Marcos Breton: Arena plan drives value of city parking lots
02/22/2012 12:00 AM
04/18/2013 7:45 PM
There are good people in Sacramento who don't believe public assets should be used to fund a downtown arena where the Kings would be major tenants.
Fair enough, but let's focus on the public asset in play here.
Sacramento is considering putting city parking operations up for competitive bid and using the millions that generates to fund a big piece of the arena.
Some estimate the bids could bring in $200 million or $250 million. What is often overlooked is that parking operations actually would be worth that much for one reason: an arena in the downtown railyard.
With an arena, the presumption is that city lots that now sit empty on nights and weekends could be heavily used. That's what makes them lucrative.
Without the arena, the value of city parking lots goes way down. "Would they be worth zero?" said John Shirey, Sacramento's city manager. "No. But they wouldn't be worth $250 million."
Arena opponents often decry the use of city assets worth $250 million while overlooking that the arena is driving the price.
Some say, why not use city parking assets to fund city services?
It's simple: Cities get into trouble by using one-time assets to fund ongoing expenses. The price you get for the parking is the price you get, but the cost of services continues and goes up over time. What happens when the parking money runs out? It's bad budgeting.
The city has a choice: Craft the best deal to fund an arena by maximizing parking assets – or not. This decision wouldn't trigger an increase in taxes or require a public vote. It's a policy decision we elected public officials to make.
Why fund an arena this way?
Because you can't raise taxes for arenas in Sacramento as most other cities do. User fees, hotel taxes and personal seat licenses don't generate enough revenue. This is how it can be done here.
You hate the feeling that Sacramento is being extorted by the NBA? It's not. Sacramento is in this game because it has something to gain and something to lose. Getting an arena is not without risks, but failing to do so comes with a price.
Without the Kings, you don't have the interest of AEG, the Los Angeles-based arena developer prepared to build here. Without AEG, you have no arena. Without the arena, the downtown railyard continues to sit empty as a testament to community inaction.
Some argue the city would recoup the $70 million the Kings borrowed in 1997 if the team left town, but that's not true. The money goes to the bondholders who funded the loan. And an antiquated arena in Natomas and land around it would still belong to the Kings, a dismal proposition.
Sacramento would continue its downward economic spiral, but some would feel proud for protecting public assets.
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