “profit” that currently flows to the city’s general fund.
However, parking revenue is expected to grow in the future, because the city plans to write more tickets, put in more meters, and raise meter prices and ticket fees. The growth in parking revenue will help pay the bond payments every year.
Still, the fact that Sacramento is close to closing a $477-million arena deal is pretty remarkable, considering most expected the team to be playing in Anaheim or Seattle by now. Now, whether the investment pays off for the city remains to be seen — but Mayor Kevin Johnson is clearly the big winner here.