SACRAMENTO, CA - The Sacramento City Council voted to approve the term sheet for building an entertainment and sports complex in downtown at its meeting Tuesday night.
The council voted 7 to 2 on the non-binding term sheet, which will be presented to an NBA Board of Governors relocation subcommittee on April 3. Members who voted "yes" include Jay Schenirer, Angelique Ashby, Steve Cohn, Bonnie Pannell, Allen Warren, Steve Hansen and Mayor Kevin Johnson; members who voted "no" include Kevin McCarty and Darrell Fong.
"Tonight is a major milestone for our community and the region," City Manager John Shirey said. "The city has done its part in helping to keep the Kings in Sacramento by approving a term sheet that will lead to the development of a new Entertainment and Sports Center Downtown."
The term sheet, which was released to the public Saturday, outlines the city's and investors' contribution to building an arena in Downtown Plaza. The construction for the entertainment and sports complex will cost $448 million.
The city is contributing 57.6 percent of the money needed to build the arena. The $258 million contribution from the city includes:
- $212.5 million from public parking finance model
- $5 million from MOPA (Sheraton Proceeds)
- $1.5 million from parking infrastructure fund
- $1 million from construction sales tax rebate
- $38 million from Land Contribution
The investor group will contribute $189.7 million to the construction of the arena and up to $1 billion in total downtown revitalization.. The ESC investor group includes Ron Burkle, part owner of the Pittsburg Penguins and supermarket mogul, and JMA Ventures Inc., owner of the Downtown Plaza. Their contribution will cover:
- Predevelopment expenses
- Providing completion guarantee
- All cost overruns
- Responsible for 5 percent surcharge
- Responsible for all operating risks
- Oversee arena capital repair overages
- Share profits with city
The city wants to build the ESC in hopes increase economic development and to keep the Sacramento Kings in the city. After the Kings' majority owners, the Maloof Family, announced that they plan to sell their shares to a Seattle ownership group, Johnson worked to put together a local ownership group to counter the Seattle group's offer.
The Seattle group, headed by Microsoft CEO Steve Ballmer and hedge fund manager Chris Hansen, offered to buy 65 percent of the team from the Maloofs for $525 million.
The Sacramento ownership group includes Vivek Ranadive, founder of software company Tibco and Golden State Warriors minority owner; the Jacobs Family, owners of Qualcomm; Mark Mastrov, founder of 24-hour Fitness; Burkle and at least 25 local investors are putting up money to buy the Maloof's share of the Kings. The amount of their counter-offer is unclear.
"This is bigger than basketball. Tonight's vote is a win for jobs and our economy, a win for taxpayers, and a win in terms of a fair public-private partnership with a dream team investor group consisting of Ron Burkle, Mark Mastrov, and Vivek Ranadivé," Johnson said.
The term sheet is non-binding until after the NBA Board of Governors turns down the Seattle groups' offer to buy the Kings and to move the franchise to Seattle. During the April 3 meeting, the subcommittee will listen to the plans and offers from both Seattle and Sacramento. Then, during the NBA Board of Governors meeting from April 18 to 19, they will decide whether or not the Kings stay in Sacramento. The vote to approve the term sheet tells the Board of Governors that the city is committed to building a new entertainment and sports complex to house the Kings.
"We believe this will be persuasive in convincing the NBA to approve the sale of the Kings to this same Investor Group and to keep the team in Sacramento," Shirey said.
During the meeting, 13 people signed up to speak against approving the term sheet, while 45 people were signed up to speak for approval. Council members commented on the term sheet and also talked about the questions they had about the plan.