City updates project details for new Sacramento Kings arena
The cost of a new downtown arena has gone up. However, the city of Sacramento’s contribution to the project has gone slightly down.
Yesterday afternoon, the city released updated details on the pending deal to build a new entertainment and sports complex that will house the Sacramento Kings. According to the staff report released by the city of Sacramento, the price-tag of the new arena has jumped up to $477 million, $30-million more than originally projected in last year’s non-binding term sheet. However, the Kings will shoulder the burden of the increased costs, some of which will go toward the construction of a new practice facility for the team.
Meanwhile, the city of Sacramento will apparently pay $3-million less than their original contribution. In last year’s non-binding term sheet, the city was originally slated to pitch in $258 million to the project. The updated deal, however, calls for the city to chip in $255 million toward the arena project instead. Their contributions will come from a variety of sources including transferring over city-owned real estate and borrowing money against future parking revenues.
“Today’s report shows how much progress the City and Kings continue to make on the new entertainment and sports center,” Kings president Chris Granger said yesterday in a prepared statement released by the team. “After listening to our fans, our players, City leaders and the public, we have decided to invest an additional $30 million to enhance the public plaza, improve the L Street façade, and build a state-of-the-art practice facility that will help recruit the best players to Sacramento.”
The city maintains that the terms of the updated deal, which will be finalized in the coming weeks, have “been negotiated according to the Council’s adopted core principles of no new taxes and protection for the General Fund.” The details of the recently released arena staff report will be discussed publicly at Tuesday’s council meeting taking place at city hall later this evening.
Highlights of updated terms for arena project
- A fixed, lease-payment schedule has been agreed to that the city says will provide it greater certainty on ESC revenues. The Kings will contribute annual lease fee payments that will range from $6.5 million starting in year one to a minimum of approximately $18 million in the final year of the lease. The Kings agreed to a 35-year commitment to the new arena and two five-year options.
- A lease-revenue financing structure will be used by the city and it will include a reserve fund. As a result, the city claims bonds will be sold at a higher credit rating making borrowing costs lower and creating greater flexibility with repayment.
- The eight parcels of land the city is transferring over to the Kings’ control was appraised at approximately $32 million, which is $6-million lower than what was originally estimated.
- The extra $30 million the Kings are kicking into the project will be used to “further enhance ESC, activate L Street, and broaden scope of plaza, practice courts, and team offices” according to the city.
- Important dates: On May 1, the posting of contracts, agreements and the final environmental impact report will be released. On May 13, council will vote to enter into a binding agreement with the Kings to build the new arena. On May 14, demolition is expected to begin on the Downtown Plaza.