For all the grief city officials took over the deal for Sacramento’s new downtown arena, you have to give them this one: They were smart to protect taxpayers from cost increases.
The city’s deal with the Kings capped the taxpayer contribution toward construction of Golden 1 Center at $255 million, meaning the team would have to cover any increases.
Good thing, too. The price tag started at $447 million in the original term sheet. It had risen by $30 million by the time the City Council approved the deal in 2014 because the Kings decided to build a separate practice facility next door.
The total cost continued to increase as the Kings made design changes – such as moving hundreds of seats closer to the court – and added more bells and whistles to what they bill as the most technologically advanced sports arena in the nation.
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As The Sacramento Bee’s Dale Kasler reports, the cost is now pegged at $556.6 million, based on the latest construction estimates with the arena set to open in October. That’s 16 percent higher than when the deal was approved by the City Council.
In some other cities, taxpayers have been hit with increased costs for arenas and stadiums. Cost overruns were a bone of contention in Milwaukee until the NBA’s Bucks agreed to pay in a 2015 deal.
In Sacramento, controversy isn’t likely to fade soon around the arena deal.
Critics will argue that the $255 million figure lowballs the city subsidy. It doesn’t include the value of 3,700 parking spaces under Downtown Plaza ceded to the Kings, or of the leases on six city-owned sites where the team can put up digital billboards. It may have undervalued the contribution of city-owned land, priced at $32 million in the deal.
There’s still a little uncertainty about the city’s financing plan, which is based on repaying bonds with parking revenue as well as lease payments from the Kings. And though the early returns from accelerating downtown development are promising, it’ll be years before we can judge how good an investment the arena was, beyond the excitement of having a sparkling new arena in the heart of the city.
But taxpayers can at least be reassured that their share of the tab hasn’t been increasing as the arena is getting even nicer.