Editorial: A rush to judgment by City Council on downtown arena term sheet

Published: Thursday, Mar. 28, 2013 - 12:00 am | Page 8A
Last Modified: Monday, Sep. 23, 2013 - 8:09 am

The City Council's vote Tuesday night to help build a new downtown arena could very well turn out to be the game-changer for Sacramento that many of us hope it will be.

But committing so much public money to one project comes with levels of uncertainty – and the way the council reached its decision was a sham of the public, transparent process that should have happened.

Several council members said that since the deal's 18-page outline was made public Saturday night, they had asked tough questions of city staff and the investor group that is trying to buy the Kings and build the arena. All of those discussions, however, happened in private. The public comment on the term sheet clocked in at about one hour Tuesday night, not nearly enough for a project this monumental.

As part of the 7-2 vote, council members directed City Manager John Shirey to report back April 23 on the next steps for figuring out what would happen at the site of Sleep Train Arena if a new arena opens at Downtown Plaza. The council also asked for a plan on how to pay for renovations at the Community Center Theater that could cost as much as $48 million; a potential city loan to the B Street Theatre; and helping the Crocker Art Museum replace the parking revenue and spaces it would lose by the transfer of two city-owned lots to the investor group.

Those are costs not counted in the official figure of a $258 million public subsidy toward the $448 million arena. It would have been far better to have at least some answers before approving the term sheet.

In some ways, this appears to be a better deal than last year's – an argument repeatedly made by city officials and council members. The private investors are stronger, and they would be on the hook for pre-development work and construction cost overruns. This deal could mean a bigger boost for downtown because the investor group plans a $500 million-plus mixed-use development around the arena site. It preserves the railyard, where an arena would have squeezed the site for an intermodal transit center.

Yet the financing still depends heavily on city parking revenue and arena attendance meeting uncertain projections. It also assumes $600,000 a year from Sacramento County that supervisors haven't definitively agreed to yet.

Countless deal details have to be worked out in final legal documents. It's true that council members would get to review those contracts. The city, backed by its zoning code, would also get a say on what is developed at Downtown Plaza and on the city land given to the investor group.

But if this agreement keeps the Kings in Sacramento, it would be extremely difficult to try to change major provisions to better protect taxpayers. The city's negotiating position was the strongest it will ever be before the term sheet was approved.

While the council was under intense pressure to vote ahead of crucial NBA meetings starting next Wednesday, it didn't need to rush. As it was, the meeting Tuesday seemed like a pro forma exercise, with votes already counted and committed long before members of the public had a chance to speak. That only increases the chances there will be lawsuits or a petition drive for a public referendum that could trip up this project, even if NBA owners support Sacramento's bid.

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