Sacramento City Council to vote on $27.2 million loan to Major League Soccer investor group
Sacramento Mayor Darrell Steinberg will ask the City Council on Tuesday to agree in principle to loan the city’s Major League Soccer investment group up to $27.2 million to pay for infrastructure around a planned stadium in the downtown Railyard.
The funds, to come from a city risk management fund, would finance roads, water and sewer lines, pedestrian walkways and a light rail station near the 20,000-plus seat stadium.
The soccer group would pay the city back with interest either from their own pockets or by taking advantage of new state infrastructure law that would permit the use of future increased property tax revenues from the site for the loan repayment.
Steinberg said he made the offer earlier this summer to the soccer investment group to help push it to finalize its negotiations with Major League Soccer to win an expansion team for Sacramento.
The mayor said the loan also should serve as an incentive to the group to move quickly on starting new development projects on the 17-acre area it is buying in the Railyard that immediately surrounds the 14-acre stadium site.
“For me as mayor, there is one overriding question: Is an infrastructure loan that clinched the deal to get Major League Soccer and help reverse decades of little progress in the railyards good for the city?” Steinberg said. “I have no doubt the answer is yes.”
The soccer group, which is led by Beverly Hills billionaire Ron Burkle and Hollywood movie producer Matt Alvarez, won the rights to an MLS team last month after a half-year of negotiations. It was the culmination of six years of effort by various Sacramento groups to land a team in the nation’s top soccer league. The team is expected to replace the current Republic FC team which plays in the lower-level United Soccer League.
The soccer investor group will pay a $200 million entrance fee to the league for the right to operate a team here starting in Spring 2022.
Team President Ben Gumpert said the investor group does not yet have a plan for what kind of development it will create in the area around the stadium. Speaking to The Bee last month, Burkle said the goal will be to create a district that enhances fan experience outside the stadium before and after matches.
The $27.2 million loan likely will be issued early next year, if the council approves, Steinberg said. The investor group will be required to put up a yet-to-be determined collateral.
The loan represents an amendment to a $33 million incentive package the City council approved earlier this year to offer the soccer group to help it seal its deal with MLS. That includes setting up an infrastructure financing district that would allow the team to tap future increased property tax revenues to pay the loan back, if the team develops the land sufficiently to produce new tax revenues.
Any future new tax revenue from the 17-acre site, beyond the initial $27.2 million, would go into city coffers, officials said.
The incentive package also includes $2.4 million worth of building permit fee waivers and other tax rebates, and up to $3 million worth of traffic control and policing on city streets adjacent to the stadium during soccer matches. The city also will rewrite its signage ordinance to give the team rights to install five digital billboards around town.