An artist's sketch, above, shows Sacramento's proposed downtown arena on the site of Downtown Plaza.

Sacramento City Council puts aside $6.5 million for arena

Published: Thursday, Jun. 27, 2013 - 12:00 am
Last Modified: Tuesday, Sep. 3, 2013 - 5:38 pm

There was nothing preliminary about what the Sacramento City Council did Tuesday night.

By a 7-2 vote, the council agreed to set aside $6.5 million in public funding on a new downtown arena for the Sacramento Kings – the first large investment in a facility that city officials have touted as the most significant redevelopment project in the history of downtown.

The decision was the first push forward on a preliminary, nonbinding plan approved by the council in March to help finance a $448 million arena at the Downtown Plaza. That term sheet will not be formalized until the City Council votes on a final spending plan next year, following the conclusion of an environmental review of the arena project.

Still, Tuesday's vote means the City Manager's Office will immediately have $1.755 million to spend on a team of consultants as the intense predevelopment stage of the project begins. The remaining $4.7 million would be used on the arena's eventual design and construction.

The consultants that City Manager John Shirey's office plans to hire will provide legal counsel and consult the city on design, financing and construction elements of the arena.

Another firm will help the city analyze its downtown parking assets. Of the $258 million public subsidy the council has tentatively approved for the arena, $212.5 million would be generated by revenue bonds backed by downtown parking spaces and garages.

The $6.5 million approved on Tuesday is covered by the subsidy total already approved by the council. Proceeds from the city's sale of the downtown Sheraton account for $5 million, and $1.5 million will come from the city's parking fund.

"We've come a very long way," said Councilman Allen Warren. "Right now, we're making decisions to invest in our city. Those millions that we invest I think will come back in the form of a tremendous resource for our city."

Roughly two dozen Kings fans attended the council hearing.

"Let's take another step forward," said James Battles, a member of the Crown Downtown fan group. Not everyone on the council supported the investment.

Council members Kevin McCarty and Darrell Fong voted against the spending and also opposed a preliminary term sheet in March.

Neither councilman explained his vote against Tuesday's item and no members of the public spoke opposing the decision.

A campaign to force a public vote on the arena subsidy started collecting signatures over the weekend to place an initiative on the ballot.

City officials have contended that the effort to build the arena was about more than keeping the Kings from fleeing to Seattle.

The private investment group driving the effort plans to construct up to 1.5 million square feet of offices, housing, stores and a high-rise hotel at the Downtown Plaza site, although those plans are still being developed.

Earlier this year, Shirey told The Bee that having private investment willing to pump that much into a project is "every city's dream."

The group has also committed to spend $190 million on the arena.

Assistant City Manager John Dangberg said the partnership – dubbed Sacramento Basketball Holdings LLC – is hiring arena builder ICON Venue Group to serve as the project's lead designer and contractor.

For the Kings ownership group – led by Silicon Valley software tycoon Vivek Ranadive – "this is about much more than the Sacramento Kings," said the group's spokesman, Adam Mendelsohn.

"This was always about the total economic revitalization of downtown Sacramento," Mendelsohn said. "The arena is the centerpiece of that."

The council's approval of the first step of funding follows other investments the city has made downtown.

Over the past two years, the council allocated millions of dollars in redevelopment subsidies for projects along parts of K Street in the hopes of turning blighted blocks into a vibrant mix of housing, shops and music venues. Other subsidies have been granted to an entertainment complex on the 1000 block of K Street and for hotels and housing in the area.

Councilman Steve Hansen, who represents the central city, said, "We have every opportunity here to become the city that so many have wanted us to be.

"The arena project is part of a bigger picture that really has the opportunity to fundamentally reshape the center of our city with more residents, more retail and opportunities for a reconcentration of uses that has been missing since the 1950s. This is an opportunity that doesn't come very often, and we have to make sure we get it right."

Call The Bee's Ryan Lillis, (916) 321-1085. Read his City Beat blog at Follow him on Twitter @ryan_lillis.

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