Aaron Bruski shares a positive outlook on tonight's vote and the future of the Kings.
As he says, "Kings fans will probably wait until the shovels hit the dirt before they celebrate." I'm not celebrating, but there's a lot of positive information in the article.
I would also add
That this vote cannot be taken for granted. We still need as many people as possible to attend tonight’s meeting and voice support for the new ESC.
Exhibit G - February 14, 2012
Exactly
Most people expected the vote last week to fail 7-2 (in which failing was a good thing). Instead it was 5-4. That was still good, but it showed we can’t be complacent. Everyone still needs to come out and show their support.
Aykis16 - February 14, 2012
Great article
Nice to see that there are some potential contingencies in the parking plan to hopefully avoid excessive meter rate hiking, kick-backs to Sacramento if they are making more than $9 million a year, and hopefully cost overruns taken care of by the developer. With those safety valves in place, I hope the 5 votes we already had from the last city council meeting will stick to their guns and keep voting to push the plan forward.
SacKing4Ever - February 14, 2012
Hey there Mr. Bruski, back off!
wallywagon11 - February 14, 2012
okay all joking aside
Again, this $30 million number keeps popping up from the hotels. Unless it’s part of a bond sale through the 2% Occupancy Tax revenue, I dunno how the heck that number works here. That sure seems again to be the million per year the hotels are voluntarily pledging and that doesn’t work in adding up to $406 million (not the $387 million in the article but given that number is used so often understandable to think that’s it). Also, are they still going to try and sell the meters (I feel like I must have missed the meeting where they said they wouldn’t) because if they do doesn’t $50 million of the parking not go to the arena?
Also curious with what they are going to do with the loan.
wallywagon11 - February 14, 2012
The $30 million voluntarily from the hotels
and the 2% Occupancy Tax money I would have to think are going to partially cover the $9 million lost from the parking revenue (The Transit Occupancy Tax that was earmarked for the Community Theatre Renovation was estimated to bring in $2.7 million annually).
wallywagon11 - February 14, 2012
Just to clarify
The 2% Occupancy Tax is pretty much the Hotel Tax that results in the guests of the hotels being charged an additional 2% tax, right? Is this tax in addition to the $30 million voluntary from the hotels?
SharkKings49 - February 14, 2012
Sacramento has a 12% Occupancy Tax
but 2% gets kicked down to the City (forget the name of the fund, need to do actual work right now so brain kind of dying on this stuff) while pretty sure the other 10% goes to the County or at least a separate fund that can’t be touched for any tourism or convention center type projects (pretty sure it all goes to the County though).
wallywagon11 - February 14, 2012
and yeah I think it's in addition to the $30 million voluntary from the hotels
wallywagon11 - February 14, 2012
Thanks for the clarification
SharkKings49 - February 14, 2012
Yes, local businesses are putting thier money where their mouths are
I mentioned that to the council, a voluntary tax. Amaaaaazing.
lietothegirls - February 15, 2012
I am under the impression the Hotels are promising
$1 million a year for 30 years. That is way different than 30 million…unless they hotels intend to take a loan out to over it.
I thought they had determined the meters were too big an issue and were going to avoid action on them.
Nothing needs to be done with the Maloof loan if the Kings stay. I do believe though they will exchange the land to the city if the ESC is built so that the city has more control of the Natomas revitalization that will need to take place.
ElRonToro - February 14, 2012
Yeah I just want to stress that the $30 million from the hotels isn't covering the arena getting built unless there is something we don't know.
Something though needs to be done with the Kings loan though because right now they are paying over $11 million a year on it. Whether it’s partially dealt with by a sale or something else I got no clue but something has to be done to get those payments down or out of the way entirely.
wallywagon11 - February 14, 2012
sorry
*a sale of Arco
wallywagon11 - February 14, 2012
What the hell is the rate on that loan
that they pay 11 million a year and it barely goes down ? I was under the impression they paid about 3 million….what the??
ElRonToro - February 14, 2012
it's pretty nuts
give me a little bit of time and I’ll grab the documents from the city’s website (kind of hard to find because it’s like page 467 of 1234 or something like that.
wallywagon11 - February 14, 2012
derp derp
Around $11 million is the max annual payment.
wallywagon11 - February 14, 2012
and throwing this in here so I don't have to look for it again elsewhere
but apparantly it is currently a 5.607% interest rate.
wallywagon11 - February 14, 2012
Max is not really in play
The max number is so that they don’t repay too much against the bonds too early. Penalties kick in so as to protect the long repayment of the bonds.
Jb_Kings - February 14, 2012
I know
hence the “derp derp”
wallywagon11 - February 14, 2012
Sounds like my mortgage
You know, on a fractional basis.
otis29 - February 14, 2012
This is the part of the financing that continues to confuse me
What amount of money is “up front” versus “paid over time”. And for the “paid over time” dollars, how is that money fronted at the beginning of the process to execute construction of the facility?
My other question is what happens in a cost overrun situation?
otis29 - February 14, 2012
And after actually reading the article, instead of skimming
I see the answer to the second question:
otis29 - February 14, 2012
Everyone aknowledges it's $407 now, factoring in a VIP garage.
lietothegirls - February 15, 2012
lol, yeah the legal obligations of all the parties for all of the contingencies still needs to be worked out.
The parking money ($200 million?) along with AEG money ($50 million?) and the NBA/Maloof money ($80 million?) should all be upfront to actually pay for the arena. That totals up $330 million so if those are the numbers we still need money from somewhere else (and yes, zero clue if the rest is already all accounted for or what, but that is all that has gotten out of the tent so far).
If it’s not upfront money, it’s than either (a) financing for the upfront money or (b) replacing the parking revenue. For example, it appears the Maloofs will be paying the NBA around $3 million in rent. That per year rent doesn’t get applied to the $406 million number because it’s just financing the $80 million upfront (at around a 0% interest rate but whatever).
Another example is the revenues from the arena which can be used to recoup the $9 million in parking revenue lost every year. Personally, I think it’s way too premature for anyone to say “Oh all the parking revenue will be recovered from the arena.” That doesn’t personally make much sense to me because the whole point of this whole project for both AEG and MSE is to take advantage of the arena revenue streams like ticket income, naming rights, cell tower income, and usually parking (which they aren’t getting much of, just the new parking lot at the arena) while making someone else pay for it. Taking from their revenue streams is basically making them pay for it. Now I think that’s a good thing mind you and if it happened it will be one of the most fair current public/private arenas in America but I don’t think they are just going to say “Cool, whatever it takes.” So I personally wouldn’t be surprised if the money being donated annually from the hotels and the 2% Occupancy Tax that was meant to go to renovating the Community Theatre go towards filling that gap.
wallywagon11 - February 14, 2012
That's good info, thanks Wally
I’ll be interested to find out how the gap in up front money is bridged.
otis29 - February 14, 2012
yeah and if they sell property, that often takes some time (although would think if it's to David Taylor and it's property around the project that can be pretty quick)
wallywagon11 - February 14, 2012
basically, there will be a two month extension here
and my biggest concern for the project, as I said last week, is whether or not the terms of the parking deal will be watered down and affect the sale price. This article seems to indicate though that I might be a bit of a chicken little and it’s going to be okay.
wallywagon11 - February 14, 2012
Wow they are paying 11 mil a year
On the 67 mil left on loan?
KingsFanInPortland - February 14, 2012 via mobile
they aren't sorry
can see in the thread above, it’s the max annual payment (it would be the equivalent of around 14% interest which in fact is not the case)
wallywagon11 - February 14, 2012
derp 15%
They are likely paying somewhere a little over $5 million a year if I am reading the 5.607% correctly
wallywagon11 - February 14, 2012
Thanks WW
It seems they must be making near minimum payments for a 15 year old loan to have gone down so little.
KingsFanInPortland - February 14, 2012 via mobile
Just some house cleaning
but yeah you need to subtract around $52 million from whatever we get in the parking REGARDLESS of whether it includes metered parking.
So theoretically if we got $200 million from parking we are looking at around $148 million toward the arena and with the possible $80 and $50 million from AEG/Maloofs/NBA we are looking at a grand total of a known $278 million worth of speculated funding for a $406 million project so something else would have to make up the other $128 million.
wallywagon11 - February 14, 2012
I thought the $200 mill baseline number already factored in that $52 debt payoff
dampania - February 14, 2012
zero clue
maybe it does, I hadn’t seen anything that indicated that and given the fact that the meters issue is still a problem I doubt it.
wallywagon11 - February 14, 2012
Isn't that $200 million suppose to be the low side?
I thought I heard somewhere that they purposely under shot what they think it will actually bring in and that it could exceed 250+ million.
Granted, what they “think” and what a company will put in ink are two different things.
HeuristicLineup - February 14, 2012
that was including the parking meters
which unless we change state law in the next two weeks might be difficult to do
wallywagon11 - February 14, 2012
Ahh, ok
Thanks for the clarification. I was wondering why the wording had changed to “upwards of 200million” when it was looking like we would far exceed the original 200 million.
HeuristicLineup - February 14, 2012
well you may be right
it’s just very ambiguous at the moment. We know for sure that whatever money they get for the meters cannot go towards the arena at all. We might be able to use it to cover the bonds for the parking structure (that will have to be paid back at the tune of $52 million in 60 days after monetizing the garages) but we aren’t even sure of that so they might not do the meters at all for all we know.
wallywagon11 - February 14, 2012
Yes, they've already factored that in, paying off those garages so they can be included in the lease.
lietothegirls - February 15, 2012
I like the last line.... Sacramento isn't going anywhere!
rcervantes5 - February 14, 2012
Here We Stay!!
HeuristicLineup - February 14, 2012
The city or the team?
ElRonToro - February 14, 2012
I hope he's right
but I never trust anyone political. They’d be dumb to vote it down. Just dumb.
Dub_TC - February 14, 2012
honestly
If I were a council member I wouldn’t touch a 50 year lease and would think it would be quite dumb to do so (30 years is entirely different). So there’s that.
wallywagon11 - February 14, 2012
I intend to address that issue at the meeting
I think there are options
ElRonToro - February 14, 2012
oh yeah there are options
no way they just do a 50 year lease. No chance of getting that 5th vote if you leave it to just 50 years and you may even lose your 4th vote. They will not do a straight up 50 year lease, it’s almost a certainty at this point given what’s been said by council members.
wallywagon11 - February 14, 2012
It any council member didn't want to touch the issue of a 50 year lease
then they would have voted last week for the public to decide. That is the easiest way for political cover.
rmgordon4 - February 14, 2012
did you actually listen to Cohen talk?
they are going to either scale it back to 30 or put in enough options on the deal to cut it to 30 if the Kings don’t resign a lease.
wallywagon11 - February 14, 2012
As I recall Cohn and 1 other
voiced that they were very concerned with a 50 year lease, others may have stayed silent after the thought was already expressed. To any earlier point you made, I think they also agreed that the 2% earmarked for the CC would not be touched
ElRonToro - February 14, 2012
wow did not know that about the 2% on the CC
seriously, thank you.
wallywagon11 - February 14, 2012
All depends on how it's structured...
I am definitely more in favor of a 30 year lease over a 50 year lease but up until this point we are all speculating on the terms of the deal.
Also, i really hope our city council structures the agreement with reasonable profit sharing between the city and the private operators above and beyond current estimates. It would be foolish not to since you can easily argue that the privitization of the parking (ie increased operational efficiency) mixed with more downtown parking (ie if we sell parking the funds are used for a downtown ESC which will boost parking astronomically in said spots) will drastically exceed the current $9 million annual figure which has been thrown out.
My hope is that this profit sharing term + hotel voluntary offering + 2% hotel tax will be used to come as close as possible to covering the general fund depletion. If the deal is structured properly and portrayed as such reason should prevail.
Porter02 - February 14, 2012
Yeah, I want what this guy is selling
I honestly though think it’s going to be hard to share much of the revenues from the parking company just because any significant revenue sharing type of deal will likely decrease the amount of money we get. That being said, yes absolutely try and they will likely get something written down even if it seems unlikely at the time that they would reach those revenues and even if it’s just a small chunk of money.
As a sidenote, Porter might be one of my favorite sparse commentor right now (next to BearKing).
wallywagon11 - February 14, 2012
Agreed
Although I think if it includes new parking and event parking we may reach a little revenue sharing money. But so long as it doesn’t take down up front money it at least is something that looks good to the masses
KingsFanInPortland - February 14, 2012 via mobile
Many many commercial leases
include a small % of the tenants profits over a certain amount to the landlord as part of the deal.
Not uncommon at all.
lietothegirls - February 15, 2012
Thanks WW
Honestly, i have read STR for so long its weird to finally post on a regular, albeit sparadic basis.
PS: I will continue to chime in wherever possible with my 2c.
PPS: I thoroughly enjoy reading your detailed and informed posts, helps keep us ALL in the know.
Porter02 - February 14, 2012
Reply fail... I are new.
Porter02 - February 14, 2012
I hope a lot of people go to City Hall
I wish I could go, but I have a physics test tonight =( I would much rather be supporting the ESC than taking a test. For the people that go, you make sure to let them know that there are plenty of Kings fans outside the area that support the new ESC too!
ina_118 - February 14, 2012
I've noticed two numbers that intrigue me.
387 is the cost of the arena, and 400 is what we’re trying to raise.
Are we trying to raise 400 so that we have extra in case we go over 387? Or, are we trying to raise 400 so that the difference can be used to replace the 9 mil we lose from the parking structures between the sale and the kick start of the arena in 2015?
The Guy on the Couch - February 14, 2012
I keep seeing conflicting reports on the cost
Some say 387 some say 406
deadenddude - February 14, 2012
Revised Estimates
Original estimate for the ESC was $387 mil based on purely schematic designs and a best guess. As we get closer to construction the estimates will be refined and adjusted accordingly. The most recent estimate is now $406 mil.
The reasons for the jump in costs are based on a few main things:
1) Corrections to original assumptions – ie building design, locations, utility tie in points, site development costs etc.
2) Variable material costs – ie the ever changing diesel / fuel prices, PVC, steel, concrete, heavy equipment rentals etc (I work as a construction manager so these hit close to home)
3) Tertiary / indirect costs – ie marketing, lobbying, natomas pay out amounts etc.
It’s all part of the game, but hopefully the market adjusts and material prices stop skyrocketing before any bidding can be done to GC’s & subcontractors. That will be the biggest impact (minus unforeseen conditions which WILL be encountered on a project of this magnitude).
Porter02 - February 14, 2012
pretty sure there was an added parking structure to boot
wallywagon11 - February 14, 2012
Yes, a $20 mil VIP garage
which brings the total to $406 million.
I’d remind everyone that the original $387 million included about $30 million for potential cost overruns.
lietothegirls - February 15, 2012
It's really $406 million
$387 million was the previous estimate. That didn’t include the parking structure that was later included in the price.
wallywagon11 - February 14, 2012
agreed
I think the NBA would insist on having a premier parking option adjacent/onsite to the arena. Maybe as much as 1,500 – 2,000 spots. Probably have to build under the freeway.
Jb_Kings - February 14, 2012
Exactly what they plan
lietothegirls - February 15, 2012
Surcharge?
Did I miss a refererence to ticket surcharges? Are those still an option?
gregory l - February 14, 2012
I don't recall hearing anything about that lately
But one would assume that the Maloofs could include a new surcharge for Kings games to help pay for their portion.
Exhibit G - February 14, 2012
i thought their portion is just paying their rent up front?
TrojanCBB - February 14, 2012
yes and know
Any ticket surcharge on Kings games or events will be seen from AEG/Kings though as a contribution from them because it essentially is taking a bite out of their income on events. This is all about the revenue streams for them, not ownership.
wallywagon11 - February 14, 2012
Sorry if I wasn't clear
What I was saying was that the Maloofs would simply raise the ticket prices to Kings games to help them cover the “rent” portion they paid up front.
Again, pure speculation.
Exhibit G - February 14, 2012
well yeah they are going to set ticket prices at whatever rate they think will bring in the most money for them
regardless of a surcharge or not. It’s just with a surcharge they can try and play the “Hey it’s only this expensive because of other people” card but in reality they would charge whatever the market dictates anyway.
wallywagon11 - February 14, 2012
Any chance the Maloofs front some money in addition to the $80 million loan?
I could see the league requesting this from them as they had all but agreed to spend at least $50 million to make the move to Anaheim happen. This would bring the gap between 330 and 407 much closer.
kangsfan - February 14, 2012
The theoretical gap might be between 278 and 406 unless when they keep talking about the parking they are subtracting the bond repayment on the parking structures.
and who knows about the Maloofs. Personally doubt it.
wallywagon11 - February 14, 2012
Yea I was just going off the estimates of 200, 80, and 50.
The only real numbers I’ve seen. Obviously those have a significant potential for fluctuation.
kangsfan - February 14, 2012
?
Do I need to be city/county resident to speak?
ElRonToro - February 14, 2012
My mom lives in Sac. County,
so just introduce yourself as mama214.
section214 - February 14, 2012
Do you know something you're not saying?
Son214?
ElRonToro - February 14, 2012
Magoof-ed?
betweentheeyes - February 14, 2012
Your address is voluntary on the slip
http://www.cityofsacramento.org/clerk/documents/Web-Speaker-Slip.pdf
just
HeuristicLineup - February 14, 2012
Everyone bellow except your name is voluntary
which would include the “not a city resident”. Which if they give that option, I’m going to assume it means you can speak still. This is an issue that far succeeds the City of Sacramento and directly affects everyone in the surrounding areas, you should be allowed to say your piece
HeuristicLineup - February 14, 2012
everything**
HeuristicLineup - February 14, 2012
Where is the meeting?
“Sacramento City Hall”? I need to know what to type into Google so I can find it
CLopez63 - February 14, 2012
Watching the meeting on TV right now.
These people are stupid. They’re saying they haven’t seen stuff that is clearly available to the public if they just look a little and read the articles about this.
PurpleLoco - February 14, 2012
Carmichael Dave
Just spoke.
Scott Section 213 - February 14, 2012
wow everyone stood up
In unison when asked by kj who is in favor
Scott Section 213 - February 14, 2012
Motion passed unanimously
watching the video feed.
kinglet - February 14, 2012
Excellent.....wait, right?
-Reggie Miller
PurpleHurts - February 14, 2012
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