On Saturday I took a drive up to Sacramento. I went to Raley Field and took in part of Sacramento State Hornets baseball game. While I was up in the capitol I dropped by the train station, which is immediately south of the Railyards, the site of the proposed arena entertainment and sports complex. 240 acres of dirt and old buildings will make way for an arena, a new intermodal transit facility to go with the historic rail depot, and future ancillary and related development.
So I guess I was fortunate to get a glimpse of things before today’s announcement by the City of Sacramento, NBA, and the Kings about a Railyards arena deal (City press release). The $387 million arena plan has been in the works for the last year, with a complete term sheet to be put up before the City Council by March 6. Details have been coming out in the last week as negotiations between the City, team, league, future arena operator AEG, and Sacramento County have caused the numbers to shift considerably as all parties rushed towards the league’s deadline (originally March 1).
When I wrote about the project two weeks ago, I opined that as usual, the devil would be in those details. Now it appears that the deal is on fairly solid footing because of the Maloofs and AEG providing more money to bridge known funding gaps. Those raised contributions, when taken in conjunction with the selling off of parking rights throughout downtown, should provide enough money to get the plan off the ground. The tenets of the deal are these:
- $190-200 million from selling future parking revenues to private operators. To make this work, the City will have to guarantee some $9-10 million per year in revenue, which means the City may have to make up a shortfall if revenues don’t come in as expected. Sacramento County has apparently pledged revenue from three lots it owns for the effort. Existing debt the Maloofs owe to the City would be refinanced. The “cash” the Maloofs are pledging may actually come some kind of loan, though the loan wouldn’t come from the league.
- $75 million upfront from the Maloofs, plus $75 million from future rent payments and perhaps a revenue sharing deal. Part of the upfront contribution would be $25 million in land in Natomas near ARCO/Power Balance.
- An unknown amount from AEG. Initially this was speculated to be $50 million, but the fact that AEG will probably split gate and concession money with the Kings makes this more difficult to assess. There was also talk that AEG’s contribution would actually be part of the Kings “cash” share, but I’ve seen nothing to confirm this. AEG’s updated contribution is expected to be $60 million.
- A 3-5% ticket surcharge being assessed by the City will not be used to pay off the arena. Instead it will go straight to the City’s general fund in order to offset the lost parking revenue. (Back of the napkin math has this at $3-5 million in revenue annually.)
- ICON/Taylor, the developer planning the arena, is pledging to handle cost overruns.
From what I know of the area, I have to believe that for the project to get through the CEQA process at least one additional exit/interchange on I-5 between J Street and Richards Blvd. will be necessary. 7th St to the east of the Railyards is merely two lanes wide, so it’ll probably have to be widened to handle traffic not just for the arena but also for the other area development. Remember the Cal Expo plan floated in 2010? There were tons of traffic concerns associated with it, with no clear way to deal with it. Fortunately the Railyards arena will be very close to light rail and Amtrak service.
Now that the plan has been hammered out, it’s all process from here on out. The project EIR started in October, which means a draft should come out of it in the next six months. The tricky part of sequencing everything is that if the parties are all still aiming for opening in May 2015, they’ll have to certify the EIR in only 15 months in order to start building in January 2013. If the project goes to a public vote, there’s little chance that vote can happen before the EIR certification. It would seem more prudent to aim for a October 2015 opening to coincide with the start of the NBA season.
Will this get the job done? It’s a lot better looking plan than any I’ve seen for the Kings in the past decade. That’s a major improvement over the sense of impending doom that shadowed the team last April. It’s clear that this is the final shot for Sacramento to get something done for the Kings, and it’s a decent shot at this early juncture. The losers at this point are Seattle and Anaheim, both of whom were looking to poach the team. If there’s a winner, it’s David Stern, who has somehow come off looking magnanimous while not loaning or otherwise spending any league money to get the ball rolling. A year can make a lot of difference, though Kings fans should be cautiously optimistic. The Railyards arena plan is fragile at best, and while Mayor Kevin Johnson characterized today’s news as hitting the front end of a one-and-one (free throws), plenty of players and cities have bricked that second free throw.