Populous architecture

Artist renderings show where the Sacramento arena would fit in the railyard. This view is from the south.

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  • Kings and AEG like the looks of new Sacramento chance
  • The Sacramento City Council is set to vote tonight on the "term sheet" for a new arena. Here are key elements.
    • The city or a "public sector entity" created by the city would own the arena.
    • Arena would have 18,500 basketball capacity, 50 to 70 suites, 693,000 square feet.
    • The Kings would retire their $67 million city loan. The city would issue new bonds, covering the cost of the retiring loan, essentially setting up a new loan for team. Collateral is required but not yet determined.
    • Opening date of September 2015.
    • Turner Construction guarantees construction price, unless cost overruns involve issues outside its contract, such as land acquisition.
    • Kings must sign a non- relocation contract, barring them from moving to a new city for 30 years.
    • AEG operates arena for 30 years under lease with city.
    • AEG is in for $58.75 million; Kings for $73.25 million. City pays $255.5 million, and generates another $3 million through public donation campaign.
    • City can host up to 12 civic events annually in arena, rent-free, retaining profits.
    • There would be a 5 percent surcharge on all tickets, except for Kings game suites. Money would go to city.
    • AEG would sell naming rights and split revenue 50/50 with Kings.
    • Kings receive up to $2.6 million annually in parking revenue from city garages on game nights.
    • City and developers David Taylor and CIM would build 1,000-plus-space parking lot, to be completed no later than third NBA season, at arena. City and Taylor/CIM share the parking revenue.
    • AEG retains revenue from all non-Kings, non-city events.
    • AEG and Kings share payment of property taxes and possessory interest taxes. AEG would charge $1 per ticket for a capital repairs reserve fund. Any surplus from arena construction would also go into repairs fund.
    • Kings pay for city police service during games.
    • Kings must keep "Sacramento" in their name, maintaining their headquarters within city limits.
    • If team owners sell, new owner must agree to this contract.
    • Kings must make an effort to provide "meaningful" programs to keep NBA basketball affordable to Sacramento families.
    • Kings shall request NBA All-Star Game in Sacramento within three years of opening.
    • City gets "waterfall" profits from AEG: 15 percent of AEG's first $10 million operating profits, 30 percent of next $5 million, and 50 percent of profits beyond that.
    • City and Kings would consider joint marketing for sale of 185-acre arena site in Natomas, where city owns 100 acres and Kings own 85 acres.
    – Tony Bizjak

Sacramento arena plan appears to have 5 council votes for passage

Published: Tuesday, Mar. 6, 2012 - 12:00 am | Page 1A
Last Modified: Tuesday, Feb. 26, 2013 - 11:46 am

It's a potentially risky bet, but so far the Sacramento City Council appears willing to keep playing the game.

Four City Council members on Monday expressed support for the preliminary "term sheet" agreed to by the city, the Kings and arena operator AEG to build a $391 million arena in the downtown railyard. With the mayor's support, that adds up to the five votes needed for passage of the nonbinding document at tonight's council meeting.

Some at City Hall said they think seven of the nine council members could vote to move forward.

Council support has increased in part because of a new approach the city is considering to wring $200 million or more in upfront cash from its parking operations.

The city had been focused on the idea of leasing its parking out to a private operator for as long as 50 years in return for a big, upfront payment. But more recently, staff members have introduced the possibility of creating a public parking authority and borrowing against future parking revenue.

Several cities, most on the East Coast, have municipal parking authorities. San Francisco is the most prominent Western city to have one.

A parking authority could give the council more control over rates going forward and allow the city to keep workers currently employed by parking operations.

A financing authority "is certainly something people want to take a look at," said Councilman Rob Fong. "It could be good for all the right reasons. The city still runs the parking. No one can say you sold it for too little or you gave it away."

Still, Fong and others said they want the city to follow through on soliciting bids from the private sector on leasing parking operations.

"It's premature to rule anything out," said Councilman Steve Cohn.

While gaining support among council members, the parking financing authority model carries risk.

If parking revenue falls short of what's needed to repay the bonds issued to generate money for the arena, the city could be forced to dip into its general fund to make up the difference. The general fund pays for most basic services, including police, fire and parks.

The parking authority could be structured to insulate the general fund. But experts said the city might feel compelled to step in anyway and make up the difference because a default by the parking authority could hurt the city's credit rating.

"That taint will stay with them," said Marilyn Cohen of Envision Capital Management in Los Angeles.

There are potential upsides as well.

If revenue came in above what the city needed to repay its bond debt, that money would go into the city's coffers. "If you assume more risk, you also assume more potential upside," said City Treasurer Russ Fehr.

City officials are banking on bringing in as much as $230 million from either parking arrangement to cover most of the public share of the arena project. The Kings have agreed to provide $73.25 million and AEG, the company tapped to operate the facility, would put in $58.75 million. The city would own the arena.

Cohn, Fong and council members Jay Schenirer and Angelique Ashby have expressed support for the term sheet. Councilwoman Bonnie Pannell expressed interest last week in the parking authority plan but said she remains leery of a deal that could put the city at financial risk or lead to city employees losing their jobs.

Councilmen Darrell Fong and Kevin McCarty said Monday they have several concerns about the deal points and had not decided how they would vote. McCarty said he wants more assurance that plans to protect the city's budget are sound and is concerned that the city's share of the project cost has grown to two-thirds.

Councilwoman Sandy Sheedy, who has been a vocal opponent of the arena plan, did not return a phone call seeking comment.

The city's total contribution toward the arena is slated at $255.5 million, or roughly 65 percent of the project cost. That total could include the sale of city-owned property.

City Manager John Shirey said the deal does carry risk to the city if revenue falls short of the arena's financial projections – but not to the city alone.

"If it is a financial disaster, it's a problem for us as well as the Kings and AEG," Shirey said.

He added he does not believe that would be the case.

"There are a lot of people who have put a lot of time and effort into due diligence and making sure the numbers will work," he said.

© Copyright The Sacramento Bee. All rights reserved.



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