by CalWatchdog Staff | February 5, 2012 7:20 pm
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.
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
Source URL: https://calwatchdog.com/2012/02/05/sacto-to-pawn-parking-for-arena/
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