The downtown properties that Sacramento officials are proposing to give to developers as part of a $448 million arena deal will increase sharply in value once the arena is built, several commercial real estate experts said.
That would quickly benefit the city in the form of a revitalized downtown and increased property tax revenue.
It also would quickly render the stated current value of the properties in the deal irrelevant.
The city is giving arena developers land it says is worth $38 million as a chunk of its contribution to the arena's construction. That's about twice as much land as the city proposed selling on behalf of the Maloofs, the current owners of the Kings, in an aborted deal last year.
This time around, the land is part of a Sacramento effort to halt the impending sale of the team to a group of Seattle investors. Three California multimillionaires - Vivek Ranadive, Mark Mastrov and Ron Burkle - are pushing a competing bid to buy the team and build a new arena at the Downtown Plaza shopping mall.
Roughly half of the $38 million in land value comes from a 100-acre parcel north of Sleep Train Arena. Another $4 million of the value is tied to a 60-acre parcel near Haggin Oaks along Business 80.
The remaining $14 million worth of land is located in four separate places around downtown.
The Natomas and Haggin Oaks parcels will likely rise significantly in value, but it might take several years, real estate experts said.
The downtown properties, they said, will rise in value almost immediately.
"Unquestionably," said Randy Getz, executive vice president of CB Richard Ellis, a commercial real estate firm, when asked if the value would go up.
"I see that changing overnight," said Garrick Brown, research director at Terranomics, another commercial real estate firm.
Ken Turton, another commercial broker who specializes in downtown properties, estimated that the values of the parcels would rise by at least 20 percent - and as much as 100 percent - after an arena is built.
All of the downtown properties will likely appreciate in value even if the arena is not built, though at a slower pace and over a longer period of time, all three experts said.
A booming downtown real estate market would be clear evidence of the revitalization city leaders hope to create around a new arena. It also would be a source of extra property tax, sales tax and parking income.
"Not only are these parcels going to increase in value, so are all the other properties downtown," said Assistant City Manager John Dangberg.
That makes the proposed agreement "a pretty fair deal," said Brown. "The city is going to see immediate upside."
On the other hand, said Bob Blymyer, vice president of the Sacramento Taxpayers Association, an expected rise in the value of properties means the deal is much sweeter for the developers than it looks on paper.
"That land is going to increase in value considerably," he said. "The fact that the city is giving it away for free is concerning."
Blymyer called on the city to take more time in considering whether to give the land to developers. The City Council is expected to vote on the matter tonight after releasing the proposed agreement late Saturday.
"Forty-eight hours isn't enough time," he said.
The city didn't release detailed maps of the affected parcels until late Monday, and there was some confusion earlier in the day about their exact locations.
Some of the land to be given to developers sits near the Crocker Museum. Officials at the Crocker Museum declined Monday to say whether the deal would affect parking near the museum - because they said they weren't sure which parcels would be affected.
"We don't know exactly which ones," said museum spokeswoman Tania Torres. "We don't have enough information right now to know how this will impact us."
Call The Bee's Phillip Reese, (916) 321-1137.