As they prepare to finance more than half the construction costs of a new downtown arena for the Kings, Sacramento city leaders said this week it’s unlikely they can provide public money for a soccer stadium to house a potential Major League Soccer expansion team.
Mayor Kevin Johnson said Tuesday that the city can “be good partners” in the effort to construct what is expected to be a $100 million soccer facility. But he said the emerging ownership group behind the city’s big-league soccer effort should not expect a subsidy.
“I do not have an appetite to provide tax dollars to build a soccer stadium,” the mayor said. “Can it be built without it? It’s possible. Other cities have privately financed soccer stadiums.”
Johnson’s comments were echoed by City Manager John Shirey and City Treasurer Russ Fehr, both of whom cautioned that the city’s capacity to take on significant new debt is extremely limited. The city is financing more than half the project cost for a $477 million arena for the Sacramento Kings under construction downtown and is studying whether to build a new performing arts center to replace the Community Center Theater.
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Sacramento Republic FC, a third-division soccer club, and the Sacramento Kings are discussing a partnership that would help the young team land a spot in MLS. A stadium is a key element of that effort.
A week ago, Johnson and top officials of Republic FC and the Kings met with MLS executives at the league’s All-Star game in Portland, where they made a pitch for an expansion team. Sacramento appears to be a serious contender for a team, along with Minneapolis and Las Vegas.
Top executives with Republic FC have not approached city leaders with a formal plan for a new stadium.
Warren Smith, president of Republic FC, said he believes there “is a strong possibility we can privately finance” a stadium. He said the team is still in the early stages of exploring financing models, but key revenue streams for the project could include a naming rights deal.
Smith led a brief campaign earlier this year to get a sales tax increase onto the November ballot in Sacramento County, but the effort was shelved after receiving minimal political support. That proposal would have provided $3 million a year for stadium financing.
“We’ll find a lot of different options and do everything in our power to make it work,” Smith said. “I would much rather see the public invest in other projects, like the Community Center Theater, the arena and the Powerhouse Science Center than have to worry about financing a stadium.”
Kings President Chris Granger, on hand early today as demolition began at Downtown Plaza for the new basketball arena, had no comment on the city’s stance on stadium finance. “It’s too early for us to chime in,” said Granger, who represented the Kings ownership group in Portland last week.
Johnson said Republic FC has three “competitive advantages” as it continues its push to land a spot in MLS.
First, the team has drawn record crowds in its first season in the lower-division USL Pro league – crowds that have grabbed the attention of top MLS executives. Sacramento also ranked high for television ratings during the World Cup.
Second, Johnson said the team has “a well-resourced ownership group” behind its campaign. And finally, the mayor said the team has “a clear path to a facility (stadium) that will not require public dollars.”
The mayor also mentioned that a stadium for the San Jose Earthquakes soccer team is being built with no public dollars. The StubHub Center in Carson, which hosts the L.A. Galaxy and Chivas USA of MLS, was also privately financed.
Developing a stadium is seen as the pivotal step in Sacramento’s quest to join the ranks of Major League Soccer. League executives are scheduled to visit Sacramento next month to gauge the city’s viability as an expansion market. A focus of that visit will be on assessing potential stadium sites in Sacramento, with the downtown railyard considered a front-runner for a facility.
City Manager Shirey said his office has not been approached with a stadium plan. He said the city’s debt load is near capacity and taking on more obligations for a soccer facility would “be very difficult for us to do.”
“We’re putting most of our eggs in the arena basket,” Shirey said. “But we also have other projects that we need to worry about and that we’ve committed financing to.”
Fehr, the city treasurer, said the city plans to borrow up to $295 million to fund its share of the downtown arena project. That includes money that will be placed into a reserve.
The Kings are contributing $222 million to the project.
Fehr said the city has “used our general fund credit capacity on the arena operation.” Standard & Poor’s recently upgraded the city’s credit rating – to AA-minus in general and A-plus for lease revenue bonds. But the agency also warned the city has a “very weak debt profile” and may be carrying too many obligations, including unfunded pensions and medical benefits for retired city workers.
Councilman Steve Cohn, whose district covers the railyard, said the most the city could be asked to contribute to a stadium would be $30 million to $35 million.
“Could we handle that? Yes, I think it’s possible,” he said. “But we have a number of things we’re trying to do at the same time, and we don’t want to overextend ourselves.”
In addition to its arena obligations, the city is also on the verge of embarking upon a renovation of the Community Center Theater. City officials are exploring plans ranging from an $11 million renovation for disabled access upgrades to a $52 million face-lift for the L Street facility.
Johnson has signaled he may want more for the theater. The mayor and Councilman Steve Hansen are behind a task force that is looking at options for building a new performing arts center in downtown, a feat that could cost between $100 million and $300 million.
The City Council also this year agreed to contribute $350,000 annually to the Powerhouse Science Center, a proposed museum on the Sacramento Riverfront north of downtown, near the railyard. Those payments would be made over 20 years.
The city has invested millions in readying the 240-acre downtown railyard for development, which would benefit a stadium that located there.
About $251 million has been spent on railyard infrastructure, including moving railroad tracks and building roads and bridges to connect the site with the northern edge of downtown. Most of the funds have come from state bond proceeds and the 2009 federal economic stimulus program.
City spokeswoman Linda Tucker said $61 million in local money has been spent, too. Much of that has come from Measure A, a half-penny sales tax increase first approved by Sacramento County voters in 1988 to pay for transportation improvements.
A stretch of Seventh Street as it runs through the railyard will be closed this week as crews construct a new intersection at what will be called Railyards Boulevard. That street will be a key entry into the railyard near one of the sites under strong consideration for a soccer stadium.