May 31, 2013

Group launches drive to force public vote on Sacramento arena subsidy

Five months ago, Sacramento Mayor Kevin Johnson launched a successful come-from-behind campaign to finance a downtown arena and keep the Kings in town.

Five months ago, Sacramento Mayor Kevin Johnson launched a successful come-from-behind campaign to finance a downtown arena and keep the Kings in town.

Now, a small group of downtown activists is launching an underdog campaign of its own to challenge that plan.

The group, calling themselves STOP – Sacramento Taxpayers Opposed to Pork – took steps this week to launch a petition drive for a public vote on the arena financing plan.

The group is headed by longtime city residents Julian Camacho and James Cathcart. So far, their network of backers is small, relying on Facebook messages and fundraising drives in a midtown garden to generate support and money.

Camacho, an engineer and frequent City Hall critic, said he is not personally against a downtown arena or a subsidy.

"Our mission is very straightforward," he said. "Let the people decide. Is that too much to ask for?"

Cathcart, a retired legislative consultant and midtown resident, said he opposes the $448 million deal for an arena at Downtown Plaza, approved by the City Council in March.

The deal calls for a city subsidy of $258 million, most of it from revenue bonds backed by city parking operations. Cathcart contends the city subsidy is really much higher.

"I think it is a horrible deal," he said, at times pounding the table in front of him with his fist. "It doesn't pass the smell test."

The group notified the City Clerk's Office on Wednesday that it intends to gather signatures – starting in about two weeks – to put what it calls the Voter Approval for Public Funding of Professional Sports Arena Act on the ballot.

The act states the city "shall not use or redirect, undertake an obligation to pay, or bond or borrow against monies intended for or from the city general fund for the development and/or construction of a professional sports arena without approval of a simple majority of voters."

The City Attorney's Office has two weeks to write a ballot summary before the group can begin collecting signatures.

The group aims to force the city to schedule a special election. City Clerk Shirley Concolino said STOP will need valid signatures from 15 percent of registered voters in the city, or about 33,000 people, to qualify for a special election.

Those signatures likely would have to be collected in a little more than one month to meet the city's deadline for scheduling a special election this year.

The group would have more time to collect signatures if the measure were to be placed on next year's June ballot.

Speaking to The Bee on Thursday at Camacho's remodeled 1880s Victorian home in Alkali Flat, Camacho and Cathcart said they have about $20,000 in hand for the effort, and estimate they will need $120,000 to see the petition drive through. That money will be used in part to pay for signature gatherers.

The pair have connected with an Orange County political action committee they say will help them raise money.

Andrew Acosta, a Sacramento political consultant, said most voters would probably appreciate the chance to vote on the arena plan and that there is "a strong divide in the city on this issue." Still, Acosta said, STOP is facing a tough challenge.

"Two guys standing in front of the co-op aren't going to do it (get the signatures they need)," he said. "You need more than volunteers and people with good intentions to get something on the ballot."

The STOP group's Facebook page had only 156 likes as of Thursday evening. And even if it gets its initiative on the ballot, it would still need to run a campaign to get the measure passed.

"What do we do," Cathcart asked, "just stand still and do nothing?"

Camacho and Cathcart say they hope to create public debate about the deal, and force a closer look at the arena financing package. In addition to the petition drive, both men are plaintiffs in a recently filed lawsuit challenging the city's arena subsidy.

The City Council voted 7-2 in March to approve a term sheet with a group of private investors for public-private financing of an arena at Downtown Plaza. The city will own the arena. The private group, which just bought the Kings basketball team, will operate the arena.

The city would kick in an upfront subsidy of $258 million. The city will come up with most of that money from borrowing against future revenue from the city's downtown garages. The $258 million figure includes the estimated value of seven pieces of property the city plans to give to the private group for future development.

The city also agreed to allow the Kings ownership group to operate several thousand city parking spaces under Downtown Plaza. If revenue from those spaces and arena profits top a certain amount, the developers have agreed to share further profits with the city.

Critics note that in 2006, when the city proposed a sales tax increase to entirely fund a downtown arena, voters overwhelmingly rejected the concept.

Arena proponents, however, point out that the arena financing scenario is far different this time.

This time, the private group will kick in a substantial sum for the arena, about $190 million, and has agreed in principle to invest hundreds of millions more in ancillary development projects around the facility.

The public portion involves no tax increase, and relies instead on future revenue from city garages. Those garages will be used more at night and weekends if an arena and other development occurs downtown, and are expected to generate substantially higher profits over time.

While the city general fund would lose about $9 million in parking fees each year, it is slated to receive that money back from a variety of sources, including a surcharge on tickets and a guaranteed portion of arena revenue.

The city's subsidy financing calculations are conservative, city officials say. They are based on no increase in revenue over time from downtown garages.

Cathcart said he believes the city is putting its general fund at risk, but City Treasurer Russ Fehr has said his review of the deal causes him to assess the risk to the general fund as small.

City Clerk Concolino said conducting a special election would cost the city between $1.3 million and $1.5 million from its general fund budget, which pays for most core services. City spokeswoman Amy Williams said that expense "is not currently budgeted."

"A special election would be very expensive for the city to finance and the funds would need to come from the economic uncertainty reserves," Williams said.

Michale Ault, head of the Downtown Sacramento Partnership, lashed back Thursday at the STOP campaign, calling it "misguided" and calling the potential $1.5 million city expenditure a waste.

"We should be putting that money to work taking advantage of the great economic opportunity an arena presents downtown," he said.

Ault said his group has been getting calls from businesses interested in locating in the downtown near the arena.

"We should be trying to further that momentum."

Call The Bee's Tony Bizjak, (916) 321-1059. Follow him on Twitter @tonybizjak.

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