Financing deal for arena needs a hard look
Now that the kickoff pep rallies for a new arena are over, it's time to put away the pompoms and take a more sober look at the proposed arena financing deal, which is starting to show a few cracks.
First, let's dispense with the scarcely believable claim that the arena isn't all about the Sacramento Kings. Every time proponents try to spin that yarn, the deal becomes less credible. This is a basketball arena for the Kings; and like the former Arco Arena, other promotions will get a chance to use it.
I recently met with a representative from Think Big Sacramento, the mayor's regional arena group, who invoked the Sprint Center in Kansas City more than a dozen times. That arena was built with a menu of funding sources – including a rental car tax that required voter approval. So, if Think Big is trying to allay concerns over the end-run around voters, perhaps they shouldn't invoke a deal that was actually approved by voters.
Of greater concern is the claim that the arena will be financed by patrons and users, which is simply not true. The public details are still vague, but the "menu" of potential funding sources includes selling assets that were purchased with taxpayers' money, leasing city-owned parking spaces to a private operator, using transient occupancy taxes (i.e. hotel taxes) – even creating a "business improvement district" that could tack a surcharge on tickets for live theater patrons who never go to the arena.
Proposition 26 clarifies that fees collected for indirect purposes are "hidden taxes." The measure wasn't about this arena, and while it might not be legally binding on this deal, it unquestionably possesses a moral authority that should. Drawing artful distinctions between "tax money" and "taxpayer assets" is legal quibbling at its worst.
If things go badly, taxpayers will be the ones left holding the bag. Think Big holds out Kansas City's Sprint Center as talisman to ward off any bad juju. But there's no guarantee that the deal won't end up more like Xcel Energy Center in St. Paul, Minn., where taxpayers got stuck with 70 percent of the costs; or the Target Center, where the Minnesota Timberwolves threatened to move and demanded multiple renovations costing millions in 2004 and $155 million five years later to renovate the renovations.
One may wonder, "How is the arena different than the Sacramento airport or Raley Field, neither of which was subject to voter approval?"
That's a legitimate question. So I will answer. Raley Field was privately financed. And, unlike the arena deal, the airport expansion is being financed entirely by airlines and the more than 9 million passengers who will use it every year.
I believe Mayor Kevin Johnson has brought needed leadership to Sacramento. His infectious energy, enthusiasm and willingness to tackle big projects can mobilize the community for more than just another election – he can inspire the job-creating business sector, help revitalize the city and position it for a better future. And I absolutely agree that Councilwoman Sandy Sheedy's maneuvering is more about political ambition and retribution than fealty to voter rights.
Notwithstanding that, I cannot understand or accept the fervent insistence by the Think Big committee to evade any kind of public vote, despite the collection of public assets, fees and hidden taxes they're cobbling together to finance it.
Proponents can disarm any opposition and legitimize the process by following the spirit of law and giving voters the opportunity to participate. Efforts to manipulate rules in order to evade a public vote will serve only to legitimize and expand opposition. Winning public support will not be easy. But it's a doable – and necessary – step before committing millions in public dollars or assets.
I worked against Measure R, the previous arena funding effort, in part because proponents used legally questionable maneuvers to skirt the voter approval threshold – and because it was a half-billion gift to the Kings owners, who then demanded even more.
Think Big accurately states that this is a new deal with new players. But they fail to realize that they cannot divorce it from the legacy of previous actions by the city or the Kings quite so easily. The public remembers. They remember a decade of complaints from the Kings owners about the financial burden of owning an NBA team and an older arena – and the $6,000 Bordeaux combo meal. They remember the surprise announcement of a deal, which later collapsed, to move the Kings to Anaheim.
They remember the oft-heard refrain "it's just business." Kings co-owner George Maloof said of the city: "They've got to deliver. Everything has to be in place, ironclad. No risk." But any business deal has risks. The difference here is that taxpayers are being asked to take all of them – without the courtesy of asking for their approval. The public understands that it's business. If the deal makes sense financially, with a bit of work, they'll support it.
But none of the other potential investors are being asked to put up their money without a chance to voice their concerns and consider their options and opportunities. Voters deserve the same level of respect – not another pep rally.
T.A. Berg is president of TABcommunications Inc., a political consulting and media firm in Sacramento. He is a former chief of staff to Assembly members Tricia Hunter and Nao Takasugi.