The city of Sacramento has a dollar value for its 35-year bill for the public’s share of Golden 1 Center construction: $625.6 million.
However, City Treasurer Russ Fehr told the City Council on Tuesday that the Sacramento Kings will cover the majority of that figure with lease payments and property taxes paid to the city.
Fehr said the Kings’ annual lease payments to the city to help cover bond repayments will total at least $371 million – or 59 percent – of the public’s share over the 35-year term. Those payments start at $6.5 million in 2017 and will gradually increase. Eventually, the lease payments will cover all of the estimated $18.3 million in annual repayment of the bonds, according to Fehr’s report.
Property taxes paid by the Kings will total another $48 million over the life of the bonds, Fehr said. The Kings also borrowed $265 million to cover their end of the $507 million construction budget.
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Fehr said city parking revenue will contribute $147 million to the bond payment plan over the term. Fehr said that amount is the only “discretionary” money identified for the repayment – meaning it is the only money in the repayment plan that could have gone to other city programs and services if the arena had not been built.
The city sold $272.9 million in bonds in October. Fehr said he intended to sell the bonds earlier, but a lawsuit alleging the city provided secret arena subsidies delayed the deal. A judge eventually rejected the suit, but Fehr said the delay will end up costing the city $900,000 a year due to an increase in interest rates.
“We’re stuck with it,” Fehr said of the added cost.
In addition to the bonds, the city also contributed roughly $43 million in subsidies to the project, mostly in the form of underdeveloped city-owned parcels it transferred to the Kings.