Sacto To Pawn Parking For Arena

 Katy Grimes:  Would you pawn a $5,000 Rolex for $150? While only someone desperate for quick cash would do something so irresponsible, the City of Sacramento is making plans to cut a similar deal.

City officials are about to pawn public parking lots, appearing to have figured another way around being accused of publicly financing an arena. They so desperately want a new sports arena in Sacramento, they are willing to make a really stupid deal, similar to many government “business” deals.

The latest scheme Sacramento is proposing would cut a 30-year lease deal with a private company for all of the city’s parking, in order to get a quick infusion of cash.

“The parking monetization concept has the potential to yield substantial upfront cash to pay for a significant portion of a new Entertainment Sports Complex,” a recent city report stated. “At its core, the monetization of the City Parking System would be a trade; the City would give up exclusive control of certain parking operations and revenue in exchange for an upfront lump sum payment, regular payments over time, or a combination.”

It’s always about upfront cash. The city is planning on pawning the publicly owned parking lots for $175 million to $245 million in cash, despite “strong cash flows generated by public parking systems,” according to the report.

The city explained its motive: “A standard approach of of issuing long term debt to fund requires a very large amount of annual debt service payment and ESC revenues are insufficient to cover both operating costs and debt service.  In order to reduce the annual debt service, the ESC financing effort has focused on potential equity contributions to the project.  Equity contributions could come from the Sacramento Kings team owners, an arena operator, the City, and other regional partners.  Parking monetization has been suggested as a source for the City’s equity contribution to the ESC.”

Sacramento not only cannot afford to build an arena, the taxpayers have already voted down two ballot measures to pay for a new arena. So instead, city officials schemed and came up with a plan to pawn its parking lots, together with the future revenue they generate, in order to get a big enough chunk of change to be able to play in the big leagues.

The city of Sacramento will contribute between $170 million to $245 million to the arena deal, that it will collect in exchange for future parking revenue, less $52 million in remaining debt that it has yet to pay off on its parking garages. Estimates to build a new sports arena have come in at $406 million.

Despite a one time parking deal, the city has no idea where future revenues are coming from to pay for the arena.

Perhaps taxpayers should focus some attention on David Taylor, the local developer who always seems to be in the middle of Sacramento “public/private” development deals. The city recently granted Taylor an Exclusive Right to Negotiate (ERN): “Staff recommended the City enter into an ERN  with ICON-Taylor with the goal of negotiating the general terms for a predevelopment agreement for the financing, development, ownership and operation of the ESC (entertainment sports complex).  The Council approved a resolution directing the City Manager to return to with an ERN for Council consideration.”
The concerning issue is that decisions about public money are being made which will benefit a small number of people and interest groups, and not the majority of Sacramento residents.

But the city has not addressed the issue of the land – the parking structures are on land that belongs to the people of Sacramento.  Sacramento taxpayers have paid for the land. Leasing the parking lots to a private company to pay for an arena is just another way to get taxpayers to fund the arena. Shouldn’t residents be able to vote on the deal?

If Sacramento parking structures are so profitable, why doesn’t the city keep them, and use the revenue to fund crucial services that benefit everyone.  The city has cut police, closed community centers, cut back on garbage pickups, let the parks rot, and desperately needs to upgrade its utilities and sewer system.

With threats of nearly 20 percent utility rate increases, any city taxpayer funds spent on an arena does not resonate with city taxpayers. But the scheme is even more complex – city officials appear to be planning to impose higher utility taxes, which will be triggered by the proposed rate hikes in sewer and water services, to plug the $9 million hole created by leasing the parking lots.

I understand the parking company’s motive: They will pay $200 million for a parking system that already has revenues of $9 million per year. With a 50-year lease,  they are looking at $450 million, at the minimum. The private parking company can and will raise rates, and is looking at much more than $450 million in the next 50 years – estimates are coming in at more than $650 million.

It’s a city-sponsored shell game. Many believe that the city will find a way to stick taxpayers with the arena, which will lose money, while the parking company will make money for 50 years from downtown parking. It’s another typical government deal.

FEB. 5, 2012

11 comments

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  1. Rex The Wonder Dog!
    Rex The Wonder Dog! 5 February, 2012, 22:11

    Sacramento not only cannot afford to build an arena, the taxpayers have already voted down two ballot measures to pay for an arena. So instead, city officials schemed and came up with a plan to pawn its parking lots, together with the future revenue they generate, in order to get a chunk of change to be able to play in the big leagues.

    This is exactly what Idiot Arnold tried top pull with selling off state office buildings, paid for, and then leasing htem back. One time infusion of cashtraded for forever payments of rent. Only idiots do deals like this.

    Speaking f idiot gov dorks doing idiot deals like this the sactown fools/leaders should call up the elected leaders of Chicago and ask then how the leasing out of their downtown parking meters went for one up front cash infusion;

    http://www.thenewspaper.com/news/32/3228.asp

    As different studies and analyses of the much debated lease deal were released and brought to the notice of the public over the past eighteen months, the Daley administration scoffed at them, if it did not belittle them outright. Each time a major study made news, Chicago’s chief financial officer, Gene Saffold was trotted out to extol the benefits and reiterate what a great deal the city got with that $1.16 billion payment.
    Chicago’s Inspector General report, Alderman Scott Waguespack’s analysis, DePaul Professor H. Woods Bowman’s figures, Illinois Public Interest Research Group’s study, news analysis from the Chicago Reader’s Mick Dumke and Ben Jorvasky, and of course The Expired Meter, all came to the same conclusion: the city of Chicago drastically undervalued its parking meters.

    Reply this comment
  2. Bob
    Bob 6 February, 2012, 00:19

    Yeah Mr. Wonder Dog. And who needs a stadium anyway. It will only bring trouble like this http://www.youtube.com/watch?v=b1jHCox4Mq8

    And the next thing you know things like this happen http://www.youtube.com/watch?v=OWfI5hDutMg

    Maybe next time they should just forget the cake and just sing http://www.youtube.com/watch?v=LA3l1JatunU

    Some Jerry Browns dancing http://www.youtube.com/watch?v=QguPS_iwgDg

    This looks just like Brown http://www.youtube.com/watch?feature=endscreen&v=G97nEl7UEZk&NR=1

    Reply this comment
  3. Bob
    Bob 6 February, 2012, 00:19

    Yeah Mr. Wonder Dog. And who needs a stadium anyway. It will only bring trouble like this http://www.youtube.com/watch?v=b1jHCox4Mq8

    Reply this comment
  4. Bob
    Bob 6 February, 2012, 00:19

    And the next thing you know things like this happen http://www.youtube.com/watch?v=OWfI5hDutMg

    Reply this comment
  5. Bob
    Bob 6 February, 2012, 00:20

    Maybe next time they should just forget the cake and just sing http://www.youtube.com/watch?v=LA3l1JatunU

    Reply this comment
  6. Bob
    Bob 6 February, 2012, 00:20

    Some Jerry Browns dancing http://www.youtube.com/watch?v=QguPS_iwgDg

    Reply this comment
  7. Bob
    Bob 6 February, 2012, 00:21

    I wish this Brown would go away instead of proposing another tax increase http://www.youtube.com/watch?feature=endscreen&v=G97nEl7UEZk&NR=1

    Reply this comment
  8. CalWatchdog
    CalWatchdog Author 6 February, 2012, 06:49

    I also wrote incessantly about the state building sale – it was such a stupid, irresponsible deal, the boneheads who thought it up should have been fired. http://www.calwatchdog.com/2010/11/11/state-property-sale-costing-taxpayers-millions/

    Katy

    Reply this comment
  9. Ronnie_XXIII
    Ronnie_XXIII 6 February, 2012, 17:35

    Mayor Kevin Johnson, who in his first month on office tried to get the city council to give him “strong mayor” authority, is hell-bent on getting his basketball stadium. Let’s say that Kings fans will come to downtown from as far away as Davis and Chico and Stockton. Well then why, oh why, Mr. Mayor, members of the City Council (I VOTED for you, Darrell Fong), doesn’t your faith in the project translate to the direct beneficiaries paying for this downtown debacle? Why do we have to essentially give away land owned by taxpayers, along with the parking revenue generated for 50 years (might as well be forever)? Put the price of it on the heads of the NBA, the owner of The Kings (the Maloof Bros.) and the fans who supposedly will attend the games of that pathetic team.

    There are 2 things about this shady deal (to date) that we can be sure of: 1) Sacramento’s population – the people who directly or indirectly pay the property and utility taxes – has shrunk to about 450,000. There is no way that such a small population of such a financially stressed city is going to be able to afford a half-billion dollar development of downtown. Any business owner knows that you build where people ARE, not where you wish they would be. City (taxpayer) participation in this looming land grab will guarantee deficits for the foreseeable future, and a continued erosion of city services and increasing taxes. And 2) The Kings are leaving Sacramento whether they get a new stadium or not. That’s why there are no early termination penalties upon them in this deal. A bustling, growing city of 700,000 or so, having emerged from Depression II much earlier than Sacramento will, will come a-callin’ on the door step of the Maloof Bros., with sweet smelling tax incentives and all manner if promises. And they’ll leave us. Let them go! Can you say “Al Davis”? Sure ya can.

    It must be nice to have a one-issue mayor as your friend. The 15,000 homeless who survive in this city, and the countless families who are one financial stutter away from homelessness themselves (and who do NOT need more property and utility tax rate increases to pay for welfare for billionaires) wish they had it so good.

    Reply this comment
  10. Rex The Wonder Dog!
    Rex The Wonder Dog! 7 February, 2012, 00:56

    It is hard to believe that mayors are still trying to give away the farm, and not THEIR farm but other peoples money, to their buddies who own these pro sports teams.

    Mayor Sanders in San Diego has been trying to give away over a billion dollars of taxpayer money in San Diego to the Chargers for the last 6 years, while the taxpayers are 100% against it and the City is bankrupt. Yet he is still trying.

    Reply this comment
  11. Bob
    Bob 7 February, 2012, 01:01

    You people are right.

    And sorry for stinkin’ up the joint with all the double posting and all those youtubes.

    But ya gotta admit they were funny…er…at least some of them.

    Reply this comment

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