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The City Council voted 7-2 Tuesday to pursue an agreement that could potentially bring in $250 million for a new arena by leasing the city’s parking system to a private operator.
“This is just one piece – a very important piece – in our ability to build an entertainment sports complex,” City Manager John Shirey said Tuesday.
Council members Darrell Fong and Sandy Sheedy were the only “no” votes.
A recent analysis of the city’s parking system concluded that the city could lease the parking system to a private operator for 50 years – releasing all revenue and control of the system for the life of the lease – and receive an up-front lump payment of nearly $250 million.
With an ongoing city budget shortfall of more than $20 million, a lump sum of more than 12 times that amount is appealing – but some council members expressed concerns.
Fong said he sees Sacramento carrying the biggest burden to get an arena financed, but he wants other cities in the region that will benefit from the arena to pitch in, too.
“I’d like (Sacramento) to make a real effort to see which other cities in the region would be our partners and would contribute to this in a real way,” Fong said.
“I just wonder why other cities in the region aren’t looking at monetizing their parking, or selling surplus land.” Fong said. “What’s good for the goose is good for the gander. We aren’t going to get anywhere without some real contributions from our partners.”
Sheedy asked staff to come back to the council in February with a measure to put on the June ballot for the voters to decide of they want the city to pursue a lease of the city’s parking system.
“We cannot continue to ignore the voice of the voters,” Sheedy said. “We are just sitting here not paying attention to that elephant in the room.”
According to a city staff report, a private operator does not face the same political constraints in raising parking rates or extending chargeable parking hours.
A private operator could also reduce staffing or employee benefits – a concern voiced at the council meeting by labor representatives.
“Some call it ‘monetizing parking’,” said Steve Crouch, district representative for the Local 39 labor union. “We call it stealing from the public treasury to fund an arena for the Maloofs.”
Crouch said letting go of parking revenue for years to come would deepen the city’s budget hole, forcing additional cuts to police, fire, parks and community centers.
“The numbers just don’t add up,” Crouch said. “To move forward with this absurd concept of financing is a mistake.”
Kunal Merchant, chief of staff to Mayor Kevin Johnson, said Tuesday that concerns about staffing, rates and other nuances of a lease would be hammered out once potential operators have expressed interest in taking over the city’s parking system.
The city’s parking system includes 7,200 spaces located in seven parking structures, 5,500 on-street metered spaces and revenue from parking citations from the city’s enforcement program.
With the council’s vote Tuesday, staff will start a “request for qualifications” process to gauge the interest of potential private operators.
“(RFQs) ask potential private operators, ‘Are you qualified to take over our parking, and what are you willing to pay?’ ” Merchant said.
Once interest is established, Merchant said, then the process moves forward to gathering proposals and looking for the best lease agreement for the city.
“If (a lease bid) makes economic sense, then the city should do it,” Merchant said. “If not, then, no, it shouldn’t.”
Merchant said it’s too early in the process to determine what the final terms of any parking lease might contain.
Dangberg told council members that RFQs will be sent out by Dec. 22, and responses will be expected by the third week in January.
City staff will return to council in February with recommendations for possible bid proposals, Shirey said.
Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.