December 13, 2011

Mayor Kevin Johnson, City Council
915 “I” Street, Fifth Floor
Sacramento CA 95814

Subject: Proposed New Sports and Entertainment Arena (A LUXURY, NOT A NECESSITY)

Dear Mayor Johnson and Council Members,

Much has been described in recent months about the need for a new sports and entertainment facility, with the emphasis on building it in the Railyard area. The Taxpayers League (SCTL) has concerns about the methods of paying for this proposed project, and the subsequent potential negative financial impact it could have on the community. Research of arenas in other cities has shown it to be a mixed bag; some good, some not so good. In some cases, during strong economic periods, an arena may appear to be doing well. But once the strong business cycle ends, additional subsidies may be required for the arena and surrounding businesses. Studies have also shown that hidden subsidies have played a part in many arena deals. Sacramento taxpayers do not want to be saddled with long term financial obligations, either from debt or asset sales.

Currently the arenas preliminary price tag has been ID’ed at $387 million. We think everyone involved realizes this is probably way understated, with a potential to reach $5-6,000,000 by the time everything is included. There have been recent discussions about selling off the City’s parking lots to a private operator. This supposedly would generate $170 - $245 million in cash, to go towards the arena project. Shouldn’t the taxpayers decide whether or not that money should go to an arena, as opposed to the General Fund to pay for Fire, Police, etc? And what about the $20,000,000 budget deficit the City faces next year, plus the on-going unfunded pension liabilities. Those questions need solid answers before taxpayer funds are appropriated for a new arena.

In addition, there are several aspects of the arena project that raise serious questions:

• What kind of $ commitment will the Kings provide given that they’ve been losing money on the team in Sacramento?
• What roadway/freeway and, or utility upgrades will be needed beyond what has already been described? Traffic issues could be a potential nightmare.
• How will the long time proposed regional transit center (local bus, light rail, intercity bus, commuter rail and Amtrak) fit into the Railyard plan if an arena is built?
• Are there still toxic issues associated with the Railyard? If so, who pays for that additional work?

The decisions you face in the future are significant. We only hope that you will keep the taxpayers in mind when making them.
Respectfully,

Bob Blymyer,
Executive Director

cc: Sacramento Bee
Business Journal
Sacramento News and Review
SCTL Transportation Committee