Real due diligence needed on Kings arena

First things first: Sacramento City Council members need to explain why the city is leading the charge to use public funds to subsidize the building of a new Kings arena.

The primary beneficiary would be the  Maloof family, which owns the Kings. Secondary beneficiaries would be property developers who have long coveted the downtown  railyard site. Any financial benefit for the city would be far down the road and highly problematic.

The public made its position on corporate welfare clearly known five years when 80 percent of local voters rejected a sales tax hike to subsidize a new arena.

Yet council members are preparing to discuss a costly plan tomorrow night to hire outside consultants to explore potential funding sources and other matters related to financing and building a downtown arena. The $550,000 expenditure, according to a Sacramento Bee story,  would come from the city’s parking division budget and from unused money that could otherwise go for basic services like police, fire protection  and parks.

Two councilmen, Steve Cohn and Kevin McCarty, attempted to justify such an  expenditure by saying the city needed to exercise “due diligence” in regard to the arena project. Cohn said he would prefer  that the private sector pick up the tab for the consultant work, but the city “owes it to everyone involved to put together the best plan we can.”

Right there is the basic craziness of the whole arena project. The city has taken the initiative that is clearly lacking in the private sector. If the arena were a gold mine, you would think private businessmen would be lining up to bid for the project. If promoters believed the city would also benefit,  you would think they would rush to pay for any cost-benefit analyses that would advance their case. That is not happening. You don’t see the unpopular Maloofs  saying much of anything except that they want a low rent in a new arena. The NBA isn’t forking over any league revenue. A leading stadium operator gave a remarkably tepid offer of assistance last week. 

No, it’s Mayor Kevin Johnson leading the charge for a “world-class” arena with the avid support of his Think Big Sacramento task force and the area’s shadowy power brokers. City and state officials, plus the local media, react to the agenda dictated by the promoters. They don’t question basic premises. They rarely seek out independent economic analysts or scholars who have published books and studies on the folly of publicly financed sports stadiums..

When Cohn and McCarty speak of doing “due diligence,” they should be exploring the dangers and cost overruns that other cities have suffered when they’ve been suckered into the arena and stadium game. They should be asking how much the city would pay in infrastructure costs for roads, overpasses and sewers in the arena beyond the estimated $387 million cost of the arena. They should be having their financial experts prepare and disseminate a worst-case scenario to be published alongside the pie-in-the-skybox figures prepared by arena promoters. Let us not forget the $77 million the Kings already owe the city on a 1997 loan.

The agenda for tomorrow night’s City Council meeting is a clear indication that the arena locomotive is already chugging down the track toward the sinkhole. The council should not even consider diverting $550,000 from basic city services to hire outside consultants to assess how the city can spend far more money to subsidize a sports arena. It should be asking private interests to testify why they should be given a public handout in one of the worst economic periods in local history.

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