do you think Sacramento will get a new arena built for the Kings? (neighborhoods, elementary schools)

[pistola916]

the arena is going to get financed through user fees, ticket surcharges, garage parking, merchandise, and possibly a hotel and rental car tax. No public taxes involved.

[wburg]

Originally Posted by pistola916

the arena is going to get financed through user fees, ticket surcharges, garage parking, merchandise, and possibly a hotel and rental car tax. No public taxes involved.

Well, not exactly.

First of all, you can't finance an arena with money you haven't earned yet. In order to build the arena, the city will have to take out a loan--and a firm called Goldman Sachs has expressed a willingness to lend the money: you may have heard of them: The Great American Bubble Machine | Rolling Stone Politics

Once the city has the borrowed money, they build the arena, with the idea that they will pay back the loan via these assorted fees, surcharges etcetera. If there are cost overruns, the city can borrow more money or pay out of its general fund (which comes from public taxes.)

Now, if those fees don't add up to enough to make the loan payment, the city has to pay off the balance of the loan with its general fund (which comes from public taxes.) If the arena doesn't make enough money to break even, the city has to pay off the balance of the expenses (again, from the general fund.) A couple of cities are now in this position, like Kansas City, which hoped that increased property values would pay the debt on their arena via tax increment financing--but property values dropped instead. They, like Sacramento, are also having a fiscal crisis, laying off city staff etcetera--they really can't afford this, but they signed the note so they have to pay the bill!

Second, all of those things are taxes--calling them something else doesn't make them not be taxes anymore. They are also funds that could have been used for other things (like hiring more police, for example) but will instead be directed to pay back the loan for the arena cost. Currently, hotel taxes, parking revenue, and many of the other things you mention exist as taxes, and are used for other purposes (like the general fund) but those funding streams would be lost.

So far, we haven't seen a detailed analysis, but even the overly-sunny "economic impact statement" doesn't project a city revenue stream big enough to pay off the loan necessary to build an arena--and no private parties have stepped up to provide the balance of the funding necessary to pay that bill.

[Curmudgeon]

Originally Posted by wburg

Well, not exactly.

First of all, you can't finance an arena with money you haven't earned yet. In order to build the arena, the city will have to take out a loan--and a firm called Goldman Sachs has expressed a willingness to lend the money: you may have heard of them: The Great American Bubble Machine | Rolling Stone Politics

Once the city has the borrowed money, they build the arena, with the idea that they will pay back the loan via these assorted fees, surcharges etcetera. If there are cost overruns, the city can borrow more money or pay out of its general fund (which comes from public taxes.)

Now, if those fees don't add up to enough to make the loan payment, the city has to pay off the balance of the loan with its general fund (which comes from public taxes.) If the arena doesn't make enough money to break even, the city has to pay off the balance of the expenses (again, from the general fund.) A couple of cities are now in this position, like Kansas City, which hoped that increased property values would pay the debt on their arena via tax increment financing--but property values dropped instead. They, like Sacramento, are also having a fiscal crisis, laying off city staff etcetera--they really can't afford this, but they signed the note so they have to pay the bill!

Second, all of those things are taxes--calling them something else doesn't make them not be taxes anymore. They are also funds that could have been used for other things (like hiring more police, for example) but will instead be directed to pay back the loan for the arena cost. Currently, hotel taxes, parking revenue, and many of the other things you mention exist as taxes, and are used for other purposes (like the general fund) but those funding streams would be lost.

So far, we haven't seen a detailed analysis, but even the overly-sunny "economic impact statement" doesn't project a city revenue stream big enough to pay off the loan necessary to build an arena--and no private parties have stepped up to provide the balance of the funding necessary to pay that bill.

So the bottom line is, "Don't build it 'cause they won't come!"

Not sure the powers that be in Sacto can grasp that reality.

[wburg]

The bottom line is the bottom line--don't build it if you can't reasonably expect to pay for it. If they had a solid financing plan, or enough private investors, go for it--but this panic to build something we can't afford because they're too scared of what will happen if we don't have a basketball team is just ridiculous, and likely to end badly.

[Curmudgeon]

Originally Posted by wburg

The bottom line is the bottom line--don't build it if you can't reasonably expect to pay for it. If they had a solid financing plan, or enough private investors, go for it--but this panic to build something we can't afford because they're too scared of what will happen if we don't have a basketball team is just ridiculous, and likely to end badly.

That would be my guess. Pity!

[MattClyde]

The Maloofs are losing money and won't be able to afford paying for an Arena. They should sell the team to someone who actually cares about the team and has money. PS: it also doesn't help that kings attendance is ranked 29th in the NBA

[Curmudgeon]

Originally Posted by MattClyde

The Maloofs are losing money and won't be able to afford paying for an Arena. They should sell the team to someone who actually cares about the team and has money. PS: it also doesn't help that kings attendance is ranked 29th in the NBA

That high, huh?

[sms1967]

Well, if some people on this post were in charge, we'd still be in covered wagons. Holy crap. What is so bad about building an entertainment venue? The double digit IQ folk here don't get it's a venue. They'd rather associate it with the Kings... which has been a bad story of late. The 'arena... stadium... eyesore'... whatever you want to call it, can generate revenue for the area. Shortsided people here can't see that. They're the same people that can't envision spending $10 to make $100. That's why they sit here all day and spew negativity.

If you don't have any facts, you shouldn't post here. People don't have to like the Maloof family... they just own the team. Does anyone give a crap about the Giants ownership group? How many of you even know who that is?

This building could kill the railyard eyesore and attract big dollars to Sacramento. If you're stupid enough to say, "the Maloofs are losing money...", then don't comment. Maloofs making or losing money has nothing to do with building a regional, entertainment venue because nobody is asking or expecting them to pay for it. It's also not about 'losing a basketball team'... but I guess it could be if you live under a rock and comment without knowing ANY of the facts.

[wburg]

Even if you take the Kings, the Maloofs, and other personalities out of the debate, you can even remove sports from the debate, but the money still doesn't work. I can envision spending $10 to make $100--but so far, it looks more like this project is based on spending $100 to make $10. Generating revenue is great, but only if there are realistic options to generate more revenue than the project will cost to build--and so far, that seems highly unlikely, and the experiences of other cities reflect that.

[CeJeH]

Where the hell is Burkle?