On Subsidies and Votes

If you’ve been reading this blog for a while, you’re probably already familiar with my stance on public subsidies for sports teams. It has perhaps become more hardline over the years, as civic coffers have dried up and redevelopment died out. The ideas are pretty simple, and I don’t expect everyone to think the same way I do:

  1. Public money for stadia in the form of cash, loans, or bonds – whether or not secured by upfront taxes or fees – should never happen in this day and age.
  2. All new or renovated venues that do not require public money are generally good, as long as they don’t come with significant kickbacks for the team and developers.
  3. Any public assistance that goes beyond processing permits or planning work (providing land, money, or other benefits) should require a public vote over the terms of the deal.

Note that I haven’t specified dollar values for anything. That means that it doesn’t matter if a municipality provides $1 million or $1 billion in assistance – any assistance merits a referendum. There is no gray area at work.

As currently structured right now the Sacramento Kings’ new arena will not go to the ballot box. The City Council and Mayor Kevin Johnson have argued that a referendum isn’t necessary isn’t because no new general taxes are being levied. Councilman Steve Hansen (no relation to Seattle investor Chris Hansen – we’ll get to that in a bit) even argued in a forum earlier this week that because Sacramento’s airport received $1 billion in publicly-funded improvements without a vote, the arena shouldn’t either. That is utterly absurd. First of all, an airport in a major city is a pretty important piece of public infrastructure, incomparable to an arena, which is a luxury. Secondly, it’s foolish to use third grade-level reasoning to justify a political move such as this (“My friend’s parents let him stay out late, why can’t I?”). Not voting on airport improvements was arguably a bad move in the first place. Not voting on an arena would only compound that error.

An anti-arena group, STOP, emerged as the only entity with enough cash to fund a petition drive that would’ve put the arena on a ballot. STOP’s origins were murky, as it was connected to Loeb & Loeb, a Southern California law firm associated with the Maloof family (former Kings owners). Initially that led to accusations that the Maloofs funded STOP. It turns out that the aforementioned Chris Hansen had actually funded STOP to the tune of $100,000. The non-disclosure and solicitation of the contribution(s) were all state campaign-reporting violations. Hansen eventually admitted his part in the subterfuge and apologized, explaining that he wouldn’t fund the campaign further. Arena advocates are rightly incensed and not satisfied with Hansen’s apology, going as far as asking the hedge fund manager to pull back all gathered signatures. In addition, STOP pulled some shady tactics in misrepresenting aspects of the arena plan, which has caused several thousand petition signers to request their names be removed.

Messy, right? This brouhaha didn’t start with Hansen or pro-arena forces. It started with the need for a referendum. Since the City decided the arena didn’t need one, the anti-arena political machine geared up to get enough signatures to force one. That got another group going in defense of the plan, trying to head off the petition drive at the pass. All of it, and I mean all of it, is unsavory. There’s a very simple, easy way to resolve this once and for all: just allow the referendum to take place. Even if the delay counts for several months it shouldn’t materially impact the construction plan, which has numerous pieces to work out including a potential eminent domain land acquisition. If the pro-arena forces are as confident as they say they are about the plan, there’s no reason to skip this crucial civic step. Mayor KJ has called the arena the biggest project in the City’s history. Shouldn’t the biggest project in the City’s history be confirmed by plebiscite? Forget the dirty politics, the real and phony outrage. Let it all air out in a real campaign. Sacramento voters at least deserve that amount of respect.

Plus, let’s not forget that one famous Sacramentan was caught on the other side of this divide. Last year I wrote about Gregg Lukenbill’s plot to kill the original China Basin ballpark in 1989 with mailers targeting San Francisco voters, all part of a plan to coax the team northeast along I-80 to land next to ARCO (Sleep Train) Arena. (An even more revealing account can be found at The California Fix.) Why no outrage? Because that’s part of the game. It’s also part of the past. After all, Oakland Mayor Jean Quan certainly picked up a few votes after the revelation that Lew Wolff donated $25k to presumed frontrunner Dom Perata’s campaign in 2010. How’d that work out in the end for Oakland?

Eventually, San Francisco got new ownership in that were willing to spend their own money on a ballpark, with minimal city assistance (land, infrastructure). Even that plan ended up in a referendum, one that won in a landslide. Santa Clara’s 49ers stadium plans received legitimacy thanks to their victory at the ballot box, as did San Jose’s arena plans. Meanwhile, Oakland pushed Mt. Davis (and arena renovations) through without a city or county vote to disastrous effects, and pols are hinting at even more stadium plans that won’t require referenda. Are these people nuts? Have some respect for your citizens, politicians. Allow for campaigns. Allow the citizens and fans to be fully educated on the issues. You owe them that much. Sure, campaigns are expensive. The billionaires and millionaires who want these projects can afford campaign costs, they’ve seen and done it before. Chances are that they’ll outspend opponents 10:1. They have the resources. That’s fine. That’s the way the process works. The track record, at least in this state, is that allowing proper vetting of stadium projects is good for all concerned. If stadium and arena proponents aren’t willing to accede to a referendum request, it’s worth wondering what they’re hiding.

26 thoughts on “On Subsidies and Votes

  1. RM,
    Any particular reason why the Earthquakes SSS wasn’t put to a public referendum? And if the answer is that it is being privately financed, then IMHO no privately financed sports venue should be put to a public vote. Again, just my opinion.

  2. @ML

    Dude, good article. Another example of why the public should approve what our politicians enact into law or don’t want to put on the ballot.

  3. What I hate about the demands for referendums, is it generally applies only to sports. Think about it, if you are going to do it for the Sports Stadium, why not the Movie Multiplex, Opera House, the Symphony Orchestra Building, the Art Gallery, the Museum, the Concert Venue, or tax breaks for anything entertainment related. Every one of these things are luxuries, that we can do without. Of course, many interest groups, and the arts types, are all for submitting sports to “The Free Market” and “Direct Democracy”, but God help anyone who wants to do the same thing to Shakespeare and Mozart, because they are considered “Culturally Significant.” Basically, I do not see where showing “King Lear” in a theatre is any more important to the City Of Sacramento than showing the Kings in an Arena. Until the “Cultural Elites” (particularly millionaire snobs) are willing to submit things to the voters they care about (like funding the Opera or Art Museums), I am against idea of referendums.

  4. Redevelopment Agencies used to be able to issue bonds without voter approval, for RDA projects. (You can imagine the number of bond deals that got done after Jerry Brown announced his intent to wipe out RDAs. All over the state. Now there’s some trouble over whether those bonds are good–which, of course, is just what the investors want to hear.) Anyway, general obligation bonds that cities or counties want to issue require 2/3 approval of voters. (I think that’s Prop. 13’s amendment to the state constitution–but it’s been a while since I looked.)

    If the law grants a government agency the power to spend money without going to the voters, why would it not? In any event, these days a public vote is pretty much required, I believe, for debt financing of public projects. Although there are some loop holes. I’m not sure that issuing “certificates of participation” or “bond anticipation notes” trigger the 2/3 vote requirement.

  5. “If the pro-arena forces are as confident as they say they are about the plan, there’s no reason to skip this crucial civic step.”

    By the same token, if there was such an anti-arena groundswell, then why are STOP and its allies having so much trouble getting sigs on its petition, and having to go so far as to get Chris Hansen to fund them through the back door?

    It is equally congruent to the conversation to state that the current makeup of the City Council (at this time 7-2 pro-arena) is an accurate reflection of city opinion on the matter, in that this arena decision is very much like the prior one that they encountered – and which the Maloofs tanked – in 2012. There has since been an intervening election, and the arena deal was a very large part of the city council campaign. And as Barry O once famously said, “we won.”

    While I’m sympathetic to the STOP campaign’s pleat about “we want a vote on the matter”, their actions to date plainly indicate that they oppose the arena not just in form but in principle, oppose the very concept of public support for sports infrastructure, and are just fine letting the Kings go so that Sacramento can revert back to what they think would be their ideal.

    Love them or hate them, the pro-arena folks have been absolutely transparent about their funding and about their goal – and that merits some respect. They are taking the position that we have a representative form of guvmint, and that the people we elect to represent us should have the power to make a decision.

    Because I’m no longer a Sacramento resident, I don’t have a dog in the fight. If I were a Sac resident, I probably would have signed the STOP petition until the Hansen news came to light, and I would be a signatory to the “remove” petitions.

    The facts is this: Arco’s a dump, well beyond repair. A new arena would be a terrific use and repurposing of a mall that is well past “dead”, and would meld well with the existing convention center to help Sacramento in all respects. If this arena deal fails, the Kings are gone within five years. The prior council approved the Maloof-brokered deal. We’ve since had a council election where the arena was a bone of contention during the campaign. The folks that ran “anti-arena” campaigns by and large lost the council election to the tune of 7-2.

    The time has come to get this thing done.

  6. I find it just a bit ironic that the media has trashed Hansen (appropriately so) for behind the scenes activity to try and stop the Sac arena yet that same media has not by and large had echoed a discouraging word about the gints underhanded lawsuits to stop the A’s from moving to SJ. Hansen spent 100k while the gints are spending millions- where is the media outrage towards the gints management? While TK might write about stadiums he has never done an unbiased assessment of the gints back door efforts to block the A’s from moving to SJ. In fact he likes to discount and trash any idea of teams moving to the south bay- as he did with the ‘9ers new stadium in SC.

  7. I generally disagree with ML’s post. I don’t believe we should be legislating at the ballot box. Let legislators, city councils, county supervisors, etc. do their jobs. If they make decisions that the public finds distasteful, they will kicked out of office.

    • @Pudgie – This isn’t legislation at the ballot box. This is a simple voter approval of a project which has real dollars (risk) associated with it. It is not the same thing as the Capitol’s inability to pass laws, where they go the referendum route instead. In practical terms that phenomenon has little to do with this.

      DC, Miami and many other cities have had the “let the pols do their work, kick them out of office if it fails” philosophy. And they got ripped off to the nth degree. Many of the pols involved did lose their jobs. Couldn’t fix the bad deals though, those were enshrined.

  8. I must also point out that not all voter-approved stadia are successes for the taxpayer – exhibits #1a and #1b would be Paul Brown Stadium and Great American Ballpark in Cincinnati. Contrariwise, not all non-voted stadia with public infrastructure/bonding/granting are giant ripoffs – exhibit #a in this class would be Barclays Center (at least so far), but a more reasonable comparison exhibit #b would be the RoseGarden in Portland.

    Those who are supporting the arena in Sacramento have been pretty much on a “war” footing, for they know that this is the last, best chance of getting a replacement for Arco. They’re fighting for their team, and they know that the easiest path to a new arena is to hold off a vote at any cost. The ironickal side-note to this is that Hansen was and is publicly opposed to any kind of referendum on his proposed arena in Seattle. He wants to pay to force the vote in Sacramento, but wants to avoid it in Seattle.

    Setting aside all the high-minded hoopla about the “right to vote” and what not, placing an arena in the Downtown Plaza mall would be an absolute win-win for Sacramento. The Ranadive coalition (along with Ron Burkle and others) will be kicking in somewhere between two and three times the city’s investment in the surrounding area – but that investment does not happen without the arena.

    Consider the following: If Jean Quan announced today that she had partnered up with Mr. Wolff to redevelop a certain area of Oakland that’s adjacent to JLS, and the city would monetize future additional parking in order to serve as a bonding surety, and that Mr. Wolff and Mr. Fischer would toss in $450M or so of additional surrounding development to the area, would RM then ask for a referendum on that deal? Even if it successfully keeps the A’s in Oakland for the next 30 years?

    • @SierraSpartan – Of course there should be a referendum. End-justifies-means rationale doesn’t hold water with me. A vote doesn’t guarantee everything will go without a hitch (the Petco deal was screwed up enough that it required two votes). At least it provides voters some protection just by virtue of time and rigor. BTW, it’s not “high-minded hoopla”. It’s the right thing to do.

  9. I am in complete agreement with this article. The voters of any city publicly subsidizing a “luxury” should be allowed to vote on it. What if the money comes short as in the case of the parking revenue Sacramento is siphoning?

    Many project Sacramento to fall well short of their # because they over inflated the parking revenues to keep the team at all costs. These type of things need to be weeded out and the #s need to make sense at the ballot.

    As for the Raiders, they need City AND County help to keep the team where it is. After the 1995 debacle by offering 10 year PSLs instead of making them lifetime put them behind the 8-ball. The Raiders don’t care and still want 300M but let’s face it a vote will have to take place in order for it to pass.

    As for the A’s, San Jose is ready to put up a vote when the only thing the city is doing is “selling the land” at a discounted rate and the A’s build privately. Of course San Jose will have to clear the site but the benefits of baseball team privately financing a stadium when it will take minimal infrastructure costs is too good to pass up.

    San Jose deserves a vote despite they are giving very little to the overall cause unlike Sacramento and Oakland.

    I believe Sacramento’s arena will fail because once it is exposed KJ over inflated the parking revenue dollars the Kings ownership will face with essentially investing 1B dollars (team + arena) to complete the project in an area with very little corporations and affluent fans…..Makes zero sense as they would lose money big time on the project.

    Oakland will fail as Sacramento because of the lack of a public subsidy to help their teams out while San Jose will succeed because the private sector is that strong where they are located.

  10. These vague references to “referendum” are confusing. Voters shot down four attempts to use public money to build a new Giants ballpark. Then in the mid-90s, when the new owners advanced their privately financed plan for the China Basin ballpark, I believe the only thing put to a public vote was whether to waive the height restriction in the zoning plan along the waterfront. That’s a pretty narrow “referendum.”

    The right thing for governing boards to do is to exercise the powers voters elect them to exercise. If some specific issues deserve public mandate, fine. But a grand referendum is not necessarily “right.”

  11. @xoot – Surely changing a height restriction could’ve been done by SF Planning & the Supes w/o a vote, right? So why did they bother?

    On the same ballot in 1996 was Prop A, which if approved authorized an expansion to Moscone Center that eventually became Moscone West. One measure involved a bond raising, the other didn’t (at the time). Where do the governing powers begin and end? And what rises to the point of being worthy of a public vote?

    Sometimes getting a yes vote is about approving deal terms. Sometimes it’s about getting a mandate. In some cases it’s both. Nothing wrong with either.

  12. Referenda and initiatives aren’t mysterious. Sometimes people petition to challenge a decision by a city or county–i.e., to overturn a decision by a board. Sometimes people petition to enact a law. I believe occassionally elected officials push for either as a grandstanding measure, or as a means of bypassing fellow elected officials. (Jerry Brown’s tax increase initiatives in the last election, e.g.).

  13. And I don’t recall if the 1996 measure related to the China Basin ballpark was a referendum (i.e., a challenge to action taken by the governing boards) or an initiative (i.e., a request for approval of a zoning change).

  14. Now Jacksonville and St Louis as the prime candidates for the NFL move to Los Angeles – also building an NFL at the Dodgers site?

  15. re: What I hate about the demands for referendums, is it generally applies only to sports. Think about it, if you are going to do it for the Sports Stadium, why not the Movie Multiplex, Opera House, the Symphony Orchestra Building, the Art Gallery, the Museum, the Concert Venue, or tax breaks for anything entertainment related

    …San Jose spent a fortune on its expensive new City Hall, with no referendum. But the A’s stadium, which won’t cost the city much of anything, has to go to a referendum, giving the Giants and NIMBYs a chance to bamboozle enough people into voting against it.

  16. @pjk- there was a referendum to move city hall back downtown and it passed- contrary to sports which are for-profit the arts community by-and-large are not-for-profits- billionaires aren’t being subsidized like they are in sports

  17. Was the specific price tag of the City Hall ($382 million) subject to a referendum or just the move back downtown? Thst’s more than twice what the arena cost.

  18. unbelievable
    the strength of this blog is information, intelligently presented
    sometimes there’s a learning curve to cross, to connect the two

  19. GoA’s The Arts Community is NOT a necessity of life such as food, clothes and shelter. Not to mention the fact, if you look at New York and see the Metropolitan Museum Of Art (MOMA), they charge a $25.00 fee to enter (not exactly cheap). Note: I failed to mention the Condo (‘The Baccarat’) being built across the street from MOMA where the Penthouse has a listing price of $60m. Lincoln Center is not cheap either, charging huge prices for things like Jazz, Opera, ballet, and other things the average person (myself included) does not give a damn about. One more point: Do not forget Broadway and Hollywood when discussing the “Arts Community” (not exactly who I describe as needy).

  20. @David Brown–once again–they are not for-profit–a bit different to pay for a ticket to support annual O&M and any capital upgrades in an art museum compared to subsidizing the building of a stadium so a guy like Crane can make $99M—me thinks sports is a for profit enterprise where owners should pay for their stadiums—like ‘9ers are doing by and large and like LW is proposing for the A’s in SJ–and recognize guys–I am a huge sports fan—while I like going to art museums and plays etc occassionally i would much prefer to be in a ballpark or an arena watching hockey

  21. re: me thinks sports is a for profit enterprise where owners should pay for their stadiums—

    …The A’s are heavily subsidized by MLB in Oakland (as in they would lose money without this subsidy). What’s the incentive for MLB to spend $500-$700 million on a stadium in a place where the sport has not proven to be profitable? In Oakland, we have folks demanding the owners build their own stadium and then telling them they must put it where they’re not going to make any money.

  22. The best example of why there should be a public referendum is the Phoenix/AZ Coyotes and Jobing.com arena. The city has to cut back on paying it’s civil servants to justify keeping a hockey team and arena open. 50 million dollars in subsidies to the Yotes since 2010 and additional 10 million a year for the next 5 years unless the Coyotes make a profit (haha). This team will lose the 50 million it needs to get out of it’s lease in 5 years.

    Civic pride is one thing but into debt to support millionaires is priceless.

  23. @Mike2 – the Goldwater Institute as well as other entities have been trying like the dickens to do just that, but they cannot get enough people to sign on the line which is dotted to force the referendum, nor can they get any judge anywhere to overturn the constutionality of the current deal. It’s gotten to the point where Goldwater has given up on trying to block it.(http://www.azcentral.com/community/glendale/articles/20130711goldwater-says-wont-try-block-coyotes-deal.html)

    Hmmm…petitioners having trouble gathering enough signatures to force a referendum. Now where have I heard that one before???

  24. The county owns the airport. The county has close to 2 million people and all the fees are being paid for by those that fly. No one is getting rich off the airport. The arena will be paid for by hte city, about 440k people and the owners of the kings will get even richer.

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