Three national parking service companies expressed interest Thursday 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 comes days before the City Council is expected to take a first step in exploring privatizing its parking garages and other downtown parking services, a linchpin of an proposed arena financing package.
"We're excited," said John Conway, regional manager for Standard Parking. If the city issues a request for qualifications Tuesday, "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 upfront 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 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.
"That's our goal," Mayor Kevin Johnson said Thursday.
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.
Johnson said he is pleased with how far the effort has come. Two years ago, he said, he felt the city's hope of delivering a new arena was equal to sinking a full-court shot.
"I feel like at some point, we got at the three-point line," he said. "This is as close as we've ever been."
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 Thursday 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."
"Make sure you have the political will in town to see it through," he said.
It appears that the majority of the City Council is willing to move forward Tuesday with the first step in the process, issuing a request for qualifications known as an RFQ from private parking companies.
Councilman Jay Schenirer called it the logical next step. "It gives us the information we need to make the deal we need to get with AEG and the (team)," he said. "And even if we decide at some point not to build an arena, if it doesn't pencil out, this parking piece will give us information that will be useful to the city."
But some council members say they will have significant questions:
What happens to city garage employees if a private company takes over?
How much control would the city have over parking rates?
Will other jurisdictions help with financing, or at least help back bonds if they are sold to finance an arena?
The vote takes place less than three months before a March 1 deadline set by the National Basketball Association for the city to come up with a financing plan, or risk losing the Kings.
If the city receives solid interest from private companies with its initial RFQ, officials said they will propose a binding bid process, and bring that back to the council for a vote in mid-February.
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.