My Views on Arena Deal

By Kevin McCarty

If Sacramento provides the arena buck, it should get more bang

If Sacramento provides the arena buck, it should get more bang

March 18, 2012 By Councilmember Kevin McCarty

At the City Council meeting March 6, I voted against a financial plan to build a new downtown sports arena.

Over the past few months, I've heard from hundreds of constituents and city residents calling and emailing my office, and I've read through more than 1,700 constituent surveys. I've also met with advocacy groups, business owners, Kings fans and interested parties.

Two things have become clear to me over the arena financing debate: 1. Details matter; and 2. We ought to be working toward crafting the best possible deal for the city of Sacramento.

Most concur that a new arena could boost our city and downtown. But even more want a deal that protects Sacramento down the road and provides an immediate upside to fund our current city priorities.

My stance is that if we put public money into this project, it must be a good deal for the city and its residents. The current plan just isn't a good enough deal for the city of Sacramento. Because the details matter, the following issues need to be addressed as the process moves forward in the coming months.

• Issue 1: Let's address our current city priorities

For me, it's unconscionable to allocate all new parking monies toward a new arena with so many other pressing city needs. In my council District 6, all three swimming pools are closed and community centers and libraries are staffed at skeleton levels. Citywide, all youth sports programs were eliminated last year. Park maintenance and code enforcement are not staffed at levels to provide adequate service, and we've been forced to eliminate more than 200 police and firefighter positions in recent years. And, in less than three months, there may be more layoffs as we face another $25 million deficit.

I believe some of these new funds should be used for the city's most pressing needs. While we must invest in Sacramento's future, we can't ignore today's needs.

• Issue 2: Let's protect ourselves regarding the Kings loan

Sacramento's existing loan with the Kings has the arena and adjacent land as collateral, but this refinanced loan would have neither. No bank would accept such a deal, and neither should the city.

We should insist that the current loan be paid off as we consider a new arena deal. Absent this, we must mandate adequate security against real property or a liquid asset of equal value, or require an NBA guarantee to protect the city against a default.

• Issue 3: Let's ensure rock-solid guarantees to protect our general fund

To safeguard the city general fund, we should insist that the NBA, Kings and/or AEG guarantee the $3.8 million annual backfill.

• Issue 4: Let's negotiate a deal to make money

While AEG is investing $59 million and netting $5.7 million annually, a 10 percent return on investment, the city is investing $256 million and netting only $1 million annually. In addition, this deal gives the Kings all game-night parking revenue at our city garages, netting them $2.6 million annually and also undermining the overall market value of our parking portfolio.

Why can't we fine-tune the deal to require a 5 percent return on our investment to generate $12.5 million annually? These funds could help reopen our pools, community centers and libraries, or help us meet other city priorities.

Like many Sacramentans, I'm not an automatic "no" vote on public funding for an arena, but it has to be a better deal for our city. Sacramento deserves better + the city deserves a bigger bang for our buck.