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January 25, 2010
Kings arena land swap to involve TIF subsidies?
More details are emerging about the Sacramento Kings' proposed crazy three-way land swap arena deal, and they put the emphasis on the "crazy." The Sacramento Bee (whose direct link to the full article is broken) calls the plan "audacious," "fragile," and "still-evolving"; it also gives a hint at some of the public subsidies that would be required:
The development team is counting on concessions from the city. The arena site would be a parcel of city-owned land at the railyard. The city also would be expected to donate 100 acres it owns near Arco for the new fairgrounds, Kamilos said. The developers also plan to ask the city for other forms of financial aid.
Without endorsing any of the proposals, Assistant City Manager John Dangberg acknowledged that any arena deal would likely require "a significant public investment," including land grants. To support the project, the city would consider contributing some of the tax dollars generated by the deal, he said. That way, the city wouldn't have to raise taxes.
That's right, it's our old friend TIFs. And while local officials like to tout the free-lunch aspects of tax increment financing — it's money that otherwise wouldn't exist! — they avert their eyes to the less salutary aspects, like the fact that new development brings new public service costs that those new property tax revenues are normally expected to cover, or that TIF-subsidized sites can siphon off development from other local sites that would otherwise pay full property taxes.
In any case, the land swap plan sounds like it's still pretty up in the air — one of the developers behind it tells the Bee that "We're hoping there is a land-development opportunity as part of this ... Cal Expo or something else." It may just be a trial balloon, but the NBA's designation of the plan as its favorite means that it's the balloon that everyone has their eyes on.
I just love that line, "That way, the city wouldn't have to raise taxes."
Oh! That's how it works! If I take the funds before they hit the general fund, they don't actually hit the general fund!
Why didn't I think of that?
I'm not holding my breath for, "We're not using that land anyway", but I know it's coming.
A big problem I see with this deal is practical. The State Fair currently takes up 350 acres, and the proposed new site takes up 105 acres. I tell you, I've been to the State Fair many times on weekends, and it gets crowded. I bet the parking lot is over 100 acres already.
I think the Legislature will have a say in this -- shouldn't the current property be put up for competitive bidding? -- and when they do, they'll realize that 105 acres simply isn't enough. They're talking about a State Fair without horses, which is bizarre. But look at all the space it saves!
There's a budget crisis in California. I just don't think the legislature will be in the mood to sell their property at a bargain price, then move to a site less than 1/3 the size of the current one, then pay for a bunch of new buildings, all so the Maloofs can end up in the best of the 3 pieces of real estate involved in this proposal (and themselves ending up with the worst).
I don't think the legislature is that dumb, but you never know.
Posted by MikeM on January 25, 2010 11:55 AM
"Oh! That's how it works! If I take the funds before they hit the general fund, they don't actually hit the general fund!"
MikeM, you hit the nail on the head.
Here in Santa Clara, the San Francisco 49ers are demanding $114,000,000 of our money upfront - but if our RDA issues those risky/high-coupon stadium bonds, its payments to our General Fund will get slashed.
The cost to our City's General Fund over the proposed 40-year term of a stadium lease?
*** $67,000,000. Lost. Gone. ***
To see this, visit Santa Clara's 49ers stadium page, go to the June 2, 2009, City Council meeting, and open up the "Staff Powerpoint Presentation" .PDF. Page down to SLIDE #48.
Fast way to get to the report - Search string: index.aspx?page=1359
Yet: The 49ers are still trying to snow us with their limp little throwaway line, "No New Taxes." The only purpose of that is to divert our attention from the General Fund ripoff a stadium will cause.
Best regards,
Bill Bailey, Treasurer
Santa Clara Plays Fair org
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