The Sacramento City Council voted 7-2 to approve the Sacramento Kings arena financing plan term sheet recently hammered out by Mayor Kevin Johnson, the owners (the Maloof family) and the National Basketball Association, paving the way for construction to possibly begin this year.
According to the city council, the term sheet provides a framework for how the city will develop the $391-million Entertainment and Sports Complex at the Railyards site in conjunction with the Sacramento Kings, Anschutz Entertainment Group (AEG) and the ICON-Taylor group. The city will contribute $256 million to project, primarily via a public-private partnership involving city parking assets. An additional $132 million in private dollars will come from the Sacramento Kings ($73 million) and AEG ($59 million). The final $3 million will be raised via the “Brick by Brick” capital campaign initiative announced earlier this month by the mayor and council member Steve Cohn.
In addition to the term sheet, the city council also released recommendations to proceed with a request for proposals process to further pursue a public-private partnership to lease city parking assets, and initiate the pre-development phase of the ESC’s development.
Through the agreement, the Sacramento Kings agree to play all home games in Sacramento at the new ESC for a 30 year period. AEG will operate the facility during the period of time. The ICON-Taylor team will construct the facility at the downtown Railyards by September 2015 and provide cost overrun protection.
Mayor Johnson said the project will “create 4,100 jobs for our community.”
A key provision of the proposal ensures no net impact to the general fund, which will be achieved by generating approximately $9 million in new revenues primarily from a 5% ticket surcharge on ESC events, a revenue-sharing agreement with AEG, revenues from the parking P3, and other sources created by the development of the ESC.
The city and Kings will issue new bonds to retire the existing Kings loan, provided the city receives adequate security/collateral from the Kings for the loan, according to the mayor’s office. To accommodate premium seat holders, a separate $25-million privately-financed 1,000 space parking structure will be developed in the proximity of the ESC by David S. Taylor Interests and the CIM group.