Sacramento has a projected $60 million budget deficit for the next five years. We laid off cops and nearly browned-out fire stations to cover this years cuts. Where would you expect us to cut an extra $45 million from in the next five years? Is $450 million in lost revenues worth an upfront $170-$240 million that won’t even cover the total bill for this arena?

And if it is such a great idea, why wouldn't private enterprises do it themselves? Maybe cause they would rather the public sector take on all the risk because in the long run arena contruction is a zero-sum game at best.

http://moneyland.time.com/2011/11/07/the-nba-lockout-and-the-economy-an-overstated-impact/#?sct=nba_t2_a12

Of course that ignores any potential value in the arena or the impact on downtown in regards to taxes, property values or quality of life.

The bottom line, as always, is that there are trade-offs. I appreciate your analysis because for anyone interested in this issue - for or against - we must understand the tradeoff this presents. What will we give up in order to take a business risk as a community?

Generally, "you have to spend money to make money" only applies when you expect to make more money than you spend. Every indication so far points to this expenditure returning far less than the amount the city has to put in. Unless by "you have to spend money to make money," you really mean "The city has to spend its money for the private sector to make money." In which case I think there may be something wrong with your business model.

I would disagree with your speculation that this will make less money than it costs to build. Then again, I also disagree with ThinkBIG's verly optimistic view of how much money it would make.

Between the city ownership of the arena with leases from an entertainment company and a pro sports team, increased tax revenue in downtown and increased tax revenue from higher property taxes on property adjacent to the building there are considerable potential upsides for the city that would not be available to a private sector investor in the building. That said, the size of those is debatable.

In Kansas City, the arena ended up costing the city money, but decision to build it is still a popular one with voters there. And in that situation, the city's bet was on attracting a pro sports team that never materialized. In this case, that sports team is assured if the project moves forward.

What I would like to see is a balance sheet for this project now and for the life of the arena and a detailed set of assumptions that went into building that balance sheet.

Wouldn't much of the increased tax revenue from a new arena be offset by decreased revenue from the area around the old arena?

WB "...The city has to spend its money for the private sector to make money." FYI, the city has no "its money", it only has the property is confiscates from workers through taxation.

not neccesarily - that is why the city wants a downtown location so badly. The city is competing with other regional attractions for dollars.

In addition, this arena would be able to support events the current arena cannot - particularly large regional religious gatherings that are extremely lucrative. Sure, some of this is about the Kings, and rightfully so. But there are other opportunities a new arena opens up in terms of concerts, NCAA games, religious shows and even conventions.

Of course, this makes me sound like a shill for the proposal. I'm not. I just want to mention that there are benefits and costs. There is risk - and yes - potential reward.

Thsas: you are correct--the government only holds the funds and property that the people own and government has taken via taxes. But that is exactly who is taking on the costs, and the risks, in this arena scheme--the taxpayer.

So a follow-up, have any buildings been removed in the rendering from the slideshow? If so what building in particular have been removed.

As I work in the REA Express building each weekday I am fairly familiar with this part of the Sacramento skyline.

Pheww! Thank God!

I believe you are incorrect Mr. Gonzalez, the building in the lower right corner is the Vagabond Inn which looks just as depicted in the rendering. The Denny's is south of that. The Holiday Inn is south of J Street not, I Street.

UPDATE: Here is a link to Google Maps street view for added support: http://g.co/maps/tbv3c

Mr. Gonzalez is my father. Please, call me Isaac!

The $67 mill debt you are referring to - is that the existing debt from Arco? If so, it is a debt that is serviced by the owners of the Kings and unless they default, not a liability for the city.

As for the rest of the money, it would make sense to see what the AEG or other entertainment offer is and how much in leases the Maloofs will kick in.

Until that happens there really is no clear math here. At least we have one bit of seemingly certain math.

We have not heard any financial commitment from the private sector at all. And how much can the Maloofs afford to pay if they end up losing the $10 million or so a year they make from their parking rights at Rubbercheck Pavlion?

Where to Start,

"You need to <WISELY> spend money to make money" note the insertion of the word wisely!
This community has done just that when it comes to its parking resources. The parking report and the recurring return to the general fund of revenue from parking operations is a testament to that. Additionally when you actually look at this years budget document and the section pertaining to special funds and how they are doing...one stands out...the parking fund

http://www.cityofsacramento.org/finance/budget/approved-budget-2011-12/2-Budget_Overview.pdf

Look at pages 29-41....Well the Utility Fund info 5 year assumptions did not include rate increases...did everyone else receive their notice of less discretionary income per the water and waste water rate inc. proposal?

Yet look at parking....the 5 year assumptions show it being balanced....again with no rate increases projected. How long do you seriously think that will hold with privatization?

From a 2009 WSJ article and it goes along with MikeM's find in the parking report...

"Ours is a car-based culture. Cars have to park somewhere when they leave their owner’s garage. Pricey curb metering and aggressive ticketing by public parking authorities are thus inevitable, something drivers will likely suffer with to an ever greater extent because of the fiscal woes of local communities.

That’s bad enough. But giving over all or part of this huge cash cow for quick upfront money, or enforcement rights to a pack of parking vigilantes, is just plain crazy.

Publicly controlled parking collections and enforcement are at least somewhat restrained by political pressures of a local citizenry. Privatizing public parking is just throwing motorists to the metering and ticketing wolves."

This is a 50 year lease proposal...

"You really, really don’t want private company bottom lines and the demands of Wall Street hucksters to control how much you have to cough up when you take your car from home and venture into the wider world."

http://themoderatevoice.com/49779/parking-privatization-%E2%80%94-beware-the-slippery-slope/

The city actually spent $80,000 on a report that shows the economic engine that the parking department is...a solid report...And what do we get from ThinkBig? Fish Wrap labeled as "Polls" "Economic Engine Report" "The Taxpayer Comes First" etc.

Seattle got it right with I-91....use of public funds demands a guaranteed concrete ROI...no good will BS..."and shall exclude all intangible, indirect, non-cash items such as goodwill, cultural or general economic benefit to the City,"

http://www.citizensformoreimportantthings.org/I91TEXT.html

No concrete budget for the Hoop Arena, Exisiting ARCO debt, all property tax revenues are in a RDZ...they don't go to the general fund...they go to redevelopment and additionally cost the state the school make-up portion of those taxes. Upfront cash for a Build -At-Any&All-Cost Arena Construction Budget in exchange for ??

Do The residents of this city want the city to end up like the investors in that Twin Towers in the Sky HOLE on Capitol Mall?

Let's Ask them...with a binding vote...anything less would be....LUDICROUS!

BTW Taxation and Revenue code sec 61...change of ownership and leases of 35 years or more....interesting speed bump....but again any property taxes generated would be for the RDZ...not the general fund....

and ask yourself this...how is the Parking garage at 13th & I...that the city sold for 25 million? To David Taylor etal... only assessed 15mill? Check it out at Sac County Parcel View...1223 J St...

I think it is actually an early rendering from the "Think Big" selection committee, the original Railyards arena proposal, but not the most current one which is planned closer to I-5 (on land the city has to buy, incidentally, a price not in the current figure.) The Q-R arena was supposed to be farther north, against the northern edge of the Railyards property (the area that is currently bare soil.) The current plan is for a city owned lot where the Amtrak parking lot now sits.

http://www.cityofsacramento.org/SED/SED.htm

Compare that analysis to the current Worm Wood Report.
Even with that and an economy that was taking off....we all know how the public felt about paying for it...in 2006.

What do you think would have happened if they suggested leasing and selling off of city asserts...back then....after that vote?

Actually, I figured it out: It's from the Convergence plan.

Bill is 100% correct about the rendering source (and the Q&R location).

It's starting to remind me more and more of last year's "Boqueria" plan: ask for something totally unrealistic and unreasonable, just to see if the city will go for it, and when asked about financing, ask the city to pay for that too. We should keep in mind that the "Think Big" task force is not actually an official city body: it's an ad-hoc group with no regulatory authority, and thus no need to follow rules that city bodies do (such as the Brown Act) regarding public notification of meetings (most of which are set up at 11 AM during the work day with, generally, only 1 day of public notice, and no public agenda.)

That has been the pattern all along: Think Big speaks, the local media takes it as Gospel.

So far, Think Big has released only reliable, accurate information, such as the $7B this will return over 30 years. Think Big says it, and the Bee says, "See?".

Never one word of criticism over the poll Think Big conducted.