New arena plans have capital deeply divided
Tom FitzGerald, Chronicle Staff Writer
Friday, April 1, 2005
New arenas continue to pop up in NBA cities around the country. They are full of what pro sports people like to call "amenities'' -- snazzy bars and restaurants, state-of-the-art scoreboards with high-resolution video screens, corporate suites and luxurious locker rooms worthy of the millionaire
ballplayers they house.
The Memphis Grizzlies and New Orleans Hornets moved from Vancouver and Charlotte, N.C., to arenas that were financed completely by public largesse. Charlotte, in turn, landed the expansion Bobcats with an arena that will open in October. Its $265 million cost was paid in part by $100 million from local financial institutions, $23 million in up-front lease payments by the club, and the rest from taxes on hotels and rental cars.
Even Kansas City, which lost the Kings to Sacramento in 1985, is building a $250 million downtown arena, largely with hotel and rental car taxes. The city is operating on the premise: If we build it, NBA Commissioner David Stern will come.
Meanwhile, in trying to replace antiquated ARCO Arena, Sacramento is shooting nothing but airballs.
The Kings want somebody to show them the money, but Sacramentans have made it clear that tax money won't be involved. Two plans to build a publicly-funded arena downtown never made it to a ballot. A third try, by landowners in the North Natomas area near ARCO, looks doomed, too. Their plan would have
funded an arena in return for getting their land rezoned for residential development more rapidly.
"I think it's dead,'' Kings co-owner Joe Maloof said. "We appreciated them trying."
Maloof and brother Gavin -- the family owns 54 percent of the Kings -- have a management style similar to that of Dallas Mavericks owner Mark Cuban. They are not only service-first bosses but highly visible cheerleaders, lacking only Cuban's cloying self-promotion.
On the other hand, while the Maloofs are circumspect when it comes to committing much of their own money to the arena project, Cuban and the owners of the NHL's Dallas Stars put up the lion's share of the money for the $400 million American Airlines Center, completed in 2001. The city of Dallas provided just $125 million, again mostly from hotel and rental car taxes. The high-tech arena has 144 luxury suites, all of them sold on a season basis.
ARCO Arena, built in 1988, has just 30 luxury suites. Its seating
capacity of 17,317 is fourth smallest in the NBA. The seats rest on uncovered
plywood. The concourses are too narrow to accommodate the crowds. And, Joe
Maloof pointed out, "We get roof leaks all the time."
What makes the arena saga strange is that Sacramento and the Kings are
one of the great love affairs in the increasingly rancorous world of pro
sports. Although their one real window of opportunity for an NBA title closed
three years ago -- on a buzzer-beating 3-point shot by Robert Horry of the
Los Angeles Lakers in Game 4 of the Western Conference finals -- they have
sold out ARCO for 263 straight games despite having some of the highest ticket
prices in the NBA.
Though on track for their seventh straight playoff appearance, the Kings
have gone through a rough patch since trading Chris Webber, 32, a great but
often gimpy player whose career seems on the descent, to Philadelphia a month
ago. But the boos at ARCO are generally reserved for the visitors and refs, as
when beloved guard Mike Bibby was ejected in the closing seconds of a recent
loss to the Warriors.
All that good will for Sacramento's only major-league team hasn't
translated to much political and economic support for a new arena.
Environmentalists complain that much of the land in the latest arena
scheme rests on a flood plain and would require major drainage facilities. It
also is considered habitat for 122 protected species, mainly the Swainson's
hawk and the giant garter snake.
"There's a sky-is-falling mentality that they'll leave if we don't
provide an arena for the Maloofs,'' said Vicki Lee, head of the local chapter
of the Sierra Club. "Why should they, if they can get the leadership of
Sacramento to be gullible enough to open areas that don't have public
infrastructure, that are part of a habitat conservation plan? It's like none
of that matters. We'll skim enough money off the top, and the millionaire
Maloofs won't have to pay off."
"These landowners just wanted to get on the fast track for urban
development,'' said Jim Pachl, attorney for the group Friends of the
Swainson's Hawk. "Gee, if these guys are willing to give up 20 percent of
their profits, they must know they're going to have some real problems getting
through the normal governmental processes. The whole purpose was to railroad
entitlements that would be controversial.''
All this political and economic wrangling has players feeling the strain,
"I'm hoping they're going to find a solution,'' the Kings' leading scorer,
forward Peja Stojakovic, said. "This city and these people deserve a
professional team. We enjoy being here and playing basketball. They've been
loyal to us, and we've been loyal to them. It's a great relationship.''
Within a few years, though, that loyalty could be put to the test if an
arena plan isn't forthcoming.
"I never anticipated we'd have the kind of delays we've had,'' Joe Maloof
said. "It's been tough. I don't know what it's going to take."
Would the Kings consider leaving a city that holds them in its warm
embrace, a metropolitan area that has 2.1 million residents and is adding 50,
000 every year?
"We're not considering that,'' Maloof said. "We've never talked about
something like that. Our game plan is to put something in Sacramento. We've
just got to get something done here.''
When the latest arena idea foundered, the Sacramento Bee stated,
"Predictions that the Kings will leave town are swirling. Speculation has been
running rampant, with cities such as San Jose, Anaheim, Kansas City and Las
Vegas all bandied about as possible destinations."
"They may be history unless something changes,'' former city councilman
Jimmie Yee told The Chronicle. But he added, "I'm not saying they're leaving.
I don't know where they'd go that would give them the same support that the
Kings have here.''
Like Yee, city councilman Steve Cohn has been pushing for a new arena. He
insists the North Natomas land development plan is still alive. "Any time
you've got a group willing to put $200 million on the table," he said, "that's
a good starting point.''
The group originally had sought a ballot measure that would have
expedited development of 9,000 acres of farmland into residential areas.
Insiders say such a deal could cut the time of getting the development through
the bureaucratic process from 10 years to five. More than 40,000 homes could
be built on the land, and estimates on the potential payoff range from $2
billion to $5 billion.
In return, the landowners were going to divert about 20 percent of the
expected proceeds, up to a ceiling of $275 million, to build an arena and
create a $25 million endowment fund for the arts and youth sports. The Kings
would kick in the rest, then keep all the new arena's revenues, and everybody
would be happy.
The wheels came off the plan in January when some of the property owners,
led by former Congressman Doug Ose, pulled out and took their 2,000 acres with
"Our estimates left us $80-90 million short of our $300 million goal,''
said Steve Thurtle, a member of the landowners' group. "We think it's a good
idea, but we've exhausted our efforts.''
Just how much an arena would -- or should -- cost is debatable. The
Kings want a $400 million facility, citing the higher costs of construction in
California. Thurtle, Cohn and others think a $300 million home would be more
reasonable, given the price tags of arenas in Memphis ($250 million),
Charlotte ($265 million) and Kansas City ($250 million).
Those cities, however, don't operate under tax restrictions like
California's Proposition 13. Also, labor costs are higher here, and Kings part-
owner Bob Hernreich said, "The cost of steel has gone up 50 percent in the
last year and a half.''
"Our problem,'' Cohn said, "is we don't have the level of corporate
sponsorship you have in the Bay Area.''
Some of the deepest pockets in Sacramento belong to the Maloofs. The
family recently announced it would spend $600 million to expand its Palms
Casino Hotel in Las Vegas with a 40-story tower housing 347 hotel rooms and a
50-story tower with 599 luxury condos. The Maloofs were immediately criticized
in Sacramento for refusing to build an arena with their own money or, at the
least, to make up for the shortfall from the North Natomas plan. The Palms is
highly profitable, while the ARCO/Kings operation barely makes money.
More to the point, most cities realize that in order to attract NBA
franchises or keep them from leaving, publicly-funded arenas are standard
"Industry wide, roughly 20 percent of arena costs are paid for by the
team, either in cash or debt service,'' Thurtle said. "The Kings are not the
But even among people who love the Kings the most, it's far from
unanimous that a new arena is needed. At a recent game, Chuck Arana, a 37-year-
old fan, said he hopes ARCO is never replaced.
"You get a good view from wherever you're at in the arena,'' he said.
"Everybody's happy when they come here. (In a new arena) you're just going to
have a bunch of luxury boxes and people who don't care about the game, more
business people who just come once in a while rather than people who come to
KINGS ARENA PLAN EXPECTED SHORTLY
October 23, 2008
Copyright 2008 MediaVentures
Sacramento, Calif. - The NBA and Cal Expo expect to produce a plan within 90 days to build a
new Kings arena at the state fairgrounds, an NBA consultant said.
Representatives of the league and Cal Expo have spent five months working on a conceptual
blueprint for the revamping of Cal Expo into a "village" with a modern fairgrounds, arena,
housing, office, entertainment and retail uses.
Now the NBA will commission a study to examine the plan and tweak it so that it's financially
That study should take about two months, said John Moag, the NBA's point man on the arena.
He expects to be back before the Cal Expo board in December or January. At that point, the
board will decide whether to solicit developer proposals to execute the plan for the 360-acre
"Within 90 days we're going to know whether Cal Expo and the NBA have a deal, and what the
plan looks like," Moag said.
He added: "We'd pull the plug in a heartbeat if we didn't think it was going anywhere, because
it is very expensive."
Moag said the NBA has spent millions on the effort so far. Brian May, deputy general manager
of Cal Expo, said the state fairgrounds has spent $75,000 in legal and consulting fees.
On Oct. 31, the Cal Expo board is scheduled to vote on extending the negotiation period with
the NBA - set to expire Nov. 21 - until the economic analysis is finished.
A tentative plan for the Cal Expo site has been circulating for months, but the NBA and Cal
Expo are keeping it under wraps because it is still evolving.
City officials were briefed by the NBA in August. They were required to sign a confidentiality
agreement, said John Dangberg, deputy city manager.
If both parties agree the plan makes financial sense, they will solicit proposals from developers
interested in overhauling the sprawling, 40-year-old fairgrounds complex along Business 80 near
the American River.
The idea is to build enough homes, offices, retail stores and restaurants to pay for a
replacement of Arco Arena - which the NBA says is obsolete - and a modern state fair facility.
The arena alone could cost $500 million, and the cost of rebuilding the fairgrounds has been
estimated at $150 million.
May has said Cal Expo would not sell its 360 acres to a developer but would enter into a
long-term lease. When the lease ran out, everything on the site would revert to Cal Expo's control.
If the parties move forward, Cal Expo and the NBA will be battling an economic headwind that
has left developers reeling nationwide. (Sacramento Bee)
NEW SACRAMENTO MAYOR BACKS ARENA
February 12, 2009
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Sacramento, Calif. - Mayor Kevin Johnson is jumping into the drawn-out game of getting
Sacramento a new Kings arena.
In recent days, Johnson met or spoke with the Kings' owners, Gov. Arnold Schwarzenegger,
NBA Commissioner David Stern and representatives of Cal Expo, the site of a proposed new arena.
The mayor said the meetings were not sparked by concerns over whether the Kings would leave
Sacramento but were instead designed to bring him up to speed on the process of building a new
NBA officials said last month the league's effort to build an arena at Cal Expo has been
hampered by a sluggish real estate economy. The delay led league and Kings officials to
acknowledge that the Maloofs - the family who owns the Kings - have grown frustrated.
John Moag, the NBA consultant who is working with Cal Expo officials on a plan for an arena,
said the Maloofs have not spoken to him about filing a request with the league to move the Kings
out of Sacramento. Still, he acknowledged the owners are discouraged by slow progress on the
On Feb. 27, the Cal Expo board will see a master plan for a mixed-use project that includes a
revamped space for the California State Fair and an arena. An NBA financial feasibility study for
the project is also scheduled to be discussed.
The mayor said he is "a huge proponent of (an arena) happening at Cal Expo if it makes
sense." He said several factors, including the economy and impact an arena would have on traffic
around Cal Expo, need to be considered.
Johnson said that for now, Cal Expo should be considered above other arena options, including
building at the downtown railyard or in Natomas. (Sacramento Bee)
NBA SHOWS PLANS FOR SACRAMENTO ARENA
March 5, 2009
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Sacramento, Calif. - National Basketball Association officials have released a proposal to the
Cal Expo board that reportedly would wipe the slate clean at the 40-year-old fairground,
eliminating the horse-racing track, the grandstands, the livestock pavilions and other buildings.
In their place, town houses, apartments, offices, stores and restaurants would sprout on a new
street grid, anchored by an arena for the Sacramento Kings and a site for what Cal Expo officials
have billed as a modern State Fairground and year-round event center.
City officials have hailed the plan as dramatic on three fronts: as a prototype for urban
development in Sacramento; as the move that could finally give the Kings what they want to stay
in town; and as a financial boost for a fading State Fair.
But questions remain unanswered: How will the project be funded? How many years will it take
to build? Will any developer sign on in this down economy? And, will the Kings stick around long
enough to see it all happen?
NBA officials want to move quickly, saying they have little time to spare in helping the
financially ailing Kings secure a new arena.
"There is a tremendous amount of work required before you can go to the development
community and get solid proposals," NBA representative John Moag said. "We have about a year
to put something together that makes sense. If we miss that opportunity, we do have a problem on
The Kings have struggled unsuccessfully for nearly a decade to replace the aging Arco Arena.
Now, team owners say they are losing money as a bad economy and poor play by the team leave
more empty seats.
Despite that, Joe Maloof this month repeated his long-standing mantra: The team has roots in
Sacramento, it is part of the community, and he hopes an arena deal can be arranged.
The board is expected to convene a meeting later in March to vote on whether to sign an
agreement with the NBA for the fairground remodel.
If the answer is yes, NBA and Cal Expo officials will launch a nationwide "request for
qualifications" process to seek potential project developers.
The NBA stepped in two years ago to lead the arena effort after Sacramento voters
overwhelmingly rejected a ballot measure for a publicly financed arena downtown.
Moag, point man for the NBA effort, said he believes his group has put together a workable
"It's heavily dependent on private-sector investment, and a lack of direct taxpayer dollars," he
He said he envisions the project moving forward this year with land entitlements, environmental reviews and more work on plans and financing.
"Then, when the market is right, we're ready to go," Moag said. (Sacramento Bee)
April 2, 2009
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Cal Expo directors have agreed unanimously to extend a letter of understanding with the NBA for development of a new arena for the Sacramento Kings until Nov. 30. The letter details the actions that can be taken on behalf of Cal Expo and the NBA during the development of an arena, exposition facility and fairgrounds. (Sacramento Bee)
STATE PLAN UNLIKELY TO AFFECT KINGS' PROSPECTS
May 21, 2009
Copyright 2009 MediaVentures
Sacramento, Calif. - Observers say a state plan to sell off assets, including the Cal Expo
fairgrounds, is unlikely to affect efforts to build a new arena for the Kings on that property.
Administration officials, in fact, said they approve of Cal Expo's effort to bring a private
developer aboard to build a new fairgrounds, an NBA basketball arena, and an urban community of
homes, businesses and stores.
Selling the land to a private developer, may even speed up the process of developing the land,
they say. The land has an estimated value of $150 million.
Should the governor win legislative approval for his plan, it likely would force Cal Expo and the
NBA to rewrite their development plan.
Currently, the tentative plan calls for the state to lease the western end of the 300-acre site to a
developer to build a mixed-use community, including theaters, a hotel, stores, offices and housing.
An arena could cost $500 million, and remade fairgrounds another $290 million to $350 million,
Cal Expo officials say they are still in the exploratory stages of the project, but NBA officials say
they face a tight timeline.
The Kings reportedly are losing millions of dollars at Arco Arena, which team officials say is
A league representative said the NBA feels it must make significant progress this year on an
arena deal to keep the basketball team in town.
NBA and Cal Expo consultants have disagreed over whether the plan makes financial sense.
Sacramento city officials said putting Cal Expo land into private hands for redevelopment could
be a boost for their adjoining Point West and Arden Fair mall area.
CAL EXPO REPORTS POSITIVE FEEDBACK ON DEVELOPMENT PLAN
July 30, 2009
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Sacramento, Calif. - Cal Expo and NBA officials say they have received valuable feedback from
four developers asked to give their opinions about a plan to build a new arena at the fairgrounds
and help finance it with proceeds from other development.
Officials said they learned that their idea is viable, but not until economic conditions improve.
Expo and NBA representatives said they were told they should continue laying the groundwork
for the redevelopment plan in anticipation of an eventual economic turn-around.
Officials declined to say which developers participated. A.G. Spanos company officials
confirmed their participation. Spanos is owner of the San Diego Chargers.
The redevelopment effort began nearly two years ago when NBA officials approached Cal Expo
about building an arena on site.
Expo officials say their fairgrounds need an overhaul. NBA and Sacramento Kings officials say
the team's current home, Arco Arena, is antiquated and doesn't allow the financially struggling franchise to produce adequate income. City voters previously rejected a proposal for a publicly
financed arena in the downtown railyards.
The NBA wants to start the formal process this year of signing a private developer as a partner.
The strategy is for a developer to finance and build the new fairgrounds and arena. In
exchange, that developer would lease part of the existing Expo site to build a mixed-use
The challenge will be coming up with up-front financing to get construction started. The plan
envisions three key funding sources: private funds from the developer, funds from the Kings, and
tax increment funds from expected future increased value of the Cal Expo land.
NCAA SNUB PUSHES SACRAMENTO TO PUSH FOR ARENA
September 24, 2009
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Sacramento, Calif. - After learning that the NCAA considers Arco Arena insufficient for a spot
in its men's basketball tournament, Mayor Kevin Johnson said efforts to replace the venue must be
speeded up or the city could risk losing its NBA franchise as well.
Arco Arena has hosted the NCAA four times since 1994.
Sacramento Sports Commission officials said they were told the city's bid to host tournament
games through 2013 had been denied because of concerns over the conditions at Arco Arena.
"They said, 'I hope you will consider bidding in the future when you get your arena issues
resolved,'" said John McCasey, executive director of the Sacramento Sports Commission, which
filed the bid.
An emotional mayor said it was "staggering and mind-boggling" that Arco - home of the NBA's
Kings since 1988 - is no longer considered suitable for big-time college basketball.
In response, Johnson said he wants to see a proposal to build a new arena at Cal Expo soon.
If one doesn't materialize - and if the city doesn't start seriously considering alternate options
for a new arena should the Cal Expo plan fall flat - the threat of the Kings leaving town will
become more real, according to the mayor.
NBA representative John Moag, who is leading the NBA's three-year effort to build a new arena
at Cal Expo, said he understands the mayor's frustration about the slowness of that effort.
"I think the mayor is expressing a sense of where we all are," Moag said. "We are in a bad
economy in a state that doesn't have any money. Lending has dried up. We can't force developers
to borrow money they can't get."
October 1, 2009
Copyright 2009 MediaVentures
The owners of the Sacramento Kings say they have no deadline for building a new arena and
the team has no intention of leaving town next year. Gavin Maloof says a new building is needed,
but considering the state's economic challenges his family is willing to be patient and let the
process play out. Maloof said the family is committed to keeping the team in Sacramento.
SEAT MORTGAGES MAY FUND SACRAMENTO ARENA
October 29, 2009
Copyright 2009 MediaVentures
Sacramento, Calif. - NBA officials are considering 30-year "seat mortgages" as a way of
financing a new arena for the Sacramento Kings.
Officials have met twice recently with a Chicago-based company pitching the concept of
"equity seat rights" or "seat mortgages" to finance stadiums and arenas without having to go
hat-in-hand to voters with unpopular tax increase proposals.
The company, Stadium Capital Financing Group, is putting together a similar deal to renovate
the football stadium at the University of California, Berkeley.
There about 3,000 seats are for sale to fans, ranging from $40,000 to $220,000 per seat,
university officials said. Fans purchase the seats for 40 or 50 years and either pay in whole upfront
or in annual chunks.
An official with Stadium Capital estimated it would take fewer than 2,000 seat sales in
Sacramento - in an arena with 18,000-plus seats - to finance construction of what could be a $500
City officials and Stadium Capital Chief Executive Lou Weisbach declined to estimate how
much those seats might cost.
One challenge, he said, would be structuring a financing program that allows enough revenue
for a professional sports franchise that has higher operating costs than a college team.
"Nonetheless, (the seat mortgage concept) might provide an option, at least in part, for
financing a facility, and we're very interested in exploring it to see what we can do to mitigate the
potential challenges for a pro sports team," he said.
So far, the concept is in use in the United States only at two universities. But Weisbach, whose
company is majority-owned by Morgan Stanley Principal Investments, said he's confident equity
seat rights can be the answer for Sacramento.
Meanwhile, plans to use money from new development to fund the new arena on the state's
fairgrounds are being called into doubt because developers may not be willing to invest under the
current economic conditions.
"There is not a developer I know in the country who would do it, especially in today's
economy," said John Semcken, vice president of sports stadium builder Majestic Realty Co., who
viewed Cal Expo's plans, told the Sacramento Bee.
Majestic - which built Los Angeles' Staples Center arena, home of the Lakers, and plans a
football stadium in the City of Industry near Los Angeles - was one of four developers consulted by
Cal Expo and the National Basketball Association about the viability of their arena and fairgrounds
Even if the economy improves, Semcken said the initial plan appears risky. It calls for a
developer to front money for the project.
His comments serve as a cautionary backdrop as Cal Expo and the NBA consider formally
advertising for a private developer to help them finance an arena and a new fairgrounds. Officials
said the developer would be allowed to lease and redevelop the rest of the aging and underused
Expo officials acknowledge they learned in their discussions with developers that the recession
makes the project problematic and tougher than it appeared in February, when the NBA unveiled
Expo officials said they feel the ball is still in their court and they expect to press forward.
Staff members had planned this week to have the Cal Expo board review and possibly vote on
publishing a formal document soliciting potential partners. The NBA, however, asked them to hold
off while the league reviews the document.
Kings co-owner Gavin Maloof defused some pressure this month, saying team owners have
rededicated themselves to being patient, given the tough economy.
Team owners acknowledge they have talked with cities interested in landing an NBA team, but
continue to believe that Sacramento is the best place for the Kings.
Maloof said the focus now is on providing a team that will excite fans.
SACRAMENTO MAYOR CREATES ARENA TASK FORCE
November 5, 2009
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Sacramento, Calif. - Mayor Kevin Johnson does not want to wait for efforts to build a new
arena for the city at the Expo Center to gel and instead has created his own exploratory committee
to investigate the potential for a new arena.
Johnson said he would not accept arena proposals that include new taxes and said he does not
want Sacramento to be used as leverage for another city hoping to lure away the Kings. And he
said a proposal to build an arena at Cal Expo "cannot be our only option."
Getting a new arena built for the Kings has become a recurring theme for Johnson in recent
weeks, especially since the NCAA said Arco Arena would not host men's basketball tournament
games through at least 2013.
Johnson said he wants an arena that acts as "an entertainment center that lights up six blocks
in all directions," is linked to mass transit and utilizes green technology.
Johnson said the task force has not been formed, and despite a tight timeline, he said he
expects responses to his call for requests for proposals.
Besides Cal Expo, Johnson and city officials have discussed the downtown railyard and the
current Westfield Downtown Plaza site as possible locations.
NBA officials said the basketball association continues to work on a plan for an arena at Cal
Expo, but said the economy has slowed that process. She said the NBA is willing to work with the
mayor on a broader effort for an arena.
Meanwhile, Cal Expo officials have agreed to extend their formal agreement with the NBA to
continue working on plans for a new fairgrounds and arena on Expo grounds.
The existing letter of understanding was set to expire next month. The NBA had requested the
The plan calls for a mixed-use development on the fairgrounds with revenues from the
development going to fund an arena. A lack of interest from developers and the problem of
obtaining capital to finance such a project have slowed the effort.
SACRAMENTO MAYOR FORMALLY REQUESTS ARENA SUGGESTIONS
November 12, 2009
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Sacramento, Calif. - Sacramento Mayor Kevin Johnson has alerted developers that he wants
their ideas for a new sports and entertainment center in the city. A formal request is available on
the city's web site and responses are due in 45 days.
The request asks responders to give a timeline for an arena project, how the facility would be
paid for, who their development team will be and where the arena will be built. Once received, a
task force will take 90 days to review the proposals.
DEVELOPERS INTERESTED IN DOWNTOWN SACRAMENTO
November 19, 2009
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Sacramento, Calif. - At least two developers are interested in presenting concepts for a new
arena to host the Sacramento Kings with a previously abandoned downtown location mentioned as
a possible site. A task force has asked developers to submit ideas for building an arena. The
deadline for proposals is Dec. 24.
As part of their proposals, developers must include: a design for an arena; a financing plan -
including equity sources and whether public money would be used; a timeline for construction; a
location; and the number of jobs the arena would create.
The mayor has said he will not favor plans that involve new taxes.
Suheil Totah of Thomas Enterprises, the developer for most of the downtown railyard, said his
group is "definitely going to be submitting a proposal." He said Thomas might propose more than
one site within the railyard development for an arena.
Another developer working on an arena plan is Gerry Kamilos, whose projects include the
proposed Metro Air Park business area near Sacramento International Airport and a handful of
large housing developments in the area. Kamilos would not discuss where he would put the arena
until his team "completes our analysis and research."
NBA representative John Moag, who is working with Cal Expo on an effort to build an arena
there, said the NBA supports the mayor's initiative.
"We've indicated we are very supportive of the mayor's strong interest in making something
happen," Moag said.
However, he declined to say what it means for the ongoing efforts at Cal Expo and whether the
Cal Expo site could play a role in the mayor's arena effort. He also declined to say whether the
NBA could entice any major developers nationally to participate in a Sacramento project.
January 7, 2010
Report: Sacramento arena would create 4,095 jobs; 375 permanent positions
Sacramento Business Journal
by Kelly Johnson Staff writer
A new sports and entertainment center in Sacramento could create new jobs even after construction and could spur additional development, depending on where it would be located, according to a report released Thursday.
Development of a $300 million complex would create 4,095 jobs, according to the report Cathleen Dominico prepared for the arena task force. That total consists of 2,130 direct and 1,590 indirect jobs during construction, and 375 additional jobs for ongoing operations. Of those, 217 would be direct and 158 would be indirect and induced, the report found.
Construction would generate $556 million in total spending — of which would be $300 million in direct spending — and $11.3 million in tax revenue, the study found. Once operating, the complex would generate $25 million in total spending each year — including $13.6 million in annual direct spending — and would boost tax revenue by about $775,000 a year, the research shows.
The Sacramento First Task Force, which was established by Sacramento Mayor Kevin Johnson, released the report at a hearing Thursday on job creation and economic development.
Further analysis would be needed when a site is identified and more information is known about the type of complex that would be built, the report noted.
The Sacramento Metro Chamber said the findings confirm the organization’s position that a properly located arena would create thousands of jobs and pump millions of dollars into the economy.
“The Metro Chamber has long-held that a new entertainment and sports facility will be a huge job generator for our region,” Matt Mahood, chamber president and chief executive officer, said in a prepared statement. “The Sacramento First Task Force’s ‘Threshold’ report shows how — at a time when unemployment is so high — building and running the complex will create 4,095 new jobs. I say let’s get it started!”
Cities similar in size to Sacramento have seen the benefits of sports and entertainment complexes, he said.
Over the years, experts nationally have debated the economic benefits of developing professional sports stadiums and arenas.
The Sacramento First Task Force is reviewing the seven proposals it received by its late December deadline as well as the existing Cal Expo proposal and the option of renovating Arco Arena. Of the new proposals, two would make use of the Sacramento railyards and two propose using the site of Westfield Downtown Plaza. The other new proposals would locate an arena at Cal Expo, on city-owned land next to Arco Arena and at the docks area in downtown Sacramento.
DEVELOPERS STEP UP FOR SACRAMENTO ARENA PLAN
January 7, 2010
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Sacramento, Calif. - Seven plans have been received by a city task force from developers who
want to help build a new arena. Two of those plans are for the previously-rejected railyard land downtown, but details of the other plans were not released.
Task force co-chair Chris Lehane said the plans will be unveiled at a Jan. 14 public forum.
Mayor Kevin Johnson launched his effort two months ago, saying he feared the Kings could leave town if a new arena were not on the horizon. He also has said he believes a new facility, hosting concerts, shows and other events, would benefit the public.
The Maloof family - owners of the Kings - have deemed Arco Arena antiquated and inadequate for competing in the high-finance National Basketball Association.
Johnson commissioned a 12-person volunteer citizens task force, co-chaired by Lehane and restaurateur Lina Fat, to manage the early stages of the effort and to show him a "path" to an arena by March.
The task force said Thomas Enterprises, the Atlanta-based railyard owner and developer, has submitted one of the two railyard proposals.
Lehane was mum on details and said he has asked respondents not to speak publicly about their plans prior to the Jan. 14 unveiling.
A second railyard proposal has been submitted by the Kamilos Co., a Sacramento-area land developer. That plan would place an arena on a slice of city-owned land at the front end of the railyard, next to the current downtown train depot.
City officials intend to build an expanded transit center for buses and trains there but have said there should be room for an arena, possibly connected to the transit center.
Developer Gerry Kamilos declined to discuss his proposal but said he sees the arena and entertainment facility as an economic development tool.
Johnson said he was "blown away" by the number of proposals. He said he hadn't read them and didn't know about plans for financing or other details.
Johnson reiterated that he leans toward building the facility downtown but said the key issue is not location.
"How to finance it is going to be the No. 1 question," the mayor said.
The task force has commissioned a quick economic study it says will offer "a broad look at how Sacramento would benefit economically from a new entertainment and sports complex."
Capitol Public Finance Group, a public finance consulting firm, has volunteered to do the study without pay. It is planned for release at a Jan. 7 task force meeting.
In addition to the two railyard proposals, two plans call for siting an arena in the heart of downtown.
Tripp Development would place an arena at Third and L streets, at the current site of a city parking garage.
Real estate consultant Rick Tripp said he has proposed what he thinks is a unique financing mechanism, in which certain real estate agents who value the Sacramento Kings agree to forward sales commissions as an investment in the project.
Ali Mackani, owner of Lounge on 20, proposes an arena at the east end of the Westfield Downtown Plaza shopping mall on K Street. That plan, according to a task force synopsis, includes a focus on retail and dining around the facility, and a public park.
Another respondent, restaurateur Matt Haines, contends that the railyard and K Street sites could create entertainment districts that harm struggling restaurants in the central city.
He and partner Matt Rallens, a graphic designer, propose an arena along the Sacramento River in what city planners call the Docks area, south of Old Sacramento and north of Broadway.
He proposes paying for the arena through a "seat mortgage" method used by some universities. UC Berkeley proposes to finance renovations and seismic upgrades to its football stadium by selling long-term personal "licenses" for 3,000 of the 72,000 seats.
Natomas ESC Partners, a development group backed by members of the Natomas Chamber of Commerce, is proposing a facility on the city-owned 100 acres adjacent to the existing Arco Arena.
Group spokesman Jeff Baize, head of Brookhurst Development, said the site is owned by the city and has parking and proper zoning, making it a less expensive place to build.
Local resident Doug Tatara has submitted a proposal for an arena and theme park at Cal Expo.
Cal Expo officials have been in talks with the NBA for two years on an arena and new fairgrounds there. That effort is still alive but has slowed dramatically in recent months.
Johnson said he will meet in New York next month with NBA Commissioner David Stern to update him on Sacramento's efforts.
PROPOSAL CALLS FOR REAL ESTATE COMMISSIONS TO FUND ARENA
January 14, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - Real estate brokers would be asked to give up a six percent commission on
land sold or leased in the area around a proposed arena to fund the Sacramento venue's construction under a plan proposed by developer Rick Tripp.
Using Tripp's numbers, a $400 million arena would take the commissions of more than 22,000 real estate deals.
How many real estate brokers would be willing to give up a piece of their commissions to pay for an arena? Sacramento real estate broker Dave Herrera said the rough economy makes that unlikely.
Tripp's plan is one of six being submitted to a task force studying the arena.
Meanwhile, a new report says the arena would create 1,300 temporary jobs and 229 permanent jobs.
The report was prepared at no cost by Sacramento consultants Capitol Public Finance Group.
Once the building opens, the economic impact would grow, the study says. Because the arena would be larger and have more amenities than Arco Arena, it would take about 375 extra workers to operate it.
The study makes allowance for what's known as the "substitution effect." That means that the money spent by fans at the new arena takes dollars away from other entertainment venues in the community. The study also acknowledges that some of the new employees will live outside the city.
Given those factors, the net gain in permanent jobs within the city is 229.
KINGS, NBA BACK PLAN FOR FAIRGROUNDS
January 21, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - The Kings and the NBA have announced support for a new plan that
would see an arena built for the team downtown and the state fairgrounds move to property near Arco Arena.
The proposal, involving three prime pieces of Sacramento real estate, is one of seven arena concepts submitted in response to a request from Sacramento Mayor Kevin Johnson two months ago for help in finding a replacement facility for aging Arco Arena.
The mayor's sports and entertainment facility task force unveiled the seven proposals recently.
Under the NBA-backed arena plan, the city and state would be part of a joint-powers authority created to manage financing of the project. The developers involved include Gerry Kamilos and David Taylor.
The plan calls for a three-part land swap: The state would sell the current Cal Expo site to a development group that would redevelop the property into a mixed-use community. The state, in turn, would take over the existing Arco Arena site in Natomas, now owned by the city and the Kings, and transform it into a modern state fairgrounds and exposition center. And a new Kings arena would go up on city-owned land in the downtown rail yard.
NBA representative John Moag said the NBA and the Maloof family, owners of the Sacramento Kings, are backing the proposal because it comes with what has been the missing link in Sacramento arena discussions: financing commitments from two major investment firms.
State officials say they are willing to sell Cal Expo as long as they are assured they will end up with a new state fairgrounds.
Representatives of the mayor's task force said the proposal is among several they received that look impressive. The task force, a 12-person citizens volunteer group, plan to review the proposals and submit an arena concept to the mayor in March.
Downtown rail yard owner Thomas Enterprises also is proposing building a sports and entertainment center on the city-owned land at the lower end of the downtown rail yard.
Natomas ESC Partners proposes an arena on the city-owned 100 acres adjacent to the existing Arco Arena.
Two submissions call for siting an arena in the heart of downtown: Tripp Development would place an arena at 3rd and L streets, at the current site of a city parking garage. Ali Mackani proposes an arena at the east end of the Westfield Downtown Plaza shopping mall on K Street.
M&M Group, led by Matt Haines, proposes an arena along the Sacramento River, south of the Embassy Suites hotel, in what city planners call the Docks area.
Doug Tatara has submitted a proposal for an arena at the current Cal Expo site. Chris Lehane, co-chair of the task force, said his group will review the proposals.
NATOMAS GROUP SEEKS TO KEEP THE KINGS AT ARCO SITE
February 4, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - A group of Natomas business leaders are pushing a plan to keep the Kings
at their present location and build a new arena nearby. The odds are against the group, however, as five of the seven proposals for the team's new facility, including one favored by the Kings and the NBA, have the arena located downtown.
The Natomas group, Natomas ESC Partners, along with architect Michael Corrick and several developers, turned in its proposal 15 minutes before Johnson's Christmas Eve deadline. NBBJ architects - designers of Los Angeles' Staples Center - did conceptual drawings for the plan.
It calls for a complete reinvention of the Arco site, part of which is owned by the city, part by the Kings. Besides the arena and retail offerings, the group proposes a "green tech" research and office park on the site and a small "car-reduced" residential community next to what may be a future light-rail station.
The old arena would stay, possibly as a green tech science center. Its roof and the downsized parking lot would be lined with solar panels. A greenbelt and wetlands would wind through the center of the site.
The goal, said Scott Hunter of NBBJ, is to use advanced technology to heat and cool the arena and other facilities.
"We wanted to propose something unique to this site that you couldn't do in a downtown site," Hunter said.
Notably absent from the proposal is any detailed plan for financing. Natomas ESC Partners has listed possible revenue sources. But most of those involve proceeds from arena operations - revenue the Maloof family, which owns the Kings, has been unwilling to give up in past financing discussions.
Natomas group spokesman Jeff Baize of Brookhurst Development Corp. said it's impossible to come up with a financing plan until Kings officials, the city and developers sit down to negotiate.
Baize said he guesses an arena at Arco could be 30 percent less expensive to build than downtown because roads and parking already are in place.
The proposal faces other challenges.
The suburban site virtually requires arena users to arrive in cars. Sacramento transportation planners say major new developments, especially an arena, should be linked to light-rail and bus systems.
A light-rail line is planned for nearby Truxel Road with a stop six-minutes walking distance
from the proposed arena. Transit officials, however, do not have the money to build the line now.
February 11, 2010
Copyright 2010 MediaVentures
The Sacramento City Council has told the city's staff to review all seven proposals recently submitted for a new arena to host the Kings. The move was against the wishes of Mayor Kevin Johnson who wanted a citizen committee continue its work reviewing the plans. That committee is to report March 11. The city council favored a proposal also backed by the Kings and the NBA and wanted the city to begin its review, but without limiting the other options.
February 18, 2010
Copyright 2010 MediaVentures
Former NBA player Magic Johnson could be involved in the development of a new arena in Sacramento. Johnson's company - Magic Johnson Enterprises - has done extensive work with the Skanska construction firm which is part of a group that wants to build the arena near Arco Arena in Natomas. Magic Johnson Enterprises owns a string of movie theaters and restaurants, many in minority neighborhoods. MJE also has financed real estate developments in several states. Johnson's possible role has not been defined.
SACRAMENTO OFFICIALS WANT BIDDERS TO OUTLINE FINANCING
February 25, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - While Sacramento officials review proposals from seven groups interested
in developing a new arena for the Kings, they're also asking how the venue will be funded.
Several of the contenders suggest selling long-term seat licenses to arena users. One talks
about enlisting civic-minded real estate agents to donate commissions. Another relies in part on competing for federal transportation and job-creation funds. And one would ask major corporations to pay sponsorship fees.
The task force has three weeks to sift through the plans and deliver recommendations to the mayor. The 12-member volunteer group includes financial experts, developers, architects, political consultants and business owners.
Mayor Kevin Johnson has said he will bring recommendations to the City Council. Johnson launched his arena effort in October, saying he feared the Sacramento Kings could leave town if a replacement isn't found for aging Arco Arena.
Johnson said he does not intend to consider proposals that would impose new taxes on residents, or that would put the city general fund at risk.
The Kings have offered to pay $10 million in annual rent for 30 years, with annual adjustments, under an agreement with a group led by developer Gerry Kamilos.
"That's substantive to me," said downtown developer David Taylor, Kamilos' partner in the arena proposal.
The National Basketball Association supports the Kamilos plan.
That concept involves a three-way land swap: moving the state fairgrounds from Cal Expo to the current Arco Arena site in Natomas; buying the Cal Expo property from the state for a development project that could generate revenue for arena construction; and building a new arena in the downtown railyard.
Task force member Mark Harris, who deals in infrastructure finance, said the Kamilos proposal is one of three that stand out in his eyes.
He said he also was impressed with presentations from Thomas Enterprises for an arena on the same railyard site as the Kamilos proposal, and with restaurateur Ali Mackani's proposal for an arena at Seventh and K streets.
CAL EXPO DROPS ITS PLANNING WITH NBA
March 4, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - The Cal Expo board of directors voted to terminate a letter of
understanding it had with the NBA regarding a 2-year-old proposal to build a basketball arena at the state fairgrounds. That proposal had already been ruled dead because of a lack of financing.
The letter had prohibited Cal Expo and the NBA from talking with third parties about alternative plans. However, the NBA already had signed off on a separate proposal to move Cal Expo to Natomas and develop the state fairgrounds to help finance a new arena in the downtown railyards.
The NBA's actions upset Cal Expo officials who sent a letter of their own to John Moag, the league's representative, saying the scope and spirit of the agreement had been violated.
The letter of understanding stipulated that neither side would engage in talks with a third party or take actions that could be disruptive to the proposed arena and redevelopment plan.
Moag responded in a letter saying he is "mystified" by Cal Expo's assertions, pointing out that he briefed them about the new plan last year, and Cal Expo officials themselves met with the developer.
He further accused Cal Expo officials of violating the agreement by negotiating a horse-racing deal that conflicted with the arena plan the two sides had been working on.
The developer behind the proposal endorsed by the NBA, Gerry Kamilos, answered a series of questions from the Cal Expo board about his plan. Kamilos has indicated that he wants to enter into an exclusive negotiating agreement with Cal Expo, but board members said they were not ready to vote on such an agreement.
March 11, 2010
Copyright 2010 MediaVentures
A citizens panel in Sacramento will recommend that a new arena for the Kings be built
downtown at a site near the city's railyards. The site is different than one that has been pursued at the Expo center and which the NBA had favored until the latest proposal came along. Task force leaders reportedly say they believe the city's best chance of success appears to be a plan involving privatizing the Cal Expo site, moving the state fairgrounds to the Arco site in Natomas and building an arena on city-owned land next to the I Street train depot in the downtown railyard. The financing proposal includes two major private investment companies and a $300 million-plus financial commitment from the Kings over the next 30 years. It would require quick cooperation from numerous entities, including state legislators, the governor, Cal Expo officials, the Sacramento Kings, and city and county officials.
SACRAMENTO COUNCIL SUPPORTS KAMILOS ARENA PLAN
March 18, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - Support has come together on the Sacramento City Council for a plan to
build a new arena for the Kings in the downtown railyard area. The proposal by Gerry Kamilos, already backed by the National Basketball Association and Sacramento Kings, was the top choice of a mayoral arena task force convened to find a replacement for Arco.
In making that recommendation in a special council session, the task force urged the City Council to enter into an exclusive negotiating agreement with the Kamilos team to secure financing for the project.
Mayor Kevin Johnson said he wants an agreement in place by next month - and it appears much of the council is with him.
For the proposed deal to work, the city likely would have to donate 100 acres it owns next to Arco Arena and a small plot of land it owns in the downtown railyard.
The project also faces a complex list of legislative, economic and political hurdles.
A critical element of the plan involves selling the state fairgrounds site at Cal Expo and moving the fair to the current Arco Arena site in Natomas. That would require the cooperation of the state Legislature, the governor and the Cal Expo board of directors.
Expo officials say they are intrigued, but first must determine whether the State Fair can fit on the small Arco site, and whether building in Natomas pencils out.
As proposed, the state also would have to agree to designate the Cal Expo site as a special tax district. Taxes in the district from new housing, business and retail development would help pay for arena construction debt.
Despite the daunting challenges, the task force said it recommended the Kamilos project because it had the most detailed financing of the seven proposals it considered.
Kamilos has two major investment partners on board and a $300 million-plus commitment from the owners of the Kings over the next 30 years.
REPORT: ARCO SITE TOO SMALL FOR STATE FAIR
May 20, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - New research says the Arco Arena site being proposed as a new home for
the California State Fair is significantly too small for the fair's needs. The Arco site is about 185 acres while the fair needs some 400 acres.
State officials are being asked to move the fair to the Arco site, and to sell Cal Expo for private development to generate financing for a downtown sports and entertainment facility.
State Fair officials say they've been aware of the acreage issue for some time, and are exploring building a more compact fair with two-story exhibit halls.
They also have asked the private developers behind the arena plan to see if several adjacent vacant land sites are for sale.
Owners of a 25-acre site next to Arco say they have been contacted by land-swap developers and are willing to discuss selling their property.
Cal Expo General Manager Norb Bartosik said the acreage numbers in the report are just part of a preliminary assessment, and not a deal killer.
"We can't just look at (the acreage) and say it doesn't work," Bartosik said. "There are new design techniques" for state fairs.
Sacramento city officials, who are being asked to donate their land at the Arco site, agreed last month to negotiate with the arena land-swap team, headed by developers Gerry Kamilos and David Taylor, and backed by the Sacramento Kings and the National Basketball Association.
Kamilos is asking state officials to join the negotiations. His plan would give the state the Arco site, including the arena, for free, as well as financing to build a new State Fair there.
State officials, however, say they need to do their own studies of the Arco land first.
Their consultant's preliminary acreage assessment for a new fairgrounds includes 130 acres for parking, and 100 acres for a racetrack.
Cal Expo officials have indicated it isn't essential to have a racetrack on the fairgrounds site. But, even by eliminating the racetrack or building it elsewhere, the Arco site comes up more than 100 acres short.
The consultant's report points out a new State Fair would require fewer acres if exhibit halls were built two stories tall and off-site land were used for some parking. It does not say what size parcel a smaller State Fair might require.
Developer Kamilos, who put together the land-swap plan, known as Sacramento Convergence, said his group has talked briefly with adjacent property owners about whether they are willing to sell. But, he said, state officials first need to look at how "vertical" it can make a fair at the site.
Purchasing additional land, however, would drive up the cost of the land-swap deal. State Fair officials say they have yet to see how the plan will pencil out.
The state's consultant, A. Plescia & Co., is reviewing the Arco site and the proposed deal finances. Plescia also has been instructed to look into whether the state can finance rebuilding the fair at the current Cal Expo site.
While the land-swap deal is complex, Cal Expo General Manager Bartosik said the state needs to take a thorough look at it.
"We owe it to ourselves to go through the (exploratory) process to find out what can or can't be done," he said. "We have to be able to demonstrate to the board and the community we have looked at all the options before we make a decision."
May 27, 2010
Copyright 2010 MediaVentures
The Cal Expo board will vote June 25 on whether to enter three months of nonbinding talks
with the National Basketball Association on a deal to take over Arco Arena and the land around it so a new venue for the Sacramento Kings can be built downtown. Expo officials who have been studying the proposal say the land under consideration is too small for their needs.
REPORT: NEW SACRAMENTO ARENA COULD BOOST DOWNTOWN
July 1, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - A new report says an arena built in the city's railyard area along with an
investment in other downtown assets such as Old Sacramento, would maximize the economic impact of the venue and strengthen the neighborhood, according to the Sacramento Press.
The report was released by the Downtown Sacramento Partnership in collaboration with a consulting team from the University of California-Davis Graduate School of Management.
According to the study, transportation access and connectivity, public safety, and local business development in conjunction with reinvestment in the Downtown District are major factors in the future success of an entertainment and sports complex at the Railyards, the newspaper reported.
The report cites several case studies of both successes and failures of downtown arenas throughout the country. Indianapolis, which used arena development as part of a long-term downtown revitalization strategy, reported a 78 percent increase in annual downtown visitors compared to 15 years ago. In contrast, Baltimore failed to connect two sports stadiums at Camden Yards and as a result experienced no additional development or revitalization in nearby neighborhoods, the newspaper said.
"As the ESC discussion moves forward, this analysis will be a very effective tool to communicate priorities for future development," Michael Ault, executive director of the partnership told the newspaper. "It also supports the case for continued investment in Sacramento's core assets and the Downtown District."
July 22, 2010
Copyright 2010 MediaVentures
The group attempting to build a downtown sports arena will have two extra months to negotiate a deal with the city of Sacramento, according to The Bee. The City Council granted the Convergence group a two-month extension on its exclusive window to negotiate with the city. The group now has until late October to wrap up the basics of a deal. Betty Masuoka, the city's executive project manager, told The Bee more time is needed for the Cal Expo board to evaluate the plan and for the Legislature to consider special legislation needed to make the land swaps work. The city also needs additional time to evaluate the finances, she said.
FINANCING OF SACRAMENTO ARENA SITE THREATENED
August 5, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - An outstanding loan default could endanger $30 million in state grants
promised to Thomas Enterprises for development of the downtown railyard site that could be the future home of an arena for the Kings, according to the Sacramento Bee.
State department of Housing and Community Development officials have informed Thomas Enterprises the state is stopping disbursements of Proposition 1C grant funds to the developer pending Thomas' resolution of an outstanding loan default with a private lender, the Bee reported.
That state's action could potentially shut down work on what has been described as one of the largest infill development projects in the country, the newspaper said.
Thomas has been relying on state grants to build a bridge in the railyard that will allow extension of 5th Street from downtown into the now-landlocked site.
The city of Sacramento, at the same time, is using state grants to finance construction nearby of a bridge that will carry 6th Street into the railyard. Those grants to the city are not in jeopardy, officials told the newspaper.
Thomas, the Atlanta-based company that bought the 240-acre railyard in 2006, already is faced with losing the entire site for failing to make good on $186 million in loans. The company is now in negotiations with the lender, Inland American of Illinois, according to the Bee.
State housing and community development officials sent Thomas a letter saying they want to see a resolution of that matter before they forward any more state funds to Thomas.
"Due to (Thomas') failure to pay its outstanding debts ... the department questions (Thomas') ability to complete the project pursuant to the requirements of the infill infrastructure grant program," the letter reads.
The Bee said the letter gives Thomas 30 days, but the state HCD official Chris Westlake said the state is talking with Thomas and Inland, and may not pull the grant as long as solid progress is being made after the 30-day mark.
"We would have to evaluate where the negotiations are at that point," Westlake told the newspaper. "It is a fairly large amount of funds we have awarded them."
Thomas officials told the Bee they and their lender, Inland, are taking the matter seriously, and are hopeful of coming to a resolution soon.
City officials told the newspaper they are concerned but not surprised that the state has decided to withhold the grants.
August 19, 2010
Copyright 2010 MediaVentures
Sacramento Developer Jerry Kamilos has asked the California state fair board officials to give him 30 more days to develop elements of an arena land swap proposal that would relocate the fairgrounds to Natomas, a state fair official told the Sacramento Press. Kamilos, who is proposing to build a downtown arena for the Kings, reportedly asked the California Exposition and State Fair board to postpone releasing a consultant's report on his proposal to sell Cal Expo and swap that fairground site for the Arco Arena site until Sept. 17. Cal Expo officials had planned to release the report this week. The developers need more time to provide a more detailed cost estimate and information on how the state fairgrounds would fit in Natomas, as well as on transportation and circulation plans, minimizing impacts on neighbors, public forums and other needs, Kamilos told the newspaper.
LEGISLATOR SEEKS ANSWERS ON ARENA/FAIR PLAN
August 26, 2010
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Sacramento, Calif. - California Senate President Pro Tem Darrell Steinberg has told city
officials he wants more questions answered before the state will consider legislation to allow the sale of Cal Expo, the state's fairgrounds, as part of a proposal to build a new arena for the Kings, according to the Sacramento Bee.
Developers had been pressing for legislation this month to pave the way for a complicated deal that would move the State Fair to the Arco Arena site, the Kings' current home, and finance a new arena near the downtown rail depot.
The arena site would be on land the city has agreed to purchase from railyard owner Thomas Enterprises. Arena proponents have said they do not believe Thomas' current financial problems - including potential foreclosure - will affect the arena project, which is separate from Thomas' railyard redevelopment project plans, the newspaper said.
Much of the financing would come from the sale and private development of the Cal Expo site, according to the land-swap plan proposed this year by Sacramento developer Gerry Kamilos, and backed by the National Basketball Association.
Steinberg said the time is not right for a bill. But in a letter also addressed to Kamilos and the NBA, he held out the possibility that a bill could still be considered at the end of the year, the newspaper said.
Cal Expo officials say they have not yet decided whether it makes sense to move to a new site. A Cal Expo consultant's report with detailed information, including costs and acreage requirements, is due to be published next month.
According to the Bee, Steinberg encouraged stakeholders - including the city of Sacramento, Cal Expo, the Kings and the Kamilos group - to continue working on the plan.
STUDY AGAINST MOVING CALIFORNIA FAIR TO ARCO SITE
September 16, 2010
Copyright 2010 MediaVentures
Sacramento, Calif. - A consultant is recommending that the California State Fair not move its
site to the Arco Arena area, according to the Sacramento Bee. If the advice is followed, it could endanger plans to build a new arena for the Kings downtown.
Consultant Andrew Plescia said the state instead could feasibly remodel its existing State Fair over time at the current Cal Expo site.
Plescia said selling 125 acres of the existing 350-acre Cal Expo site to developers likely would generate enough money for incremental improvements at the 43-year-old fairgrounds, the newspaper reported.
In contrast, Plescia wrote that a complicated land swap plan - designed to also finance a new arena in the downtown railyard for the Sacramento Kings - is based on an optimistic market analysis that could expose the state to substantial financial risks.
The Bee said Plescia's report was immediately countered by a dramatically revamped proposal from the development team that has been pushing to move the State Fair to the Arco site and to use proceeds from selling and developing Cal Expo to help finance a new Kings arena.
Gold River-based developer Gerry Kamilos told the newspaper he has engaged VisionMaker Worldwide, a Southern California company that designs and operates luxury resorts and amusement parks, to partially finance and operate a new state fairgrounds at the Arco site.
VisionMaker, run by former Disney and Universal Studio executives, would be willing to finance $125 million to $150 million of the cost to build and privately operate a 365-day-a-year expo center with a hotel and satellite wagering facility, Kamilos said.
That private financing would bridge a financing gap identified in the Plescia analysis for erecting a new State Fair site at Arco, estimated to cost $250 million to $300 million.
The state would own the site, including some additional nearby land, and would step in three weeks each year to run the State Fair, with a guarantee the state would at least break even financially, according to Kamilos' new proposal.
Initial drawings by VisionMaker show glass-walled expo halls with sloping green roofs, an amphitheater, a high-rise hotel, a massive Ferris wheel, and trolley cars to take people to nearby parking lots, the newspaper reported. The conceptual sketches include a tower bearing the name "California Park."
Kamilos said he submitted the new plan to Cal Expo in response to concerns about his land swap financing plan.
"It delivers to the state a new Cal Expo complex with the assurance by the private operator that the State Fair would not lose money," Kamilos said. "We listened to the issues and concerns the state board consultant team and staff had, and we basically responded to that."
Kamilos said VisionMaker Worldwide participated in putting together the conceptual financial plan, and would work with State Fair officials on a design for the facility.
The Cal Expo board is scheduled to review the Plescia report at a Sept. 24 meeting.
State Fair directors have been leery of the land swap proposal since it was proposed late last year. But the current fairgrounds is outdated and more than $40 million behind in repairs that have yet to be funded, officials say. A new facility with new expo halls would allow them to draw more trade shows and other events to the site throughout the year, they said.
The revamped Kamilos plan still calls for the current Cal Expo site to be sold in its entirety to a private development group. That would generate sales proceeds and create new tax revenue that would, combined with private investment, finance a new arena and fairgrounds, the Bee reported.
National Basketball Association officials, who have backed Kamilos' land-swap plan, have said
it's up to Sacramento officials to make it work.
CAL EXPO REJECTS PLAN TO MOVE FAIR
September 30, 2010
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Sacramento, Calif. - Cal Expo officials have rejected a plan to move the State Fair to the Arco
Arena site as part of a deal that would see a new arena built in Sacramento's downtown for the Kings, according to the Sacramento Bee.
After the announcement, the NBA, which has been representing the Kings in the effort to develop a new arena, said it would no longer take an active role in the process.
"On the heels of the disappointing - but not surprising - action (or inaction) of the state and Cal Expo board, it is fair to say that the NBA has ceased its activities on the Sacramento arena front," league representative John Moag said in an e-mail to The Bee. "However, we will continue to monitor and respond to the activities and options of others that might reasonably ensure the competitiveness and viability of the Kings' franchise."
"Is this deal dead? Absolutely not. But we have an uphill battle," local developer David Taylor, a partner with developer Gerry Kamilos in what has been called the Sacramento Convergence proposal, told the Bee.
Kamilos told the City Council this week that he would bring more details of a new plan to the council in October, but that it would involve an expanded role by VisionMaker, a southern California firm that develops and operates resorts and theme parks.
Taylor said he and Kamilos were "not starting from scratch" and that the team thought it was "worth our time and money" to continue working on an arena plan for downtown.
Taylor said revenue generated by VisionMaker and equity provided by the firm would help free up funding from the development team to help build an arena.
"We don't have it all figured out, but we have enough critical elements that it's very promising," Taylor said.
Sacramento Mayor Kevin Johnson said through a spokesman that the city would continue to work on getting a new arena built. But in a blog post, the mayor also suggested the city could consider a deal to renovate Arco Arena. NBA and Kings officials let it be known they weren't interested in a renovation, according to the Bee.
The Cal Expo decision, coming after months of study and public debate, eliminates the critical third leg of the complex land-swap proposal, first introduced by Kamilos late last year.
The plan would have moved the State Fair to the Arco site, and used money from the sale and redevelopment of Cal Expo to help pay for the new fair in Natomas and an arena for basketball and other events in the downtown railyard.
Cal Expo board members voted 7-2 against the idea, saying the Natomas site is too small and not visible enough from the freeway, according to the Bee.
The Kings and the National Basketball Association have deemed Arco, the second-oldest arena in the league, outmoded and undersized. NBA officials say the team can't compete long term in the high-finance professional sports world without a facility that has more modern revenue-generating amenities, such as upscale lounges, more luxury suites and club seats.
Sacramento Kings officials declined to talk to the newspaper, but issued a brief statement from co-owner Joe Maloof.
"We must continue to work hard to find a solution," the statement read. "We look forward to hearing what are the next steps and options. Right now we are focused on our exciting upcoming season."
The land-swap proposal emerged from a handful of proposals last year in response to the mayor's call for an arena financing plan that did not require a major taxpayer subsidy.
Johnson said the city had learned a lesson from the spectacular ballot-box failure in 2006 of a plan to publicly finance an arena in the railyard with a sales tax increase.
Cal Expo's decision leaves the State Fair in a quandary. The 42-year-old fairground is, much like Arco Arena, old, outmoded and in need of extensive upgrades.
Cal Expo officials said they might reconsider if the Kamilos group came back to them with a new site in Sacramento better suited to their needs.
MALOOF DISAPPOINTED OVER CAL EXPO DECISION
October 7, 2010
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Sacramento, Calif. - Kings owner Joe Maloof says he's disappointed that a plan to move the
state fair to the Arco Arena site as part of an effort to build a new downtown fell through, according to KTXL.
Maloof talked to the television station about the need to "get something done", and he would not discuss the possibility of moving the team. He said his family loves Sacramento, and added he doesn't even like to think about relocating the team, even though he and his co-owner brother Gavin have received multiple telephone calls from other cities inquiring about the possibility of moving the Kings to a new location.
Answering critics who argue the Maloofs should pay for the arena themselves, Maloof says that is not feasible. An arena that could cost as much as half a billion dollars would carry a debt service of thirty million dollars a year, an amount Maloof called impossible.
Maloof told KTXL his family has committed to paying "their fair share" to help build a new facility and he hopes people realize a new arena benefits the entire area, not just the Kings. Maloof said Arco Arena is booked for events an average of 150 days a year. Only 41 of those dates are regular season Kings games.
The other 100 days are booked for ice shows, concerts, boxing, monster truck shows, graduation ceremonies and similar events. Without a new arena, according to Maloof, all those events will be hard pressed to find a suitable facility in Sacramento. He noted the NCAA refuses to bring it's basketball tournament to ARCO because the building is too small to meet the NCAA's needs.
SACRAMENTO MAYOR TO REVIVE TASK FORCE
October 28, 2010
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Sacramento, Calif. - Sacramento Mayor Kevin Johnson told the Sacramento Bee he is
reconvening his arena task force to examine proposals for a new facility now that a plan to build a downtown sports arena vias a complicated land swap is officially dead.
Describing the land swap plan as a "three-headed monster," the mayor said the failure of that proposal has not diminished his optimism that a solution will be found to the city's years-long attempt to replace Arco Arena.
"We have a lot of goodwill that we've built up," the mayor told the Bee. "People feel a sense of renewed trust and confidence on a topic that no one wanted to talk about for years."
A negotiating agreement between City Hall and the team behind the land swap expired and officials briefed the City Council "on the next steps of how to 'reboot' the process" of building a new arena, Betty Masuoka, the city's consultant on the arena proposal, wrote in a memo.
Masuoka recommended that city staff look at other arena proposals submitted to the mayor's task force last year.
Johnson said his arena task force, first formed last November, would meet once before Thanksgiving to "assess where we are and make recommendations going forward." He said it's unlikely the task force would submit a formal report, but would act in an advisory capacity.
The task force will examine six other arena proposals it had reviewed before recommending the so-called Convergence plan. That proposal called for the State Fair to be moved to the current Arco Arena site, with proceeds from the sale and development of Cal Expo used to help build an arena in the downtown railyard.
The Maloof family, owners of the Sacramento Kings, have said they are frustrated but are trying to remain positive.
Johnson said: "The Maloofs have never told my people, 'We're out of there by this date, we're drawing a line in the sand.'
"But I'm smart enough to know that at some point, if we can't get an entertainment and sports complex built, they're going to start looking around, as they probably should," he said. "They've never said that, but I understand the nature of business."
SACRAMENTO RESTARTS ARENA PROCESS
November 18, 2010
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Sacramento, Calif. - Mayor Kevin Johnson has told his revived arena task force that he wants a
recommendation on how to build a new arena on his desk by early next year, the Sacramento Bee reported. The committee will solicit and review proposals from developers before making a recommendation.
Johnson said he wants a new facility to help keep the Kings in town but also believes the city should have a more modern entertainment venue for concerts and other entertainment events.
The Bee said the quest to build a new arena in Sacramento has lasted most of this decade and frustrated a succession of local politicians. Kings and National Basketball Association officials have said the team must consider leaving Sacramento at some point if a new arena isn't built.
At least two of the development teams involved in Johnson's first attempt are expected to take another shot.
Developer Gerry Kamilos told the Bee he plans to submit a proposal in early January for an arena on the city-owned section of the downtown Sacramento railyard.
Kamilos has declined to describe his proposal, but says it is a modified version of the failed three-site land-swap he proposed last year.
The plan likely would also involve helping Cal Expo design and finance an updated fairgrounds at its current site. State Fair officials have said they are willing to listen to Kamilos' plans, but have not yet decided which direction they will take in refurbishing the fairgrounds.
Kamilos said he still has in his stable three major companies that would bring several hundred million dollars in equity to a deal: VisionMaker Worldwide, Macquarie Capital and PCCP.
Jeff Baize, the CEO of Brookhurst Development and the spokesman of a group behind a plan to build a new facility adjacent to the Arco site in Natomas, told the newspaper his team would submit its proposal again.
However, Baize said the group is "concerned that it has been preordained that the project will go downtown and any other proposal will not receive adequate review."
In addition to a new arena, the Natomas proposal calls for restaurants, a cinema, housing and a "green tech" research and office park.
FOUR FIRMS BID ON SACRAMENTO ARENA
January 6, 2011
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Sacramento, Calif. - The Sacramento Bee says four development teams submitted proposals to a
task force formed by the mayor to develop a new arena. Two of the teams are focusing on the downtown railyard as their preferred arena site.
The proposals will be aired at a public hearing. The task force will then analyze the plans and offer its critique to the City Council before it holds a discussion on the arena Jan. 25.
Chris Lehane, the arena task force chairman, told the Bee he was pleased with the response to the committee's call for proposals.
"This is like getting four first-round picks," he said. "You have four teams, all of which have very credible folks with strong track records of success and who have demonstrated over their careers that they are capable of completing major projects."
This is the second time Johnson's task force has met to analyze arena proposals. A plan it endorsed earlier this year, which involved moving the State Fair to Natomas and building an arena in the downtown railyard, fell through after the Cal Expo board voted not to relocate the fair.
Among the groups involved in the newest round of proposals is a team led by developer Gerry Kamilos, who had spearheaded the land swap deal involving the State Fair.
Kamilos is again proposing to build an arena on city-owned property in the downtown railyard. But this time, he's proposing to help Cal Expo develop a new State Fair at its current site and redeveloping the current Arco Arena site in Natomas into a mixed-use development.
Revenues generated by those projects and private financing would help fund the improvements at both the Cal Expo and Arco sites and the new arena.
Kamilos' team includes Hunt Construction, the company that headed the construction team for the new Amway Center in Orlando, Fla.
Their competition includes a team of local developer David Taylor; ICON Venues, which has managed several recent arena and stadium projects; and Turner Construction, which is building the new jet concourse at Sacramento International Airport.
In a letter to the task force, that team said it would focus its efforts on a new arena in the downtown railyard linked to a transportation hub.
Also in the mix is a group made up of Larry Kelley, developer of the McClellan Business Park, attorney Mike Kvarme and downtown businessman Ali Mackani, who previously had submitted a proposal for downtown's K Street.
Mackani said his group is still focusing on K Street as the arena site. But, he said, the group has spoken with Inland American Real Estate Trust, the Illinois investment company that owns the railyard, about that site and would consider it "if it makes sense financially."
He said K Street has infrastructure and surrounding businesses in place to make it an instant destination.
Additionally, a Natomas-based team resubmitted a proposal to build an arena at the current Arco Arena site, arguing the group has strong financing available and that its proposed location is the most "shovel-ready" because of existing infrastructure.
"The reality is the Natomas plan can be completed in less time and for less money. It's that simple," said Ed Koop, the president of the Natomas Chamber of Commerce.
"There's no taxpayer money involved, the access to infrastructure is already in place and even though it's in Natomas, it would still benefit the greater Sacramento area by providing jobs, retail and motel growth, and an overall economic stimulus."
TAYLOR GROUP RECOMMENDED TO DEVELOP SACRAMENTO ARENA
January 27, 2011
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Sacramento, Calif. - A mayoral task force has recommended David Taylor, developer of several
downtown high-rises and City Hall itself, as the best candidate to solve the decade-long quandary of how to finance a new home for the NBA's Kings, but the Sacramento Bee said the City Council has its own ideas and rejected the idea in favor of asking the four competing teams to resubmit their qualifications.
The city's staff was also instructed to describe more precisely how they would approach the task of financing a new sports and entertainment complex. The report is due back in two weeks.
Mayor Kevin Johnson told the Bee he expects the council to make a threshold decision in two weeks, choosing one of the four teams as a partner going forward.
City Manager John Dangberg told the council a key element would be determining what financial investment the Kings owners would be willing to make in a new facility.
The Kings have been silent in recent weeks about the arena efforts, including whether they might file an application with the NBA this year for permission to move to another city. The NBA deadline for such a request is March 1, league executives told the newspaper.
By ranking Taylor above three other teams, Mayor Johnson's task force decided the best proposal for a new arena at this point isn't a proposal at all, the Bee said.
Taylor has offered only a promise to spend the next three months studying the feasibility of an event facility in the downtown railyard.
"All we've done is make an offer to spend 90 days to analyze the hell out of the deal," Taylor said told the newspaper. "Then we'd make a decision to proceed with a full-blown proposal or just say, 'You know what? This isn't going to work right now.'"
In highlighting Taylor, the Bee said the task force went with the developer who has been the most forceful in saying a public contribution will be needed to build an arena.
Task force Chairman Chris Lehane said his group, a volunteer panel chosen by the mayor, isn't directly recommending the city work with Taylor, saying only that the group appears to be the best bet.
The panel gave second ranking to a proposal to redevelop the Downtown Plaza site by mixing an event center with a shopping district. That group is led by businessman Ali Mackani and McClellan Park developer Larry Kelley.
Third on the list is a plan by developer Gerry Kamilos to redevelop the Arco site and part of the Cal Expo site to generate funds, along with private financing, for a downtown arena. An earlier Kamilos land-swap proposal involving moving the State Fair to the Arco site fell through last fall when Cal Expo officials declined to participate.
A proposal for an arena next to Arco ranked fourth on the task force list. Panel members said they strongly prefer a downtown site.
The task force, made up mainly of local business people, has repeatedly said no new tax should be part of a deal, a lesson learned when Sacramento voters overwhelmingly rejected a sales tax increase for an arena in 2006.
But in a report to the city, the task force said a sports and entertainment facility "would likely require some forms of public support," citing "infrastructure support, tax increment financing, parking revenue, car rental or other tourism-based fees" as possibilities.
If chosen, Taylor said, his team would first determine a price tag for a downtown arena, then ask the Kings ownership what they are willing to put into the deal.
"That will tell us how much private money we believe we can bring to the table, and how much of a public gap will be there," he said. "Then, it becomes an assessment by the council and possibly other public bodies to say, OK, is this something we can pull off from the public side?
"If not, we will say thanks and go away."
The Bee said Taylor joined forces in December with ICON Venue Group, a Colorado- headquartered arena and stadium developer, after Johnson arranged a meeting. Task force Chairman Lehane told the Bee his group was not influenced by the fact the mayor himself had a guiding hand in bringing Taylor and ICON together.
Asked whether he thought the latest round of proposals was the city's last shot at building an arena and keeping the Kings from leaving, Johnson said the team has not told him it is preparing to leave, but that "the clock is ticking, I really believe that."
SACRAMENTO COUNCIL APPROVES DEVELOPER RECOMMENDATION
February 10, 2011
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Sacramento, Calif. - The Sacramento City Council voted unanimously to spend the next three
months working with downtown developer David Taylor and arena builder ICON Venue Group in analyzing the financial feasibility of building a new sports facility, the Sacramento Bee reported.
After that study is complete, city staff will conduct its own analysis and bring it back to the council. The financial feasibility study will be free for the city.
Taylor said his first task would be trying to meet with the Kings, a process he said he would start immediately. Team ownership has stopped speaking publicly about the arena process.
The newspaper said Taylor is among the most successful developers in downtown Sacramento. His projects include the 25-story U.S. Bank Tower, the 500-room Sheraton Grand Hotel, the 23-story Esquire and Imax building and the new City Hall.
ICON, based in Colorado, has developed more than two dozen arenas and stadiums around the world, including Denver's Pepsi Center and the Sprint Center in Kansas City.
A mayoral task force last month recommended the council work with the Taylor/ICON group. Johnson arranged for Taylor and ICON to join forces in December.
Taylor told the council that this is a pivotal time for the city as it grapples with the issue. He said downtown would be the most beneficial site for an arena.
Tim Romani, the president and CEO of ICON, said that Arco Arena has become antiquated and that it was "no longer economically and culturally viable."
While stopping short of placing a cost estimate on a new arena, Romani told the council, "If you're planning on spending $600 million, we can build you two (arenas)," the newspaper said.
Taylor has been the most vocal of the developers in his belief that the construction of a new arena would likely involve some form of public contribution. He said he would prefer to look at public contributions that would not require a vote or new general tax, including public land donation and car rental taxes.
KINGS EXPLORING OPTIONS OUTSIDE SACRAMENTO
February 24, 2011
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Sacramento, Calif. - ESPN.com reports the Sacramento Kings are seriously considering the
possibility of applying to the NBA by the league's March 1 deadline for relocation to Anaheim for next season, according to sources with knowledge of the team's thinking.
Mayor Kevin Johnson told the Sacramento Bee in response that the city will move ahead with its arena planning, with or without the team.
The Kings haven't made a final decision, but sources told ESPN that team officials were in Orange County, Calif., this month to gather more first-hand data on the feasibility and potential obstacles involved in trying to move to Anaheim's Honda Center at season's end after a 26-season run in Sacramento and numerous failed attempts to secure the financing needed for the construction of a new modern arena.
NBA commissioner David Stern publicly confirmed at his annual All-Star Weekend news conference that the Kings have had discussions with Anaheim officials about a possible move.
In a subsequent phone interview with ESPN.com, Kings co-owner Joe Maloof declined to discuss specifics but said: "We have to look at all of our options at this point. But we also want to concentrate on our team right now. Any of the arena stuff, we'll talk about that later."
Maloof also reiterated comments he's made to the Sacramento Bee about the Kings being approached by "many cities" besides Anaheim.
Sources close to the situation told ESPN, with no NBA-ready arena for the Kings to move into in the Maloofs' home base of Las Vegas, that Anaheim holds the greatest appeal to the Kings.
The Kings have been trying for nearly a decade to replace their arena with a new revenue-generating building that would ensure they stay in a market that was once known as the home of one of the NBA's most fervent fan bases.
Among the issues identified by ESPN that could dissuade the Kings from making the relocation request before next season's deadline in 10 days are the millions still owed by the Maloofs to the city of Sacramento in loans and the behind-the-scenes resistance they could potentially receive from the Lakers and Los Angeles Clippers. The Bee also noted the team pays the city about $1 million in property taxes for Arco Arena.
The network said the Kings would likely need favorable loan and lease terms in Anaheim to mitigate those financial obligations and the franchise might still face opposition from the Lakers and Clippers. Although those teams would only have one vote each and franchise relocations in the NBA only require a 15-14 majority vote for approval.
The Sacramento City Council earlier this month chose downtown developer David Taylor and ICON Venue Group of Denver to spend the next 90 days exploring the feasibility of financing a downtown facility.
A spokesman for Taylor told the Bee the developer and ICON are continuing their efforts, but they have said that a sports and entertainment facility would be harder to finance if the Kings leave.
The Taylor group has been in contact with Kings officials but has not yet set up a meeting to discuss financing for a Sacramento arena, a spokesman said.
KINGS SEEK EXTENSION TO CONSIDER MOVE
March 3, 2011
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Sacramento, Calif. - The National Basketball Association has extended the deadline for the
Sacramento Kings to decide if they want to move to Anaheim, according to the Sacramento Bee.
The NBA announced it would extend the March 1 deadline by six weeks to give the Kings more
time to talk with Anaheim about moving the team south next season.
In doing so, the league signaled a willingness to accommodate the Kings' efforts to find a more
financially stable situation than its aging Sacramento arena, the Bee said.
At a City Hall news conference, Sacramento Mayor Kevin Johnson said he and other
community leaders are nonetheless laying plans to fight to keep the team here.
"The likelihood of them leaving is probably greater than them staying, but it's not a done deal,"
Johnson said. "There is still time on the clock."
The mayor held conversations with NBA Commissioner David Stern and members of the
Maloof family, who own the Kings. The talks were called productive, but no details were released.
The uncertainty over the team's future was underscored by news that the Power Balance sports wristband company is "revisiting" its recently signed deal with the Kings to put the Power Balance
name over the arena door, the newspaper said.
The facility name was formally changed this week from Arco Arena to Power Balance Pavilion,
Kings officials said, and the Power Balance name is going up in spots around the building.
But Power Balance officials said they are delaying installing a Power Balance sign over the
front door pending resolution of the talks that could send the Kings packing to the Honda Center in Anaheim after just 11 more games in Sacramento.
Adam Selwyn, spokesman for Power Balance LLC, told the Bee the company knew when it negotiated with the Kings that a move might happen, but officials were surprised at the speed of the process.
Kings officials will have the opportunity to discuss the team's options at an April 14-15 meeting of the league Board of Governors, made up of 30 team owners, league officials said. That meeting comes the day after the regular season ends.
The Kings, currently in negotiations with Anaheim officials about a possible team move to Orange County, had faced a March 1, league deadline to submit an application for league owners' OK to move to a new city.
Johnson also called on the Kings to make good on their promise to turn over financial documents to Sacramento developer David Taylor, who along with arena builder ICON Venue Group was tapped by the city this spring to devise a financing plan for a new downtown arena.
Kings officials had said in a Feb. 10 statement that they would provide 11 years worth of arena feasibility studies.
Kings officials for years have said they need a new arena with more amenities to allow them to compete financially in the high-stakes NBA. They have not commented on the city's latest effort with the Taylor/ICON group.
Johnson said he will push to get a sports and entertainment facility built in Sacramento, whether or not the Kings stick around. But, repeating a refrain in his press conference, the mayor said, "I hope to goodness that the Kings are going to be here."
SACRAMENTO CONTINUES PUSH FOR NEW ARENA
April 7, 2011
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Sacramento, Calif. - The Sacramento Bee says a grass-roots campaign has emerged to raise
money for a new arena in Sacramento. Within hours, the movement spread through social media and billboards along area freeways.
At the same time, Sacramento city leaders vowed to press ahead with their effort to find an arena financing plan that works. A city-sponsored development team continues to analyze the economics of a new building, with a report expected in late May.
"Our community realizes we need to build a new entertainment and sports complex whether the Kings are here or not," Mayor Kevin Johnson told the Bee. "It's about our city and proving we can get big things done."
Sports financing experts caution that building an arena without a professional sports team would be difficult, but not impossible.
The new, fan-led fundraising drive does not concede the Kings' departure. The campaign began minutes after the Anaheim City Council voted to issue a $75 million bond package to pay for upgrades to that city's Honda Center and to help the Kings relocate to Southern California.
Local Jiffy Lube shops paid for six digital billboards to publicize the "Here We Build" effort to raise money for an arena, and the campaign was mentioned more than 300 times on Twitter, the Bee reported. More than $125,000 was raised in the effort's first few hours after it was launched by local sports radio host Carmichael Dave.
Although that's a sliver of the $300 million or so needed for a new arena, organizers told the newspaper they're encouraged.
"We've been watching everybody drag their feet, thinking the Kings don't have anywhere to go, and now we know they do," Tony Peric, an Internet manager and Kings fan who helped set up the group's website, told the Bee. "The Maloofs, they're not seeing what they need to see. They need to see money, they need to see commitment."
Another effort led by a former city council member proposes to force a referendum in Anaheim over the bonds approved to upgrade the Honda Center.
"It's a completely legal move and I think the voters of Anaheim wouldn't mind a better opportunity to understand what's at risk to them and have a vote on this," political strategist Rob Stutzman told the Bee. "And if Sacramento has any commodity, it's political consultants who know how to do this."
The Sacramento campaign Ð dubbed the Committee to Save the Kings - is being backed financially by, among others, steel company executive Steve Ayers, commercial real estate investor Ethan Conrad and former Sacramento Councilman Robbie Waters. They wouldn't tell the Bee how much money they've raised so far.
In order to place a referendum on the ballot, supporters will need to collect a signature count equal to 10 percent of the number of votes cast in Anaheim in the 2010 gubernatorial election, attorney Jeffrey Dorso, a member of the referendum group, told the newspaper.
That's roughly 12,000 signatures, although the campaign is seeking to collect up to 20,000.
While drive supporters have 60 days to collect the signatures, there is hope enough can be gathered before April 18, the Kings' deadline to ask the National Basketball Association for permission to relocate.
City leaders also say they aren't giving up on efforts to keep the Kings in Sacramento.
Johnson said he will address the NBA board of governors in New York on April 14. The newspaper said the mayor's priority is to explain the importance of the Kings to Sacramento and promote efforts to build a new arena.
COST OF SACRAMENTO ARENA PUT AT $387 MILLION
May 26, 2011
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Sacramento, Calif. - An analysis says a new arena and entertainment facility in downtown
Sacramento would cost $387 million, would fit on city-owned land near Fifth and H streets and would be open by 2015, the Sacramento Bee reported.
The 40-page document doesn't include information on how to pay for the glass-fronted building, the newspaper said.
Downtown Sacramento developer David Taylor and officials with national arena builder ICON Venue Group of Denver reportedly have a tentative list of funding sources. But the group hasn't had time to do enough detail work to make them public, city officials told the newspaper.
In particular, the analysis has not yet concluded how much money might come from private sources, including the Kings' owners, and how much might come from the public, potentially from hotel taxes, car rental taxes and arena district sales taxes.
Instead, Mayor Kevin Johnson said he will form a regional coalition of elected officials and community leaders to spend the next 100 days working with Taylor and ICON to fashion a proposal for a financing plan.
The city also will convene a "technical review team" to analyze the data from Taylor and ICON, according to briefing documents distributed to City Council members and the news media.
Mayor Kevin Johnson said that he has talked with Tim Leiweke, head of AEG, one of the biggest arena operators in the country, about potential involvement in Sacramento. AEG, which runs the Staples Center in Los Angeles and the Sprint Center in Kansas City, has a long-standing business relationship with ICON Venue Group, and has provided guidance during Sacramento's feasibility study.
"They can't commit at this point (to helping to run or finance an arena)," Johnson told the Bee, "but they're at least willing to listen."
Johnson said he wants to determine the public and private contribution levels "in a relatively quick manner. I'd love to have all the answers come November or December."
That may not be soon enough, however. Team owner George Maloof has said he hopes to see a financial plan by October, to give the team time to relaunch plans to move to another city, if need be.
KINGS WILLING TO BE TENANT, NOT OPERATE NEW ARENA
June 2, 2011
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Sacramento, Calif. - Public officials in the Sacramento area say because the Kings have agreed
to consider being tenants in the new arena and not the operator, planning on a new venue can progress, the Sacramento Bee reported. The team now owns and operates its own building.
If the plan moves forward, the facility could be owned by a public entity and operated by a private company with expertise in arena management.
The chairman of that team, prolific downtown developer David Taylor, told the Bee the Maloofs' offer to consider being a tenant is "a huge deal, in my mind."
"Until now, the Kings had said they wanted all revenues (from the arena), and that was creating a barrier" to financing, Taylor said. "If we can figure out the right formula to bring in a third-party operator, we can grow the capital."
The Maloofs have also said they are willing to contribute funding for the project but have declined so far to say how much.
"We'll put in our fair share," Gavin Maloof told reporters.
The Maloofs have warned that they "are not going into this with a big checkbook," and said they are counting on public support.
"We need everyone's help," said Gavin Maloof. "We need every single county to come forward and to help in this effort. We need every city in this region to help out and come forward for this effort."
Newly-released plans call for an arena somewhere in the middle of the NBA's range of facilities - not as large as some mega-arenas built in recent years, but much bigger than Power Balance Pavilion, the newspaper said.
Taylor and ICON Venue Group proposed an arena that would seat 18,594 for basketball games. That's nearly 1,300 more seats than Power Balance. The entire facility would stand at 675,000 square feet, roughly 11Ú2 times the size of Power Balance, and would also accommodate professional hockey.
The plan calls for 74 luxury suites Ð more than double the number at the current arena - an indication that the development team believes there is adequate corporate support in the region to purchase those suites.
Other significant upgrades include tripling the number of loading docks, seen as essential elements in attracting high-profile entertainment acts; a high-resolution HD LED scoreboard; and more lounges, team stores and concourses.
Johnson announced he is forming a 60-member commission made up of elected leaders, and business and labor representatives from across the region to come up with a plan to finance a new arena. They will be charged with hammering out a proposal over the next 100 days.
PARKING MAY BE ISSUE FOR SACRAMENTO ARENA
June 16, 2011
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Sacramento, Calif. - The Sacramento Bee said the proposal for a $387 million arena at the
downtown railyard lacks a substantial parking structure, and planners are counting on 20 percent of event-goers to take light rail. Those who drove would likely need to park their cars at existing downtown garages at least a few blocks away from the arena and hoof it through city streets, the newspaper said.
Urban design experts and many fans who attend events at Power Balance Pavilion tell the newspaper a downtown arena is an idea whose time has come Ð if the area is planned properly.
A task force of elected, labor and business leaders named by Mayor Kevin Johnson will explore how to finance the project. The group will hold its first public meeting on this week, during which it will discuss ways that public and private finances can be combined for a project.
While the funding method for a new arena hasn't been determined, the Bee said city officials are convinced downtown is the right spot to build it.
The group's study list: parking, pedestrian connections, neighborhood traffic, historic preservation of nearby buildings and the arena's compatibility with surrounding structures such as the train depot, planned shops in the railyard development and nearby courthouses.
On another front, the Maloof family, which owns the Kings, has surrendered controlling interest in their Las Vegas casino, in a deal that they say improves their finances considerably.
After months of negotiations, the Maloof family announced it has reached a "recapitalization" agreement with the Palms Casino's main creditors, investment firms TPG Capital and Leonard Green & Partners.
Co-owner George Maloof told the Bee the deal erases the Palms' debt but leaves the family, which built the trendy casino a decade ago, with less than 50 percent of the equity. That gives controlling interest to TPG and Green.
Maloof said he will continue to run the Palms. He said "it's not disappointing at all" that controlling interest has passed to the creditors.
The Bee said the deal could have significant implications for the Kings at a crucial time in the team's history. The Kings passed up a recent opportunity to move to Anaheim, agreeing to give Sacramento a last chance to build a new arena. City officials and the NBA expect the Maloofs to contribute to the project, but the amount remains to be seen.
Last year the family sold its New Mexico beer distributorship to raise cash for the Palms. Clark County, Nev., real estate records show that the casino reached a forbearance agreement with creditors last summer on a $400 million line of credit, the Bee reported. That gave the family more time to repay the debt.
However, Bloomberg business news reported earlier this year that the Palms had breached its loan covenants. That set in motion lengthy negotiations with Green and TPG and raised the prospect that the creditors could grab controlling interest. Green and TPG had purchased a chunk of the debt sometime last year, according to Bloomberg.
SACRAMENTO STUDY DETAILS BENEFITS OF NEW ARENA
July 7, 2011
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Sacramento, Calif. - Advocates of a new downtown Sacramento sports arena rolled out a study
last week that says a new venue offers $7 billion in benefits over 30 years, the Sacramento Bee said. The study, commissioned by Mayor Kevin Johnson's arena task force, said the new facility
would bring the region$157 million a year. That includes spinoffs such as sales at restaurants and hotels, as well as $6.7 million in taxes.
The $7 billion estimate includes assumptions about inflation.
While a lot of the money would come from area residents - and wouldn't be new dollars for the region - task force members told the newspaper the building would still bring huge benefits.
"The return on investment the public would get from this is enormous," political consultant Chris Lehane, executive director of the task force, told the Bee.
The task force - formerly known as Here We Build, now named Think Big - has yet to unveil a plan for raising the $387 million or so needed to build an arena. But it's expected to be a public-private partnership that would take revenue from multiple sources. Lehane said a report on arena financing is expected Sept. 8.
The Bee said the Sacramento Kings are almost certain to leave town if a financing plan for a new building isn't in place by next spring. The economic-impact report is part of the task force's effort to convince the community that a new arena would bring financial benefits that transcend a basketball team.
For one thing, the new building would be able to host more high-caliber concerts and other events than aging Power Balance Pavilion, according to Lehane and others. Lehane said Power Balance would quickly fade as an entertainment venue if the Kings left.
The Sacramento study's author, Sacramento consulting firm Capitol Public Finance Group, contends that the downtown location would create considerable economic activity beyond the walls of the building itself. The arena would draw 3.1 million visitors a year downtown, the report said.
In releasing the report, task force members acknowledged that a new arena downtown could harm Natomas, home of the current arena. City Council member Angelique Ashby, who represents Natomas, told the newspaper city officials must create a "re-use plan" for the arena site.
SACRAMENTO MAYOR LOOKS FOR EARLY DECISION ON ARENA
July 21, 2011
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Sacramento, Calif. - Sacramento Mayor Kevin Johnson told the Sacramento Bee there is a need
for early action to identify financing for a new arena for the Kings and that he is in regular telephone contact with NBA Commissioner David Stern on moves made to date.
"There is a sense of urgency," Johnson said. "We know the deadline is coming in March 2012. We don't want to wait until 2012" to make things happen.
The Maloof family earlier this year pushed to move the Kings to Anaheim. But under a reprieve from the NBA, Sacramento has until March 1, 2012, to have funding secured.
The mayor's arena task force toured the suburbs last week in a bid to gain regional support for a new downtown sports and entertainment facility starting with the 2015 season. The task force faces a 100-day timeline to develop a funding proposal.
Johnson said he spoke with Stern and outlined the findings of a new study commissioned by the mayor's arena task force. The study found that the project would put about $7 billion into the regional economy over its 30-year life.
"He was positively inclined," Johnson said of the commissioner's response to the conversation.
Johnson said at the end of the 100 days - Sept. 8 - he will "let him (Stern) know we will look at a menu of options, both public and private."
In addition to financing, the task force must make sure that the downtown site will work for the arena and that the project can be completed in time for the 2015 season.
USER FEES FOCUS OF SACRAMENTO STUDY GROUP
July 28, 2011
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Sacramento, Calif. - Aides to Mayor Kevin Johnson tell the Sacramento Bee they're focused on
user fees such as ticket surcharges for people who attend arena events to help fund a new venue for the Kings. That revenue could be coupled with event-night parking fees at downtown garages, new corporate sponsorships, and up-front money from private companies that could build and operate the arena for the city.
Another idea: The city could sell up to a dozen parcels that it owns to developers, raising $30 million to $60 million, according to a financing update that will be discussed at a meeting of Johnson's 70-person regional arena committee.
Officials say they're even considering renting the arena's rooftop to telecommunications companies for cell towers.
The committee's core working group - including former Sacramento city Treasurer Tom Friery, stadium financing consultant Dan Barrett and communications specialist Chris Lehane - does not yet have a firm plan in place, Lehane said, but is progressing in identifying revenue to meet the projected $387 million price tag.
"We feel really good about the directions we are going, and the conversations we are having with the private sector," Lehane told the Bee.
An element of the proposal is likely to be a ticket surcharge at the arena - possibly in the $2 or $3 range - and surcharges on merchandise bought there, the newspaper said.
Johnson's advisers estimate arena events could generate between $1 million and $5 million annually in parking revenue at city garages.
That revenue, however, is likely to be in dispute for some arena events. Kings owners recently said they expect to continue to control parking revenue during games.
Lehane said his group also is exploring business arrangements with private companies for corporate sponsorships, advertising rights and arena naming rights. Those also likely would have to be negotiated with the Kings, who collect that money at the Natomas arena.
The mayor's group also has approached local hotels about finding a way for them to contribute to the new arena, since they'll likely see a boost in business. One financing expert said the group would have to be careful not to just seek a traditional room tax, which could trigger a public vote.
The city would have to set up a special district and ask hotel operators to vote to tax themselves, said Marco Li Mandri, president of San Diego consulting firm New City America Inc.
The mayor's group also may suggest the city erect electronic billboards for lease or sale at the arena and elsewhere.
PROPERTY SALES MAY HELP FINANCE SACRAMENTO ARENA
August 4, 2011
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Sacramento, Calif. - The Sacramento Bee says as financing plans for a new arena for the Kings
comes into focus, it's evident the city of Sacramento alone will shoulder much of the financial burden for the $387 million project.
Among the largest potential funding sources listed in a task force report was the possible sale of up to a dozen city-owned properties. Task force members would not reveal to the newspaper which properties they're talking about but said a review suggested the sales could generate between $30 million and $60 million for an arena.
A draft of the task force report indicated the committee is focusing on downtown parcels, including property in the railyard, two empty lots near the Crocker Art Museum and land in the proposed Docks development along the Sacramento River.
Although selling city property represents a significant source of revenue, members of the mayor's task force tell the Bee the cost of the arena would be shared by people from all over the region.
That's because the plan would rely on fans - rather than taxpayers - to fund the Kings venue through surcharges on tickets and parking.
A recent report by the task force showed that three-quarters of those who attend events at Power Balance Pavilion Ð and would therefore pay such user fees Ð live outside the city of Sacramento.
The task force is also looking at how much money could be generated by placing cellular phone towers on top of the arena, by the city leasing electronic billboards and by new fees on hotel rooms around the region.
The Bee said selling city properties to help pay for a sports facility could also prove controversial.
If the city sold the properties, that revenue could go into the city's battered general fund budget, which funds police officers, firefighters and parks maintenance.
City Hall, facing another gaping budget deficit, last year contracted with brokerage firm CB Richard Ellis to examine the city's portfolio of the 2,400 properties. The city wanted to identify the value of those parcels and determine which ones were marketable.
Sacramento City Councilman Kevin McCarty told the newspaper he is skeptical about "a fire sale of a bunch of city assets for an entertainment complex."
"Is this the best time to sell?" he asked. "(The real estate market) is at a historical low. Are we maximizing our assets? If we did sell, is this the place we want to park those (proceeds)? We have a reserve under 10 percent of our city budget. We have other (financial) issues."
POLL FINDS SUPPORT FOR SACRAMENTO FUNDING PLAN
August 11, 2011
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Sacramento, Calif. - A public opinion poll delivered to the Sacramento City Council shows
support for both the downtown arena and several funding options, the Sacramento Bee reported.
That poll came in with 33 days remaining in the Think Big Sacramento committee's 100-day
timeline to come up with a "menu of options" for financing an entertainment and sports complex, Kunal Merchant, chief of staff to Mayor Kevin Johnson told the Bee.
Paul Maslin, of the public opinion research and strategy organization Fairbank, Maslin, Maullin, Metz & Associates, said his company did more than 700 phone interviews with residents of Sacramento, Sacramento County, El Dorado County, Placer County and Yuba County. The polls were completed two weeks ago.
The findings, he said, showed that about two thirds of those interviewed support the downtown Sacramento arena proposal, with most citing job creation and economic development as reasons.
The margin of error for the poll was about 3.5 percent.
"Almost 90 percent of voters had some knowledge of the proposal before the survey," he said, adding that that number is very high for a local issue.
The poll also found that 75 percent of respondents said they preferred having a public/private partnership to fund the arena rather than not having a downtown arena at all.
"Economic concerns are front-and-center," he said during his report to the council, adding that political party affiliation had no bearing on the issue, with Republicans, Democrats and those who decline to state their affiliation all supporting the proposal by a two-thirds majority.
Numerous funding options showed approval from levels of more than 70 percent to just over 50 percent.
Maslin added after his presentation to the council that the level of support is some of the highest he's seen, noting that his firm has previously worked with a football stadium and a ballpark in Detroit, which required ballot measures to pass, and a regional effort for an airport in Denver in which several suburban areas agreed to give up land for a regional airport.
Funding sources that got widespread support included digital billboards, mounting a cell tower on top of the building and selling naming rights.
Other funding methods, though still showing support, were not as enthusiastically supported: Those included parking revenue from existing city parking garages that would otherwise be less-than-full during events, sales tax applied to goods sold within the arena and a $2 fee to all tickets to events in the arena.
A tax on hotels to fund the arena showed a 51 percent approval.
"We have about a dozen or more of these funding devices that have a majority of support," Maslin said, noting that any specific taxes are "tougher to sell."
On another front, the Bee said a report by the Urban Land Institute has found that both a new sports arena and the city of Sacramento's planned transit hub could fit snugly in the downtown railyard.
When designs for the proposed arena were unveiled in May, transit advocates and some city officials quickly noticed that the plans called for the facility to be placed directly on the site of the planned $300 million transit hub.
That drew some criticism, given the city's long-standing plan to one day construct a hub for high-speed rail, light rail and buses on the site. But the ULI report says the two facilities not only could fit in the railyard Ð they could work well together.
"Our first commitment has been to the intermodal (transit hub); it's a project we have obtained a lot of financing for," Councilman Rob Fong, a member of the arena task force told the newspaper. "We wanted to see if we could co-locate that (with an arena), and it looks like we can."
USER FEES BEING CONSIDERED FOR SACRAMENTO ARENA
August 25, 2011
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Sacramento, Calif. - Surcharges on everything from food to tickets could raise as much as $20
million a year toward construction of a new Sacramento sports arena, Mayor Kevin Johnson's task force said.
The Sacramento Bee said surcharges are common in arena finance - and could raise more than half the funds needed for the $387 million facility at the downtown railyard. But sports marketing experts told the Bee the proposal risks alienating customers.
"Fans feel like they're being nickeled and dimed," said David Carter of the University of Southern California.
Still, the task force believes surcharges, or user fees, will have to bear much of the burden if a new arena is going to get built. A completed financial package must be in place by next spring or the Kings will leave town, team officials have said.
In an analysis labeled "highly preliminary," the Think Big Sacramento task force outlined an array of surcharges that could be imposed at a Kings game or a Lady Gaga concert.
The biggest surcharge would be applied to tickets. A fee of $1 to $3 could be levied on each seat, depending on the price of the ticket.
Hot dogs, which now cost $3.75 to $4.75 at Power Balance Pavilion, could have a surcharge of as much as 50 cents. Beer Ð now $6.50 to $9.75 Ð could cost an extra 50 cents to $1.
All told, fees could add as much as $30 to the amount a party of four would spend on an event.
A more detailed analysis will be released by the task force on Sept. 8. Besides user fees, it's expected to draw on funds from private arena developers, lease payments from the Kings and revenue from a "business improvement district," among other things.
The goal is to raise as much as $30 million a year to pay the building's debt service.
No single revenue source "is going to get us there," Chris Lehane, task force executive director told the newspaper. "The burden will be spread ... far and wide."
User fees could generate anywhere from $5 million to $20 million a year toward that goal, the report said.
SACRAMENTO PLAN SPREADS LOAD EQUALLY
September 8, 2011
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Sacramento, Calif. - A financing plan to be put before the Sacramento City Council will require
that the public, users and the private sector share equally in the $387 million cost of a new arena, the Sacramento Bee reported. The plan will be formally presented to the council tonight.
According to people familiar with the document who talked with the newspaper, the Kings, the NBA and a private developer would contribute $91 million to $156 million in lease payments, up- front money, land and other revenue to pay for an arena.
The city of Sacramento would contribute the sale of public land, a tax on hotels and taxis, and money from items such as digital advertising and parking valued at $94 million to $123 million.
And, while residents in the six-county Sacramento region will not be asked to raise their taxes to subsidize a new arena, patrons of the venue will help pay for it. The third pot of money will be fueled by ticket surcharges, naming rights and other revenue sources that could generate $90 million to $121 million.
SACRAMENTO DEVELOPER LIKES IDEA OF DOWNTOWN ARENA
September 8, 2011
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Sacramento, Calif. - Promoting a downtown sports arena as a potential economic gold mine, a
prominent Sacramento developer told the Sacramento Bee he and other investors are looking at bringing hotels and other projects to the arena's neighborhood.
"If the arena is a go, there will be private investors, big-time investors," said David Taylor, who is also working with the task force trying to build the arena.
Taylor, whose downtown projects include the Sheraton Grand Hotel and Esquire Plaza, said he might build a hotel by the proposed transit hub, adjacent to the arena site.
Taylor and Chris Lehane, head of Mayor Kevin Johnson's Think Big Sacramento arena task force, appeared at a news conference to build support for the $387 million arena. The news conference was held at a gravel lot in the Docks area Ð one of up to 20 city-owned parcels that the task force says could be sold to generate cash for the arena.
The task force plans to reveal "a range of funding options" Thursday, Lehane said. The group has until next March to finalize a financing package. Otherwise, the owners of the Sacramento Kings say they'll leave town.
The task force first floated the idea of selling city land in late July, and it could prove controversial. City Councilman Kevin McCarty has said he's worried about assets being unloaded at "fire sale" prices. He also questioned the wisdom of using the cash for an arena when the city has other budget needs.
But Lehane, Taylor and Sacramento home-building executive Jack Reynen said the parcels' value would inflate as buyers become convinced the arena will happen.
And they said the public's investment will be repaid many times over as the arena takes shape - and other projects come to life as a result. The newspaper said it's unclear how much development an arena would spur.
PARKING REVENUE MAY BE KEY TO SACRAMENTO ARENA
September 15, 2011
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Sacramento, Calif. - The Sacramento Bee says getting a downtown sports arena built in
Sacramento could boil down to wringing a lot of cash out of a bunch of parking spots.
In a financing proposal, recently released, Mayor Kevin Johnson's arena task force identified
up to 8,000 city-owned downtown parking spots that could be leased to a private vendor.
The vendor would immediately pay the city millions of dollars, maybe tens of millions, for the
right to run the spots, the newspaper said.
In Sacramento, it could be a major piece of the arena-financing puzzle. A big up-front payday
would reduce the amount of borrowing needed to fund the $387 million complex, the Bee reported.
That could be important if the city, and maybe other area governments, are asked to guarantee
all or part of the bond debt. Reducing the debt could make a loan guarantee more palatable to elected officials.
"It eliminates a lot of the risk," Dan Barrett of Barrett Sports Group, a Manhattan Beach sports-finance consultant working on the Sacramento project told the Bee.
Others involved in the arena push believe the parking idea is crucial.
"It is potentially up-front cash they could put toward the arena, and (if it is) a large enough amount, it could make the difference between getting this thing financed and not financed," David Taylor, a prominent Sacramento developer told the newspaper.
Taylor will likely play a role in developing the arena, in partnership with Denver's ICON Venue Group. The City Council is expected to direct city staff to begin negotiating an agreement with Taylor and ICON.
The rest of the plan depends upon other revenue streams. Hotels and restaurants near the railyard will likely be asked to tax themselves. Naming rights and luxury suite dollars would be earmarked for construction costs. There's even the possibility of drawing in foreign investors under a U.S. government program that offers green cards to those who put money in, the newspaper said.
Yet almost all the details remain to be fleshed out - from the level of surcharges on arena hot dogs to the amount of rent to be paid by the main tenants, the Sacramento Kings. The City Council Ð and possibly other area governmental bodies - will likely be asked to guarantee the bonds that would be sold to fund the project.
The Bee said it's also not clear what would happen with the $65 million the Kings already owe the city.
"We are nowhere near the finish line," Johnson told around 100 supporters and communications professionals at the Sacramento Press Club.
If no package is in place by March, the Kings' owners say, they intend to seek NBA permission to move. Johnson vowed to have "what we think is the final plan" ready by January. The building itself would open in 2015.
FOREIGN FUNDS MAY HELP PAY FOR SACRAMENTO ARENA
September 22, 2011
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Sacramento, Calif. - A little-known federal program that offers green cards to wealthy
immigrants who invest in job-creating enterprises could become an important piece in the financing package for a proposed $387 million arena, the Sacramento Bee said.
The immigration program, known as EB-5, wouldn't pay for the whole project and is just one of several revenue sources advocated by Mayor Kevin Johnson's arena task force. But the amount of EB-5 money "can be substantial," Dan Barrett, a Manhattan Beach sports-finance consultant advising the Sacramento arena effort told the Bee.
The consultant said immigrant dollars could be used as a short-term bridge loan. That would help jump-start construction until the market recovers and the city can sell the land at better prices.
The program has been around for about 20 years and has encountered some controversy. But it's also generated huge sums of capital and is becoming increasingly popular as conventional financing remains tight.
Developers of a new NBA arena in Brooklyn, N.Y., raised $249 million from EB-5 investors to finance improvements near the arena. Immigrants have committed around $80 million to a hotel in downtown Los Angeles.
In the Sacramento area, a company raised $18 million from EB-5 investors to help transform McClellan Air Force Base into a business park.
The company that raised the money for McClellan's improvements, CMB Export LLC of Rock Island, Ill., says the Sacramento arena could be a match for immigrant investors.
"We've looked at it," said Kraig Schwigen, the company's senior vice president. "It would be a great undertaking as an EB-5 project."
The program offers immigrants a fast-track method of obtaining green cards to establish permanent residence. They have to invest $500,000 in businesses that create or preserve at least 10 full-time jobs in rural or high-unemployment areas.
Schwigen said immigrant dollars were responsible for at least 529 jobs at McClellan. The $18 million went toward roads, sewers and building improvements.
"The EB-5 program was certainly a help," said Frank Myers, senior vice president at the business park.
The program can offer a relatively cheap source of capital. Investors often will accept a lower return because their main interest is the green cards, Schwigen said.
AEG ANNOUNCES INTEREST IN SACRAMENTO PROJECT
September 29, 2011
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Sacramento, Calif. - International stadium and arena operator Anschutz Entertainment Group
confirmed that it might participate in the effort to build a sports and entertainment complex in Sacramento, the Sacramento Bee reported.
"We have made the mayor aware that ... any assistance he would like to ask us for, we would be interested," AEG spokesman Michael Roth told the newspaper.
AEG officials met in Los Angeles with Sacramento Mayor Kevin Johnson and members of his Sacramento arena team. The mayor described the meeting, the latest of several with AEG, as productive. The mayor said it included discussion of AEG's potential role as arena operator, should the company sign on.
"Sacramento deserves the best, and AEG represents exactly that," the mayor said in an email to the Bee. "Bringing on AEG would ... guarantee our new entertainment and sports complex is developed and operated in truly world-class fashion."
The mayor's Think Big Sacramento committee has identified Los Angeles-based AEG - or a similar arena operating company - as a pivotal player that could provide tens of millions of dollars in up-front cash to launch the construction project. That company would be compensated later by arena revenues once it opens.
Such an arrangement would not be new to AEG. The company invested $53 million several years ago to help build the Sprint Center in Kansas City, Mo. AEG now runs the building and keeps the profits. If profits exceed a certain threshold, the extra money is shared with the city.
Since the building opened in 2007, the city's share of the profits has totaled an estimated $6 million.
AEG is planning Farmers Field, a $1 billion-plus football stadium in downtown Los Angeles, where it also operates the Staples Center, home of the Lakers and Clippers basketball teams. The company is part-owner of ICON Venue Group, the arena development company that Sacramento city officials hired to lead the arena construction team. The two companies frequently work together on stadium projects.
The Sacramento City Council also approved a city staff plan to spend $555,000 over the next six months on consultants to help them analyze the finances and legalities of an arena, and to help negotiate deals with the Kings and the National Basketball Association.
Some of the funds are unused money for city capital improvement projects, money that otherwise could be available for the city general fund, which pays for basic services such as police, parks and fire.
The Kings and the NBA have given Sacramento until March 1 to come up with an arena deal.
WORK BEGINS ON SACRAMENTO ARENA PLAN
October 6, 2011
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Sacramento, Calif. - The Sacramento Bee said arena talks kicked off this week, as officials with
the city, the NBA, development group ICON/Taylor and arena operator Anschutz Entertainment Group met in Dallas to discuss the particulars of how to build a new sports facility in the downtown Sacramento railyard.
According to a memo written by City Manager John Shirey, the parties will have a "preliminary technical discussion."
"Following this discussion, we will lay out the process and timeline that formal discussions and negotiations will take place," Shirey wrote. "Our collective goal is to reach a definitive financing plan by the end of the year."
One party that the Bee said was not included in the talks is the Sacramento Kings, who would likely be tenants in the new facility.
"We've decided to let the NBA take the lead on this, but we are in very close contact with the league and are briefed regularly when new updates are available," team spokesman Chris Clark told the newspaper.
Kings co-owner George Maloof, asked about the Dallas meeting, said, "We weren't invited"
"They're going to meet and they're going to get back to us," he said. "That's been the process. It's a little strange, but we're anxiously awaiting what they have."
He said the city and the developers have been extremely busy and "we've left them alone," adding that the Kings' owners have not been approached with a proposed annual rental fee.
Leading the National Basketball Association's negotiating team is Clay Bennett, the owner of the Oklahoma City Thunder.
JOHNSON SAYS NBA LOCKOUT WON'T AFFECT ARENA TALKS
October 27, 2011
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Sacramento, Calif. - Mayor Kevin Johnson told the Sacramento Bee his effort to build a sports
and entertainment complex downtown will move forward despite the lack of an agreement between the National Basketball Association and its players' union.
The league earlier this month canceled the first two weeks of the season. Further cancellations are expected.
Johnson issued a statement reiterating his intention to build an arena for sports, concerts and other events, regardless of whether the Sacramento Kings play in it this year, or at any time.
"While like many others we hope that the NBA and the players are able to come to an agreement, our focus has always been that this facility is more than just a professional basketball arena but rather, similar to what has taken place in Kansas City, an entertainment and sports complex that will generate economic activity and create jobs," the mayor wrote.
Sacramento Kings owners declined earlier requests by the Bee to comment on the effect of game cancellations on their finances. Co-owner Joe Maloof said the league has ordered team owners not to discuss the impact of cancelled games.
NEW ESTIMATES LOWER SACRAMENTO PARKING REVENUES
December 8, 2011
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Sacramento, Calif. - City Manager John Shirey told the Sacramento Bee that the assessed value
of the city's parking facilities is lower than officials' early "hopes or expectations," impacting one of the city's primary funding sources. The recent estimates came from financial consultants at Bank of America.
Multiple sources familiar with the details of the project told the Bee the city may be able get $200 million Ð or slightly more Ð in up-front cash by leasing its parking operations to a private company. That would include 7,200 spaces in garages, 5,500 on-street spaces and parking citation revenue.
Shirey would not confirm that figure, but he said the new estimates are lower than originally believed. Officials have never said publicly what their early estimates were.
If the parking doesn't bring in as much money as hoped, more pressure would be placed on other public and private sources for the $387 million project.
"This would be easier to do if the (parking) number were larger," Shirey said. "We have to be creative and find more ways to make ends meet."
While financing a new arena still relies heavily on the city's ability to lease its parking spaces and garages, Shirey said the lower estimate for those facilities does not derail the project. "At the outset I thought this was a very difficult project to put together," he said. "That hasn't changed."
Parking is expected to be a key topic of discussion at a Dec. 13 City Council meeting. Council members will be asked to direct city staff whether to continue exploring the parking facilities as a funding source for the arena. It is unclear what exactly the council will be asked to do at that meeting, but one possibility would be directing Shirey to issue a request for qualifications from private companies interested in operating the city's parking.
City officials ultimately want to create a funding model for the arena that relies on a few major sources. Shirey said it would be difficult for the city to sell bonds to finance the project if the funding menu is "a collection of cats and dogs."
If significant progress toward a deal has not been made by March 1, the Maloof family, which owns the Kings, has vowed to once again explore moving the franchise.
Aside from parking, the city is banking on getting a major upfront investment from AEG, the Los Angeles-based arena operator that provided $53 million to help build Kansas City's Sprint Center and now operates the facility, sharing profits over a certain threshold with the city of Kansas City. Sacramento officials are in talks with the firm.
The National Basketball Association and the Sacramento Kings, the anchor tenant of the proposed arena, also would be relied upon for funding, Shirey said. So would fees charged to arena patrons, such as surcharges on tickets and concessions.
On the public side, city officials are exploring the sale of city-owned property, as well as how much money could be raised by placing cellular phone towers on the arena's roof and leasing electronic billboards.
Several questions remain on the parking facilities beyond the value of those assets.
City officials are trying to determine how revenue from on-street meters could be used for an arena project. State law requires that meter money be used for traffic safety enhancements or to pay for parking facilities.
In addition, the City Council will certainly insist that any privatization plan replenish funds that now flow into the city's general fund from parking. The general fund pays for most basic city services, including police and fire protection, parks maintenance and code enforcement.
Shirey declined to say how much parking revenue is filtered to the general fund each year.
A report commissioned by the city says a private company could expect to earn $16 million the first year it operates the city's downtown parking. That figure could increase to $51 million annually by the 30th year of the contract, according to Walker Parking Consultants. The report does not include borrowing costs that a private operator would likely take on to pay the city its upfront cash.
If the council decides to move forward, and parking companies express interest, city staff likely will begin drafting a potential contract, said Assistant City Manager John Dangberg.
In that agreement, the council would likely try to determine what level of control the city would retain over parking rates, and whether the private operator would be required to hire city parking division workers. Both issues would play a role in the price the city could ask for its parking.
PRIVATE PARKING FIRMS SHOW INTEREST IN SACRAMENTO PROJECT
December 15, 2011
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Sacramento, Calif. - The Sacramento Bee says three national parking service companies
expressed interest in spending millions of dollars to take over the city of Sacramento's downtown parking operations to help finance a new Kings arena.
The show of interest came as the City Council began exploring privatizing its parking garages and other downtown parking services, a linchpin of an proposed arena financing package.
Several council members said they would not support a final financing plan that negatively affects the city's general fund budget, which pays for police, fire and most other basic services.
One of them, Sandy Sheedy, who has emerged as a vocal opponent of the project, asked city staff to draft a measure for the June ballot that would ask voters for their say on a financing model, if one is in place by Feb. 22. The Bee said the parking plan is supported by most council members.
"We're excited," said John Conway, regional manager for Standard Parking. If the city issues a request for qualifications, "we will respond."
Based on a consultant's analysis, city staff say they believe a 50-year lease deal could produce between $170 million and $245 million in up-front cash to the city. Some $52 million of that would pay off the city's parking debt on three garages. The rest could go toward an arena. The private parking operator would pocket any future annual revenues.
Should a parking deal hit the $200 million level, that alone would account for half the money needed to build a downtown sports and entertainment facility to replace aging Power Balance Pavilion in Natomas.
City Manager John Shirey said responses to the request for qualifications would "help to confirm some of the numbers in terms of the value" of the parking assets.
While the RFQ vote was an essential step forward, there are plenty of barriers left to cross in the city's years-long pursuit of a new arena.
The next big step will come early next year, when the City Council will decide whether to issue a request for proposals seeking formal bids for the parking assets.
Also left to be determined is how much money the private sector - specifically the NBA, the Sacramento Kings and AEG - is willing to contribute to the project.
City officials say they hope to come up with as much up-front cash as possible, including shares from the Kings and from potential arena operator AEG. If the city and private entities can raise the entire amount, the city would avoid having to sell bonds, which likely would require backing from the general fund.
The arena price tag, meanwhile, has edged up. City consultants initially said the facility could be built for $387 million. After talks with the NBA, however, officials say the cost could be $406 million with inclusion of a VIP parking lot near the arena.
City officials say they intend to ask interested parking companies to meet a minimum price in their initial responses to the city. But a city staff report does not specify what that price is. Representatives of the three parking companies that participated in a media event declined to say how much they think the contract is worth.
Chris Johnson, regional vice president of Central Parking, said it is premature to offer an estimate.
Another executive, Rick Wilson of Ampco Systems Parking, warned that parking companies won't want to bid on a contract unless the city indicates it really is willing "to pull the trigger."
In the meantime, city negotiators can use the initial offers in negotiations with the NBA and the Kings to show the city is bringing its share of the revenues to the table.
City officials say they are in talks with the NBA and the Maloof family, which owns the Kings, about how much the Kings can bring to the deal. They declined to say how much is being discussed. The NBA and Kings have also declined comment.
AEG, which operates the Sprint Center in Kansas City, Mo., put up $53 million to help build the facility. Sacramento officials hope the company will be willing to put up a like amount here.
If an arena financing program includes a parking lease deal, city officials said they will have to make up for the loss of annual parking division revenues to the general fund, currently $9 million a year. A source of that backfill money has not yet been determined.
MALOOFS OPTIMISTIC ABOUT SACRAMENTO'S EFFORTS
December 22, 2011
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Sacramento, Calif. - The Sacramento Bee says Kings owners Joe and Gavin Maloof are growing
increasingly optimistic that the city will approve an acceptable financing plan for a new arena by the March 1 deadline to keep the franchise from relocating.
Gavin Maloof told the newspaper the team is pleased with the progress of the city's latest arena project and is "encouraged that something can be done" in time. Joe Maloof said the brothers are "optimistic guys" and would love for the franchise to remain in Sacramento.
The Sacramento City Council has approved several preliminary measures to finance a new arena, including asking companies interested in leasing the city's downtown parking operations to come forward. Upfront revenue from a parking deal could provide $200 million to put toward the arena.
That would be the largest chunk of money for the project, which is expected to cost at least $406 million. The parking measure passed by a 7-2 vote. A final vote is expected in February on the entire financing plan Ð with details of public and private contributions, including from the NBA and the Kings.
"We're encouraged that something can be done. Obviously, we're leaving that up to the mayor and the city and the NBA," Gavin Maloof said. "But the NBA is keeping us apprised of everything that's going on."
While a March 1 deadline has been imposed, the league also extended that a year ago while the Maloofs pursued options to move the team to Southern California. Joe Maloof said the City Council's tight schedule would still give the team enough time to make a decision - if everything stays on schedule.
The Maloofs also noted an increase in ticket sales, corporate sponsors and overall excitement building momentum toward a Sacramento solution.
"The community has been really great," Joe Maloof said. "Our ticket sales are going through the roof. Our corporate sponsors are way up. I think we're second in the league in group sales. It's just been great, sold a lot of tickets and the phone is ringing off the hook. I think they're all excited about this team and the fact that we've got a good young team with a lot of talent and looking forward to big things."
SACRAMENTO EXPECTS TO SOLICIT PARKING BIDS THIS MONTH
January 5, 2012
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Sacramento, Calif. - Sacramento officials decided to wait until January to solicit private
company interest in leasing downtown garages as part of an arena financing deal - despite a push by the mayor's office to move more quickly, the Sacramento Bee reported.
Assistant City Manager John Dangberg said city staffers were initially looking at Dec. 22 as the potential date for soliciting private company interest but moved the date to Jan. 9 after consultants advised waiting until companies have offices up and running again in the new year. The city faces a March 1 deadline, set earlier this year by the NBA, to come up with a financing plan for an arena to replace aging Power Balance Pavilion in Natomas. If not, the league would give the Kings approval to move to a new city.
The city is considering privatizing its downtown parking services to raise upfront cash - estimated at $200 million - to help pay for the facility. Dangberg said the city expects to be able to present the results of the parking lease solicitation by mid-February, and to have a financing arrangement on paper by then to share with the NBA, the Kings and other private investors.
Kings co-owners Joe and Gavin Maloof recently told the Bee they believe the March 1 deadline is flexible. But officials with Mayor Kevin Johnson's office say they are focused on having a deal in hand by the beginning of March.
"Every day counts in this process," mayoral Chief of Staff Kunal Merchant said. "We have a huge March 1 deadline, and a lot of moving parts. We'd prefer not to delay, but certainly trust the city manager and know he's equally committed to meeting our collective timetable."
The upcoming issuance, called a request for qualifications (RFQ), is part of a two-step process that could lead to privatizing downtown garages, parking meters and parking citations.
If the city receives adequate response from its RFQ, officials would ask the City Council to vote to solicit formal privatization bids. That process could take several months, but officials believe they can have a financing deal in place prior to entering into a contract with the winning bidder.
SACRAMENTO SEEKS RFQS FROM PARKING FIRMS
January 12, 2012
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Sacramento, Calif. - Sacramento city officials began the process of soliciting interest from
private companies that want to lease downtown parking facilities - what the Sacramento Bee calls a central part of the city's plan to finance a new downtown sports arena.
A request for qualifications from parking operators and investment firms was initially scheduled to be released on Dec. 22, but the process was pushed back. Consultants told the city to wait until companies had their offices running again in the new year.
City officials said they were confident the delay would not hinder the city's years-long fight to build a new arena, despite an impending March 1 deadline from the National Basketball Association for the city to come up with a financing plan for the $387 million facility.
If that deadline is not met, NBA officials have said they would give the owners of the Sacramento Kings the freedom to once again explore moving the franchise.
Several national and international firms have already expressed informal interest in the city's parking facilities.
City officials hope to generate as much as $200 million in up-front cash for the arena project by leasing downtown parking spaces and garages, as well as enforcement operations.
"We've seen a significant level of interest in this monetization effort," Assistant City Manager John Dangberg said.
Dangberg said that requests would be made to roughly 100 companies. Interested companies will have until Jan. 30 to respond to the request. Dangberg said he plans to present a list of the most qualified companies to the City Council on Feb. 14.
If enough qualified companies express interest in the parking facilities - and a viable arena financing plan comes together - city staff will recommend to the City Council that a formal Request for Proposals (RFP) be issued to solicit formal privatization bids, a process that could take several months.
Parking operations contribute roughly $9 million a year toward the city's general fund, which pays for most basic services including police, fire and parks. Several members of the City Council have insisted that any arena financing plan that involves privatizing parking facilities include a way of filling that $9 million hole.
In the meantime, city officials are negotiating with the NBA, the Sacramento Kings, arena operator AEG and the development team behind the arena on their financial contributions toward the project.
"PLAN B" CONSIDERED FOR SACRAMENTO
January 19, 2012
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Sacramento, Calif. - Saying he's concerned about an approaching March 1 deadline,
Sacramento County Supervisor Phil Serna called for officials to look into renovating Power Balance Pavilion as a backup option should downtown arena plans fall through.
Serna said he doesn't want to compromise Mayor Kevin Johnson's efforts to finance an arena in the railyard, but said it's worthwhile to consider a cheaper alternative, according to the Sacramento Bee.
"I wouldn't go so far as to call this a Plan B just yet, but ... we need to be smart about this," he said. "March is approaching very fast."
Serna, who represents Natomas and downtown on the county board, said he is concerned about the city's ability to come up with the arena's price tag - currently estimated at $387 million, but with a potential to go up when final designs are drawn.
City officials hope to generate $185 million to $245 million through privatizing downtown parking services. They also are negotiating with the NBA, Kings and other private partners for contributions.
Serna said he made his suggestion after talking with former Kings official Greg Van Dusen, who is part of a group that pitched a renovation concept last year pegged at about $100 million. Rann Haight, the arena architect, said the group would need to do more research to more closely define the project's details and costs.
Others say the 23-year-old building in Natomas is not worth a makeover. Dale Koger, a vice president with Turner Construction Co., told the Bee last year that the roof, walls and concourse would have to be blown out, and the lower bowl rebuilt.
Representatives from ICON Venue Group, the Colorado company involved in the current arena talks, analyzed Power Balance Pavilion last year and concluded it would have to be rebuilt nearly from the ground up.
The Mayor's Office said NBA and Kings officials have told them they need a new arena in order for the Kings to be willing to stay in Sacramento. The Kings referred questions on a renovation of Power Balance Pavilion to the NBA. NBA officials declined comment to the newspaper.
Faced with the March 1 deadline to put a financing plan in place, the city sent out a notice asking private companies to state their interest in a parking deal. Those companies have until Jan. 30 to submit their qualifications.
City officials said they likely will ask the council to approve a list of parking contract finalists on Feb. 14, and possibly initiate a contract bid process.
City officials say they plan to put together an arena financing "term sheet" in late February in collaboration with the NBA, the Kings and other private partners, although the city won't have a contract with any parking company prior to that.
HOTELS MAY HELP FUND SACRAMENTO ARENA
January 26, 2012
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Sacramento, Calif. - Sacramento hotel owners are considering a plan to generate $1 million a
year for the proposed downtown sports arena, officials told the Sacramento Bee.
The complicated, still-evolving plan is tied to a potential expansion of the Sacramento Convention Center.
Brian Larson, chairman of the Sacramento Convention and Visitors Bureau, said an expanded
Convention Center could yield as much as $5 million a year in new hotel occupancy taxes.
Currently, the hotel tax goes mostly toward renovations of properties like the Convention
Center and the Community Center Theater. Members of the City Council have swatted down proposals to earmark some of the hotel tax dollars to the proposed arena.
But the plan floated by Larson, by increasing the pool of hotel tax dollars, could make $1 million a year available for the arena without harming other projects supported by the hotel tax.
He added that officials are still working on a funding plan for an expanded Convention Center.
City officials are trying to put an arena funding plan in place by March 1, the deadline set by the NBA, or risk losing the Sacramento Kings. The hotel money would be a small part of the package. The bulk of the $387 million would come from a proposed quasi-privatization of city-owned parking spaces.
January 26, 2012
Copyright 2012 MediaVentures
The Sacramento City Council has delayed a vote that could have led to a June election on
funding for a new Kings arena to allow time for more discussion and to have all council members present, the Sacramento Bee reported. City officials want the City Council to vote next month on a financing "term sheet" for the project, including the parking revenue and contributions from the Kings, the NBA and an arena operator. The NBA has given the city until March 1 to come up with a financing plan or risk losing the Kings.
DIVISION SEEN ON SACRAMENTO CITY COUNCIL
February 9, 2012
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Sacramento, Calif. - The Sacramento City Council came within one vote this week of derailing
the project before knowing what the plan would look like, according to the Sacramento Bee. By a 5-4 margin, the council rejected a request by Councilwoman Sandy Sheedy to ask voters
in June if they approve of a nascent plan to lease the city's parking to a private operator. Mayor Kevin Johnson and other arena supporters are counting on such a parking lease to raise about half the money needed for the $387 million arena.
The newspaper said the unexpectedly close vote left many of those involved wondering whether there would be support on the council for a parking lease, or whether it would become a politically radioactive issue for a council entering an election season.
A June vote on Sheedy's ballot measure would have come after a March 1 deadline imposed by the NBA for Sacramento to devise a plan for a new arena, or risk losing the Kings. Arena supporters said it also would have shown the league there is limited support for the project at City Hall.
"It would have, I think, sent a very negative message to the NBA and the people who have been working with us trying to make this happen," Councilman Rob Fong said. "It would have been a vote of no confidence."
The 13 companies that responded to a request for firms interested in leasing city of Sacramento-owned parking operations includes several large companies specializing in parking assets, two partnerships with local ties and the largest single-profession pension plan in Canada.
The Bee said city staff is examining the qualifications of each firm and is scheduled to go to the City Council on Feb. 14 to narrow down the list to the most qualified companies.
After that, city staffers will ask the council to approve a formal request for proposals that would lead to bids on the city's parking assets.
City officials are hoping to raise as much as $200 million from the leasing of downtown parking spaces, garages and enforcement. Officials have proposed using that up-front cash to help finance a new $387 million Kings arena in the downtown railyard.
The city is in ongoing talks with the NBA and arena operator AEG over how much those parties are willing to contribute to the project.
If a workable financing plan does not materialize by March 1, the NBA has said it would allow the Kings' owners to explore moving the franchise. On option is Anaheim, a city with which the Kings flirted last year, and where work has begun on venue upgrades that would make it more NBA-friendly.
In a letter to the City Council and Johnson, Fran Halbakken Ð the Sacramento's development manager overseeing the railyard - said "each team provided information on their qualifications, experience, financial and technical capabilities."
She added "all teams acknowledged the minimum valuation of $185 million for the city's parking assets subject to review and due diligence."
The list includes two local partnerships.
Revitalizing Sacramento LLC is a partnership between San Francisco's Priority Parking and LDK Capital LLC. Priority owns 50 lots and garages in Sacramento and LDK revamped McClellan Air Force Base into a thriving business park.
The other firm with local ties is Sacramento Forward LLC.
According to a news release issued by the group, the partnership includes "one of the largest real estate investment management firms in the world, CBRE Global Investors; the largest parking operator in the United States, Standard Parking Corp.; the top municipal underwriter in California, Stone & Youngberg; the winning bidder for the State of California's sale, since canceled, of a $2.3 billion portfolio of office buildings, Antarctica; and a Joint Powers Authority that has 150 California municipalities and counties as members, California Municipal Finance Authority."
The firms responding were: Ontario Teachers' Pension Plan Board, Xerox Corp., InterPark LLC, Guggenheim Securities LLC, Sacramento Forward LLC, Gates Group Capital Partners, LAZ Parking/CIM Group, The Carlyle Group, CMB Export LLC, Morgan Stanley, Infrastructure Inc., Bainbridge ZKS, Revitalizing Sacramento LLC and Capital City Parking Group.
SACRAMENTO WANTS $85 MILLION FROM KINGS
February 16, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - Reports say Sacramento will ask the Kings for $85 million toward a new
$387 million arena.
The city believes the financing plan would draw on a blend of sources, including the Kings' contribution, an expected $50 million from arena operator AEG and $40 million or so from the sale of public lands. Hotel taxes could play a role, too.
The city would provide the biggest piece of the puzzle by leasing out its parking garages and meters to private investors Ð a deal that could raise perhaps $200 million or more in up-front cash.
By a unanimous vote, the Sacramento City Council this week voted to allow staff to enter into detailed talks with 11 firms seeking to lease downtown parking.
In approving deeper talks with those parking firms, the Bee said the City Council showed it supports moving forward on an attempt led by Mayor Kevin Johnson to create a financing plan for an arena by March 1 and avoid losing the Sacramento Kings.
It's a shift from just one week ago, when four council members voted to place the parking plan on the June ballot - a move that likely would have stalled the arena project beyond March 1.
The support is far from certain over the long term, given the council discussions looming in the near future, the newspaper said.
City staff is in negotiations with the National Basketball Association, the Kings, arena operator AEG and the arena development team to round out the facility's financing plan.
Those talks are expected to continue for at least another two weeks, as the city works to create a financing "term sheet" for the arena by month's end. The council would then be asked Feb. 28 to approve that term sheet in a vote that could determine whether the Kings remain in town.
The mayor said the vote on Feb. 28 "has the possibility of being very historic."
What's unclear is whether the Maloofs are willing or able to invest what the city wants. The family has been hit hard by the economy and surrendered control of its Las Vegas casino to creditors. Co-owner George Maloof said last spring: "We are not going into this with a big checkbook."
But if the NBA likes the financial package, city officials expect the league could begin pressuring the Maloofs to bring in new investors or sell the team altogether.
NBA: KINGS WILL MAKE "SUBSTANTIAL" ARENA CONTRIBUTION
February 23, 2012
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Sacramento, Calif. - National Basketball Association Commissioner David Stern said the
Sacramento Kings owners have agreed to make a substantial contribution to the city's $387 million arena deal, but he did not disclose how much. Stern said he expects negotiations between the league and city to continue into the weekend, according to the Sacramento Bee.
"There is a lot of discussion going on," he told TNT. "We're hoping by the March 1 deadline there will be a financing plan that makes sense."
Asked what will happen if there is no deal by that deadline date, he said, "We'll see. Here we go again."
During the interview with TNT's David Aldridge, Stern, however, indicated he considered any contribution to the arena from the probable arena operator, AEG, to be a team contribution.
City officials have said they expect AEG, a Los Angeles-based arena operator, to put about $50 million into the deal as up-front money. The city is reported to have asked that the Kings put in about $85 million of their own money. Stern did not offer any hint whether the Kings have agreed to that amount, but indicated the team has agreed to put in some money.
"The team has agreed to a substantial contribution, both directly from itself, but also by catalyzing AEG to be interested. In effect, whatever money AEG puts in is because of give-backs by the team ... so we see that as a team contribution," Stern said. "Whether it ultimately closes all the gaps, we'll know as we negotiate continuously and I fully expect that we will be negotiating in Orlando (this weekend when team and city representatives meet for the All-Star game)"
Sacramento Mayor Kevin Johnson said earlier he expects to meet face to face with Stern this weekend in Orlando. The city had planned to present a term sheet to the council for review next week, but that was moved to March 6, with Stern's approval, to give the public and the council more time for review.
KINGS, SACRAMENTO AGREE ON ARENA PLAN
March 1, 2012
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Sacramento, Calif. - Sacramento and its sole major league sports team, the Kings, have agreed
on the pieces of a $391 million arena financing puzzle that would keep the franchise in town another 30 years.
According to the Sacramento Bee, after 21Ú2 days of negotiations in the Waldorf Astoria hotel outside Orlando, Fla., site of the NBA All-Star game, Sacramento Mayor Kevin Johnson, NBA Commissioner David Stern and three Maloof brothers emerged to announce a handshake deal that even some of them had doubted could be done.
"It's game over!" said a jubilant Johnson, who hugged Stern. "Sacramento deserves to win, and this is our chance to win. I'm so emotional, I can't even articulate it."
Kings co-owner George Maloof, who pushed hardest for the team to move to Anaheim last year, said the deal would make the Kings healthier financially, even in small-market Sacramento.
"I think it is a fair deal," he said. "We gave a lot. Everybody had to give. Sometimes you have to take chances, and we think this is worth taking."
Under the agreement, the city would shoulder more than half the cost of a new arena and would own the facility, with the Kings as tenants. The Maloofs say they would put in $75 million up-front and provide the city with another $75 million in arena-related revenue over 30 years.
Anschutz Entertainment Group, a worldwide operator of sports and music venues, agreed to put in another $10 million to bridge a financing gap, a source who is familiar with the negotiations but not authorized to speak publicly told the Bee. AEG would pay $60 million for the right to operate the arena, up from its previous offer of $50 million.
The Bee said the deal represents the closest the city has gotten in a decade of attempts to replace outdated Power Balance Pavilion. The new arena would be built in the downtown railyard.
City officials have pegged the planned facility's public price at $255,530,000. Documents released by the city show that figure represents 65 percent of the cost for what is now estimated to be a $391 million arena, compared with a 35 percent share from the private sector, including the Kings.
The agreement is not formal. More negotiations lie ahead, and officials say dozens of details must be worked out soon if they are to meet an accelerated construction schedule to open an arena for the 2015-16 NBA season.
The county Board of Supervisors is expected to vote on a proposal to let the city use three county parking garages on arena nights. That would generate an estimated several million dollars a year toward the project.
Next up, the city will disclose details of the deal in a "term sheet." That sets up a critical City Council vote Tuesday on the basics of the deal. Johnson recently won a preliminary vote by a 5-4 margin. But the mayor is confident he'll have more support next week.
Council members say they will have plenty of questions. Already, the broad outlines of the deal suggest the city, the Kings and others would face some level of risk.
"For me, the most important thing is that we have to keep our general fund whole," said Councilman Steve Cohn, a potential swing vote.
The city, as arena owner, would provide the lion's share of the project costs. Most of the city's share would come from a still-evolving plan to wring millions in up-front cash from the city's parking operations.
The city has spent months studying a plan to privatize those assets by leasing them to an investor. A source familiar with the issue said the city also is looking at a different model that would involving borrowing against future parking and hotel-tax revenue, although a private parking operator might still be brought in.
The city's share of the arena deal also would include cash from sales of city land, including 100 acres next to the Kings' current home, Power Balance Pavilion.
The Kings' share is shrouded in uncertainty, too. The Maloofs said they would obtain financing to produce $75 million up-front. Some of that money would come from the eventual sale of the old arena site.
The team also agreed to provide the city with about $75 million in game-night revenues. Much of that would come from ticket surcharges.
The Maloofs would continue to make payments on their existing $67 million loan from the city. The city would have to refinance the loan in 2015, when the old building goes dark, by issuing new bonds, said City Treasurer Russ Fehr. The new loan would let the Kings spread payments out longer, a source said.
Fehr said the new bond offering could be somewhat risky for the city because, unlike the old debt, the new loan wouldn't be secured by an arena and its surrounding real estate.
AEG, the arena operator, is expected to control a big share of the building's profits. A source said the city would share in the dollars if arena profits exceed a certain threshold.
A representative of the ICON/Taylor development team, picked by the city to build the arena, said his group is talking with its contractor about assuming all cost overruns. The representative, Sacramento developer David Taylor, wouldn't go into detail.
Typically, the company that assumes overruns also keeps any money saved if the project comes in under budget.
The city also may contribute funds from new cell phone tower leases and electronic billboards at or near the arena. The deal doesn't include an increase in the hotel tax.
Arena ticket surcharges are expected to be a key element. The city would collect a 3 percent to 5 percent surcharge on every ticket for every event, said the source who briefed the Bee on the deal points. The portion of that money that comes from tickets sold on basketball nights would be considered a contribution from the Kings.
All surcharge revenue would go directly into the city's general fund to help make up the $9 million in annual proceeds from the city's parking operations that would be lost. The rest of the $9 million "backfill" would come from other sources, including parking revenue during arena events. On NBA game nights, the Kings would get a share.
Sources said the Kings would make money on game nights from increased concessions, new luxury suites, other premium seating, and a variety of improved advertising opportunities.
Additional council votes will be needed down the road to approve environmental reports, contract documents, choose a private parking lease partner and deal with other technical issues.
Other key elements of the deal include:
* The Kings would sign a lease obligating the team and any potential future owners to remain in Sacramento for 30 years.
* The city would allow the Kings to refinance the team's existing $67 million city loan, with better terms. The refinance likely would involve the city selling bonds to private investors and forwarding those proceeds to the Kings. The Kings would use the money to pay off the current city loan, then would make payments through the city to the private investors on the new loan.
* A 5 percent surcharge would apply to all tickets sold at the arena, for sports and non-sports events. That money would go to the city.
* The city would receive a percentage of net profits earned by the arena operator.
Associates of the mayor said the deal is solid for the city, and pointed to several recent arenas where teams put in less money than the Kings: Orlando, San Antonio, Memphis, Indianapolis, Charlotte, Cleveland and Oklahoma City.
SACRAMENTO RELEASES TERM SHEET DETAILS
March 8, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - The Sacramento City Council approved the financing plan for a $391
million sports arena in the downtown railyard, the Sacramento Bee reported.
By a 7-2 vote, the council accepted a nonbinding "term sheet" agreed to by city officials, the
Sacramento Kings, arena operator AEG and the development firm slated to build the project.
The decision sets into motion a series of critical votes in the coming months. Those votes must
occur under a tight timeline, as the city works toward breaking ground on the arena by next summer to open the facility for the 2015-16 NBA season.
Officials earlier released a raft of new details on the proposed $391 million downtown arena, including a VIP parking garage and special $1 ticket surcharge.
The all-important "term sheet" spelled out the financing structure agreed to by city officials, the Sacramento Kings, arena operator Anschutz Entertainment Group and the ICON/Taylor development team.
With the release of the document, Mayor Kevin Johnson said the city met the NBA's March 1 deadline for crafting a deal.
"This is a huge milestone along the way," said City Manager John Shirey. "It was important to have all the parties agreeing to this."
Among other things, city staffers are asking the council to spend $850,000 from the city's parking fund to move ahead on preliminary steps in the process.
Additional dollars would start flowing soon: City officials say the parties would need to commit by April 3 to spending a combined $13 million on engineering, environmental and other costs.
Of the $13 million, the city would put in half, taking dollars from its parking fund and money earmarked for redevelopment, while AEG and the Kings would put in the rest. These dollars are included in the total $391 million budget.
Much of what's in the term sheet was already known, including the city's $255.53 million contribution and the Kings' $73.25 million up-front share.
The documents show how the city would backfill the $9 million a year the general fund would lose once the city completes its plan to extract up-front cash from its parking operations.
The plan is to make up the difference through ticket surcharges, taxes generated by the arena, the city's anticipated share of arena profits and other sources. In the years before the arena opens, cash would be carved out of the so-called "parking monetization" - the linchpin of the city's share of the project.
The city said the parking program could generate $230 million in up-front cash toward the arena. But the documents also reveal that city staffers are still wrestling with exactly how to make the parking plan pencil out.
One approach could give the city more control over its parking garages and rates, but could expose its general fund to some financial risk.
Separately, the documents show that Sacramento developer David Taylor would team with Los Angeles real estate firm CIM Group to build a privately financed $25 million parking garage near the railyard arena. This garage wouldn't be part of the city's "monetization" plan.
Taylor said the lack of a VIP parking garage became a "sticking point" in talks among the city, the Kings and AEG, which would operate the arena and is contributing $58.75 million to the project. The 1,000-slot garage would be reserved for patrons sitting in luxury suites and club seats.
"We felt like it was critical in putting together the last pieces of the arena financing puzzle," Taylor said. He said LAZ Parking of Hartford, Conn., is expected to participate in the project.
Taylor said the city would get a share of profits from the garage, but that still has to be negotiated. Taylor, with ICON Venue Group of Denver, has already been tapped by the city to develop the arena itself.
In another key detail, the city and AEG agreed to tack a $1 service fee onto all arena tickets to create a building maintenance fund. It's supposed to raise about $1.2 million a year. The city said the fund is essential to prevent the city from being liable for runaway upkeep expenses as the arena ages.
The $1 service fee would be in addition to the 5 percent ticket surcharge, already announced, that would be imposed to help pay for construction.
While the Kings would be tenants in the building, they would keep all game-night revenues from tickets, concessions, club seats and luxury suites. But the Kings would split 50-50 with AEG the revenue from arena advertising, including the naming rights.
AEG would control the lion's share of revenue from non-Kings events at the arena.
Maloof said details of the Kings' lease with AEG are still being worked on. "We're going to sit with AEG and go through some things with them," he said.
AEG could make $5.7 million in annual profit running the building, according to a projection released by the city.
Under the plan, the Kings are supposed to earn at least $2.6 million in annual parking revenue during their games from city-controlled lots. If the revenue falls short, the city, under certain circumstances, would have to share some of its ticket surcharge revenue from non-Kings events. At the same time, the city would get at least 15 percent of AEG's profits from the building. And the city could host a dozen "civic-oriented events" each year at the arena, rent free. The city stands to make $1 million in annual profit from the arena.
The city said it would have to raise about $19 million from land sales, including 100 acres near Power Balance Pavilion, to make the whole project work. It identified four parcels whose worth it pegged at a combined $31 million for possible sale.
But the biggest chunk of city cash Ð $230 million Ð is supposed to come from the parking proposal. And the staff report makes it clear the city is still undecided on two possible models to make that happen.
A "concession agreement," in which the operation is leased to a private company, puts the financial risk on the company. If parking revenues plummet, it's the company's problem.
But the City Council might impose so many restraints on the company Ð including controls on parking rates Ð that the price could fall to $185 million or less, far below the amount needed.
An alternative model would set up a nonprofit corporation to issue bonds, essentially borrowing against future revenue. The corporation also might borrow against the city's hotel tax receipts, earmarking the proceeds for upgrades to the Community Center Theater.
This model could give the city more control over things like parking rates - but also bring more risk.
If revenues drop below what's needed to repay the bonds, the city's "general fund might have to be used to make those payments," according to a staff report. "That risk can be mitigated by using conservative assumptions."
March 15, 2012
Copyright 2012 MediaVentures
Reno officials are excited about the approval of a new arena in Sacramento because it helps
their bid for the 2022 Winter Olympics. Sacramento Bee columnist Ailene Voisin quoted Nevada Lt. Gov. Brian Krolicki saying "That (council vote) was a terribly important development for us. As we do an assessment of all the assets and venues available, having that sports and entertainment complex would be a very useful tool. We need at least eight sheets of ice, and right now, we don't have that. Your airport is a very critical piece, as well."
AEG BELIEVES IN SACRAMENTO MARKET; OPPOSITION GROUP ORGANIZES
March 22, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - AEG officials say they are committed to the Sacramento market and want
to help develop a new arena, the Sacramento Bee reported.
"We think we timed the economy perfect," Chief Executive Tim Leiweke told the Bee during a
visit to the city. "You never go to an economy when it's at its peak. You go to an economy when it's at or near the bottom."
Leiweke came to Sacramento to meet with city officials, the Maloofs, who own the Kings, and the ICON/Taylor group, which is developing the $391 million arena. While all sides have agreed to a non-binding "term sheet," the visit marked a key moment in negotiations that will play out over the next several months to forge a more definitive series of documents.
Meanwhile, an opposition group has launched a petition drive to force the financing plan onto the November ballot. Group members filed a petition for approval with the City Clerk's office and hope to gather 30,000 signatures by an end-of-May deadline.
In return for its investment, AEG, a worldwide arena and concert-tour operator, would run the Sacramento building, book all the non-Kings events and collect most of the profits. The city would also get a share, which it estimates at about $1 million a year.
Leiweke, breaking months of silence by AEG on the topic, said the Sacramento project would be his company's first new arena since the recession started. The $58.75 million is the most AEG has ever invested in a U.S. arena or stadium, with the exception of Staples Center in Los Angeles.
"It's telling that we have this much faith in the marketplace," he said. "We're willing to bet on this community." He said AEG ignored at least 40 other arena proposals in other cities.
NBA Commissioner David Stern is the source of much of AEG's faith in Sacramento. AEG operates seven NBA arenas. Asked whether the Maloofs can deliver on their pledge to pitch in $73.25 million, Leiweke said: "I believe in David Stern."
He later said he doesn't believe the NBA is giving the Maloofs any financial assistance. The family, which took big hits during the recession, has said it can finance its share.
Leiweke said he became convinced Sacramento deserved to keep its team. He recalled visiting Power Balance Pavilion for games between the Kings and the L.A. Lakers - who are one-third owned by AEG - and being dazzled by the passion of Kings fans.
He said he met with the Maloof brothers and told them the Kings' performance will be vital to the arena's profitability. "We're betting on the three of you," he told them. "We need a good team." Leiweke said the new arena would generate far more revenue than the Maloofs have been able
to make as owners of Power Balance Pavilion. A big source would be naming rights, advertising and other revenue streams that he said would be critical to the project.
The big difference, he said, is that AEG doesn't think of Sacramento as a market of 2 million people. Rather, because it's the state capital, "you have companies that are going to want to be part of the community," he said. "Companies that value the state of California should value the city of Sacramento."
He told the Bee that AEG has already talked to a half dozen companies about the building's naming rights, which could go for as much as $6 million a year. That revenue would be split between AEG and the Kings and the Bee said it would represent a greater payday than the team's current deal with Power Balance.
ANGER FLARES AS SACRAMENTO APPROVES ARENA WORK
April 5, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - The Sacramento City Council approved moving forward with crucial
pre-development work required for the arena by a 7-2 vote, agreeing to spend $200,000 provided by the NBA to fund that work.
The Sacramento Bee said the league agreed to forward those funds last week after the Maloofs, who own the Kings, said they never agreed to pay for pre-development work. City officials dispute that claim, saying the term sheet clearly lays out how the pre-development work would be funded.
Hours after the Kings' team owners said they do not believe they should pay a $3.26 million share to help launch arena pre-development work, NBA commissioner David Stern told the Bee in a statement the league itself will step in to advance the initial payments. A source close to the negotiations but not authorized to speak told the newspaper those payments total about $200,000.
City officials said they need the funds, coupled with $6.5 million from the city and $3.26 million from AEG, the arena operator, for pre-development work to maintain a tight schedule for arena construction to start next year.
In an email message, Stern acknowledged that the city and Kings had come to an impasse.
"Following the agreement in principle ... the parties have been attempting to reach agreement on funding the pre-development expenses that must be incurred in order for the project to move forward in a timely fashion," Stern said. "Those discussions have stalled, but I have advised Mayor Johnson that the NBA will advance pre-development expenses on behalf of the Kings pending our report to the NBA Board of Governors at its meeting on April 12-13."
NBA officials did not say whether they would make further payments after that Board of Governors meeting.
City officials said they were hopeful that meeting would provide them with clarity over whether the Maloofs will contribute to the pre-development process.
Under a nonbinding term sheet approved last month by the City Council, the city would eventually chip in $6.5 million of the $13 million in pre-development costs. That work includes environmental and design reviews.
City officials say they believed the Maloofs had agreed during negotiations last month to pay $3.2 million toward the pre-development work, as did AEG, the company signed to operate the arena.
But Kings co-owner George Maloof disputed that, saying his family never agreed to pick up pre-development costs. He said it would be unfair for the team to have to cover those costs because it will be a tenant Ð not owner and developer - of the arena. The team owners also balked at a deal point that would force them to pay AEG its $3.2 million share if the deal falls through, unless it's AEG's fault.
Assistant City Manager John Dangberg said that if the NBA meeting does not lead to a resolution of the dispute, "all pre- development work would cease."
In the meantime, "there is no risk to the city because city dollars will not be spent," said City Manager John Shirey.
The Kings' public announcement that they have issues with the deal drew rebuttals from the mayor and state Senate President Pro Tem Darrell Steinberg.
At a morning event on the rooftop of a South Natomas office building, Johnson lashed out at the Maloofs and accused the family of making "disingenuous" statements regarding their contributions to the pre- development work. He added the family had engaged in "tactics and antics that are not becoming of a true partnership."
Steinberg also questioned the family's commitment to the project.
"The Maloofs seem to be looking for every reason not to proceed as opposed to looking for ways to make it work," Steinberg said in an email to the Bee.
Asked if the city would seek new ownership for the Kings should the Maloofs continue to balk, the mayor said, "We're not going to be a city that sits on its hands."
While the mayor would not elaborate, billionaire Ron Burkle has expressed interest in purchasing the Kings. The Maloofs have insisted several times that they have no interest in selling.
The Maloof family has additional concerns beyond the pre-development funding.
In a letter to city officials, an attorney for the Maloofs questioned the city's ability to build an arena by 2015, the opening date targeted by the NBA.
Attorney Scott Zolke challenged the city's timeline of completing environmental impact reports in time to start construction next year.
Steinberg brushed those concerns aside, saying a state law he wrote was designed in part to smooth the way for the arena, allowing certain large infill projects to qualify for expedited legal reviews in court, if challenged.
"The Maloofs are wrong about the timing of the CEQA and appellate review process," Steinberg wrote. He concluded. "We stand ready to work with the city and the appropriate state agencies to ensure the project can qualify for expedited review but we need some willingness from our partners to start the process."
The snag over the fees appears to have developed after Kings officials met in Sacramento with the city, AEG and other private partners to begin work on what would be the first formal, binding documents on financing an arena.
Earlier in the month, the Kings owners said they had agreed in principle to pay $73.25 million to help build the $400 million arena.
At that time, city officials published a non-binding "term sheet" that was agreed to in principle by all the parties in the negotiation. It states that the Kings' share would go "toward development and construction of the (arena)," and "shall include pre-development expenses."
In an interview with SI.com, George Maloof acknowledged what the term sheet said, but noted that the team had not agreed to it.
"That was one that we were vehemently against, for a couple of reasons. No. 1: As a developer - and I've developed lots of properties Ð you're used to paying those types of fees, those pre-development costs and consultants or architectural fees. I've never passed that fee onto my tenant, so it didn't make sense. I'm sure someplace in the world, a tenant has paid for a pre-development cost, but the customary way is that they don't pay for that. Not only that, but [the city] asked us to pay for AEG's cost if the deal didn't happen, and that's just not a fair deal. I just didn't believe that was fair from day one.
"We've stretched ourselves on numerous occasions, but at the end of the day it's part of the process. I know it's a public deal, and I think the public should be informed. We're prepared to move forward and get it done at that site, but it's got to be under the right terms for everybody."
Maloof told the Bee the team is not trying to drop out of the deal. It just has questions it wants answered as it moves forward.
"The way we look at things, nothing's ever a deal breaker if you have the desire and the intent, which we do," Maloof said. "It's part of the negotiations ... We've always maintained that this is a negotiation."
The turn of events came days before city staff had planned to ask the City Council to allocate the first substantial city funds to the project. The staff report indicated the city was counting on the Kings and arena operator AEG to kick in $3.26 million apiece.
That payment split was discussed at a March 6 City Council meeting with team co-owner Gavin Maloof in the audience. The city's arena consultant, John Barrett, that night told the council pre-development costs "will be funded 50 percent by the city, 25 percent by the Kings and 25 percent by AEG."
A city staff report described the predevelopment funding - $13 million in total from the three entities - as a necessary first step in planning, designing and engineering the $400 million facility.
Officials said they need to move forward quickly in order to build and open the arena on a fall, 2015 time schedule.
The council already has conceptually approved committing $255 million in city assets to the project. Some $200 million or more of that is expected to come from future downtown garage and street parking revenues. The council has not, however, given final approval to a detailed plan on how to leverage its downtown parking to come up with the $200-plus million.
MALOOFS WANT OWNERS TO SUPPORT NEW DEAL
April 12, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - The Maloof family will ask their fellow NBA owners for support during an
owners meeting in New York in forcing Sacramento to negotiate a better deal with the team, the Sacramento Bee reported.
At the same time, 25 Sacramento business owners are asking the league to find new owners.
A spokesman for the Sacramento business group, Gregory Hayes, a member of Mayor Kevin Johnson's Think Big Sacramento organization, said the group plans to speak out publicly later.
Hayes said his group includes developers, restaurant owners and downtown business owners. He declined to offer further details, other than saying in a press statement that the group will express its position on the future ownership of the team.
The Kings owners say they will bank on respect and understanding from the league's board of governors when they make their pitch at the St. Regis Hotel in midtown. The newspaper said they are likely to face opposition from David Stern, the NBA commissioner, who has a close relationship with Mayor Johnson and was instrumental six weeks ago in crafting the deal the Maloofs are questioning.
Unlike last April, when Johnson and his entourage swept into the NBA board of governors meetings to make their case for Sacramento, Johnson said he doesn't plan to be in New York for the meetings Thursday and Friday.
City officials contend they have done what they needed to do. Now, they say, it is up to Stern and other NBA officials who helped negotiate the deal to persuade the Maloofs to get aboard. "We've done everything we were asked to by the NBA," said Assistant City Manager John
Dangberg, the city's point man on the arena. "We are hopeful the NBA and the team can ... bring back a solution."
For the Maloofs, the meetings could be pivotal. The family is expected to tell owners they never formally agreed to deal details, and that there are several elements in the tentative financing plan that need work before it gets their signature.
The Maloofs have declined to say publicly what their concerns are, other than their refusal two weeks ago to pay a $3.26 million share of the $13 million in pre-development costs the city says it needs to keep an arena project on track. The Kings also have objected to a proposal that they reimburse the would-be arena operator AEG its $3.26 million pre-development share if the deal falls apart without any fault from AEG.
Like the mayor, AEG representatives said they won't go to New York and aren't interested in negotiating a new deal.
"At this time, we've given as much as we can," said a company representative who wasn't authorized to speak publicly about the deal.
A source familiar with the issue told the Bee the Kings would like more decision-making authority at the arena. The team reportedly also has concerns about parking issues, wants more input on the design, and has issues with the proposed lease terms and revenue streams, among other sticking points. The current term sheet calls for the Kings to sign a 30-year lease.
NBA Commissioner Stern stepped in to temporarily patch over the first of those hurdles two weeks ago by agreeing to pay the first $200,000 of predevelopment costs, and said he would bring the issue before the board of governors. That $200,000 is enough to get work done through April 17, city officials said.
Speaking to the Bee, team co-owner George Maloof said his goal in New York is to put the project "right back on track and start negotiating this thing again."
He said he expects a sympathetic hearing. "I think the owners have a lot of respect for us, they always have, as we have for them," he said.
In recent days, Mayor Johnson and state Senate President Pro Tem Darrell Steinberg, among others, have said they suspect the Maloofs may be trying to undermine the deal.
SACRAMENTO ARENA DEAL COLLAPSES
April 19, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - The deal to build a new arena in Sacramento for the Kings has collapsed
leaving local officials angry, the league frustrated and team owners saying they still want to remain in the city.
The Sacramento Bee said the Maloof family pulled out of a plan to finance a $391 million sports and entertainment complex in the downtown railyard. Then, reversing a decade of public statements, the family suggested instead that city officials could help them renovate Power Balance Pavilion in North Natomas.
During a hastily called news conference in a law office overlooking New York's Rockefeller Plaza, a prominent economist and attorneys hired by the Maloof family took turns tearing apart the city's plan. They argued that it would place Sacramento on the edge of fiscal disaster and could be equally damaging for the Kings. Later in the day, Mayor Kevin Johnson met privately with the Maloof brothers for more than two hours. But unlike last year - when Johnson was able to persuade the Maloofs and the NBA to support one more attempt at building a new arena - the mayor left that meeting disappointed.
"I wish I had better news," the mayor said. "(The Maloofs) are now saying they don't want to do the deal, which essentially means they don't want to be in Sacramento."
Speaking at a somber news conference of his own, NBA Commissioner David Stern said he was "extremely disappointed both for the Maloofs and the city of Sacramento."
"I think that there's nothing further to be done," he said.
As for the team's future in the city it has called home since 1985?
"I know we've scheduled them into Power Balance Pavilion for next year," Stern said. "It just
wouldn't pay for me to talk about anything beyond that."
Johnson quickly dismissed the idea of renovating Power Balance Pavilion, one of the smallest
arenas in the NBA and a facility long derided by the league as inadequate.
"If it was up to me, there is no way that we as a city would invest in that building," the mayor
said. "If they want to renovate (it) on their own using private dollars, that's their prerogative."
Later in the week Johnson said the city should continue looking at a new arena "with or without an anchor tenant."
Johnson said the city would explore "the Kansas City model." City officials and arena operator AEG constructed the Sprint Center in Kansas City without a professional sports tenant.
The mayor said he still considers AEG a partner in its arena effort, even after the collapse of a deal that would have made the firm the operator of a downtown facility.
Johnson acknowledged that without the $73 million the Kings would have contributed to the arena, another facility might have to be smaller than the one originally proposed.
City Manager John Shirey told the City Council the death of the latest arena plan "doesn't end
everything," especially in regard to the city's ongoing development of the downtown railyard and developing 100 acres of city-owned property around Power Balance Pavilion.
On the railyard, where the arena would have been built, Shirey said "this setback does not mean we're giving up on" that site. He called it the "largest and maybe the best infill (development) opportunity anywhere in the country."
George Maloof, the family's point man on arena negotiations, said he has concluded that renovating the current arena makes more economic sense.
"Why put the pressure on the citizens of Sacramento when we can all figure this out and maybe just do it at Power Balance Pavilion?" Maloof asked.
Asked if that plan were feasible, Maloof replied, "You can redo anything. Trust me, I'm a developer."
But that stance contradicts a statement the family made in March 2011, when a former Kings executive and the architect who designed the former Arco Arena pitched a remodel of the facility to the Maloofs. The family said they had listened to that proposal, but determined "a renovation of the existing structure is not an adequate solution."
The Bee said there was much the Kings did not like about the financing plan for a new arena.
For one thing, the lease agreement offered by AEG was based on unrealistic attendance projections, said Maloof attorney Barry McNeil.
"They took the best two years we had ever had," he said. "They took when we were a championship contender, and they took years at the height of the bull market and based their projections on that."
Christopher Thornberg, an economist hired by the Maloofs to dissect the plan, called the projections "highly overblown" and said actual revenues could have come in between $5 million and $15 million below forecasts.
What's more, Thornberg said, city officials had presented a "wildly overblown estimate of the kind of revenue value this arena will bring to the city."
"This project would really put the city right on the edge of potential fiscal disaster," Thornberg said. "There's a massive amount of risk for the Kings, the city and ultimately the NBA."
City officials rejected Thornberg's statements.
"Chris Thornberg has never talked to me or our finance director or anyone in the city government about our finances," Shirey said. "We feel very confident with the project that was on the table and we were prepared to move forward with that, and we can still deliver on that project if there is a change of heart tomorrow."
The Maloofs accused city officials of charging ahead while ignoring their concerns. But in his news conference, Stern said the team's concerns were heard. He suggested that the Maloofs became uncomfortable about the deal because they were worried about taking on more debt.
"They decided this wasn't a transaction they wanted to go forward with, and this was their right," Stern said. "If they had done it a little simpler, a little earlier, a little more directly, it would have saved a lot of angst and trouble."
The Maloofs' concerns with the plan became publicly known only in recent weeks.
The team owners said they first received a term sheet with the proposed provisions of the deal on Feb. 19, one week before the Maloofs, the NBA and city officials met in Orlando to negotiate.
In an email to NBA officials, George Maloof wrote the family was "having a hard time with this document" and that they "find it insulting."
Other issues would materialize as a March 1 deadline to develop a financing plan approached.
Among those were a reluctance by the Maloofs to provide collateral for a refinanced loan that would replace the outstanding debt of about $65 million the family still owes the city.
The Maloofs also insisted that the city cover the project's pre-development costs. They wanted more authority over arena designs and had issues with the length of the 30-year lease the Kings would have signed in the new facility.
Mayor Johnson said he was "baffled, to say the least, at how we ended up here." "The Maloofs explicitly stated and agreed that the deal was a fair deal," he said. The Maloofs disagreed and told USA Today that if negotiations resume, they don't want to deal with the mayor. "We're disappointed in comments made by the mayor that we feel were shots to us that were unfair and not truthful."
Johnson's office responded.
"As their bizarre press conference laid bare for all to see, dealing with the Maloofs is like dealing with the North Koreans Ð except they are less competent," Chris Lehane, executive director of Think Big, a committee formed by Johnson to keep the Kings in Sacramento, told USA Today Sports in a statement. "In Maloof-world, facts are fiction; truths are half-truths; and promises are broken promises. The City of Sacramento deserves better."
Johnson said the Maloofs demanded a deal where they wouldn't put up any collateral. George Maloof said that was misleading.
"Yes, that's true," he said of the no-collateral demand, which Maloof claimed was brought up in Orlando during All-Star weekend and Feb. 27 when the sides announced they were on the path to an agreement. "Everybody knew that Day 1. I don't know why they're surprised about that yesterday. ... If he's using that to walk away, that's not right."
The failure of the arena project could have an immediate financial impact on the Kings.
The Bee said some local corporate sponsors who combined to spend $10 million on the Kings this season are assessing whether to continue that support. With many corporate sponsorships up for renewal for the 2012-13 season, representatives for some of those companies acknowledge that negative press aimed at the Kings will play a role in deciding future partnerships.
"If the fan support isn't there, that goes a big way toward the value of the partnership," said Rick Heron, the chief marketing and brand officer for Western Health Advantage, which purchased $120,000 worth of sponsorship and tickets this season.
Jiffy Lube, which paid for electronic billboards around the city last spring advertising the "Here We Stay" campaign, is waiting to hear from the Maloofs before making a decision.
"I'd like to hear how they're going to deal with the negative press and the backlash from the fans," said Matt Graham, marketing director for area Jiffy Lubes.
SACRAMENTO MAYOR HOLDS TALKS WITH MALOOFS
April 26, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - Mayor Kevin Johnson flew to Las Vegas last week in what the Sacramento
Bee said was an apparent attempt to revive talks with the Sacramento Kings' ownership on a downtown arena. The two sides also agreed to meet again this week in what the newspaper called a "make-or-break-session."
After a week of trading accusations about the collapse of the arena project, the mayor arrived at the Palms Casino, whose chairman is Kings co-owner George Maloof.
A Maloof spokesman confirmed the meeting. Eric Rose said the mayor showed up unannounced at the Palms Hotel. "George graciously accepted his meeting," Rose said.
"The meeting was cordial; however, nothing definitive resulted from the meeting," Rose said in a statement issued late this afternoon. "The Maloof family will not have any further comments on the meeting."
The arena project appeared to have died, following a two-hour meeting between Johnson and the Maloofs at the NBA owners' meetings in New York. Johnson said the Maloofs pulled out of the deal, while the family said they had never agreed to anything beyond a general "framework" of a deal.
SACRAMENTO, NBA SAY ARENA DEAL DEAD
May 1, 2012
Copyright 2012 MediaVentures
Sacramento, Calif. - Sacramento and the NBA have acknowledged that a plan to build a new
arena for the Kings is dead, but the team says it wants to remain in the city.
After the talks collapsed, NBA commissioner David Stern said the Kings are making a mistake by passing up a good deal on a new $391 million arena in downtown Sacramento.
"We had come up with a scenario where the Kings could move into the building without putting a dollar of cash down," Stern said in an interview with the Sacramento Bee. "We were not attempting to induce them to make a deal that would be unprofitable for them."
Stern made his comments shortly after a somber Sacramento Mayor Kevin Johnson announced that he and the Kings' owners, the Maloof family, had failed to reach agreement after two days of last-ditch talks - and that the two sides are too far apart to keep talking about building a facility in the downtown railyard.
"It became clear today our differences are irreconcilable," Johnson told reporters at City Hall. "This deal is not happening as we know it."
George Maloof left the meeting through a side door, but said later the team is staying in town.
Maloof mentioned expanding and rehabilitating Power Balance Pavilion, one of the smallest and oldest arenas in the league. He offered no details.
"Right now, it's break time," Maloof said. "Everybody's kind of burned out. I know we are." He said his family is "going to take some time to focus on (team) operations."
Johnson called the idea of rehabbing Power Balance Pavilion a "nonstarter" for the city. Stern said if the Kings can find the money to rehabilitate Power Balance, "that is something that would be good for Sacramento and the NBA," but the league doesn't plan to extend its loan offer to that project.
Johnson said he and city officials will explore building an arena downtown without the Kings as partners or even tenants. That includes talking with AEG, the Los Angeles-based arena operator, about whether it and the city could finance an arena patterned after the Sprint Center in Kansas City, a facility run profitably by AEG for concerts and other events but without a major league team as tenant.
The mayor also said the city will talk to a handful of major parking companies that have expressed interest in leasing city garages in exchange for up-front funding that could be put toward arena construction.