project funding
Preliminary terms and funding
A preliminary term sheet sets forth the basic terms of proposed agreements between the parties. The term sheets conveys the location, financing, ownership, design, development, construction, operation, use, and occupancy of a new, first class, state‐of‐the art, multi‐purpose ESC, that will serve as the home of the NBA’s Sacramento Kings. The term sheet also spell out agreements about family shows, concerts, sporting events, community oriented events, and numerous other events. The City Council-approved ESC Preliminary Term Sheet may be found in the March 26, 2013 staff report under Resources and Reports.
Are there guiding principles for finance the ESC must abide by?
At its February 26, 2013 City Council meeting, the Council approved a set of principles that the ESC must adhere to. These principles of finance include:
Protect the Taxpayer
No new or increased taxes will be considered for the financing of the ESC. Those who use or directly benefit from the ESC may be asked to contribute through ticket surcharges or benefit assessments. The City will endeavor to minimize risk to the General Fund.
Pay Off Existing City Loan to the Kings
The existing City lease‐revenue bond financing (loan) to the Kings must be paid‐off. Any refinancing of the loan must be fully secured and collateralized to minimize the risk to the City.
New Entertainment and Sports Center Must be Located Downtown to Achieve the Greatest Community Benefit
A downtown ESC will provide the greatest community benefit to the City. The City’s return on investment, whether in the form of revenues or future development, infrastructure or amenities, must be commensurate with the level of public investment. The City and team owners will agree on a location that best meets the interests and goals of the City and stakeholders.
Long‐Term Commitment to Keep the Kings in Sacramento
In exchange for the City’s financial contributions there must be a secure, long‐term commitment to keep the Kings in Sacramento.
City Will Consider Investing Net Value of its Parking, Land and Other Assets
Consistent with the 2012 financing plan and terms, the City will consider investing the net value of its parking, land and other assets. Best practices for the monetization of the parking assets will be utilized to provide the greatest value to the City, its businesses and customers, with the shortest possible term while providing the greatest support for the development of the ESC. Any losses to the General Fund that result from parking monetization must be backfilled by new and reliable revenues. In consideration of the City’s financial contribution, the City will own the new ESC.
Public‐Private Partnership
The project must be a true public‐private partnership where both the City and any investment team share in the responsibility and opportunities of a new entertainment and sports center.
Public Engagement and Public Interest
It is critical that the City participate in a transparent process in which taxpayers are informed, engaged, and protected, during the negotiation process. This includes engagement through social media tools, such as the City’s Envision platform, and a series of open public meetings throughout the city prior to a final deal being presented to Council.
Natomas Arena Site Economic Reuse
The economic reuse of the existing arena site in Natomas is a critical element in defining success.