Sacramento City Clerk Rejects Vote on Subsidies Earmarked for New Arena

Monday, January 27, 2014

An effort to force a public referendum on building an arena in downtown Sacramento with a substantial public subsidy gathered enough signatures on petitions to qualify for the June 3 ballot, but had one problem.

“I’ve never seen a petition with as many flaws as this one,” City Clerk Shirley Concolino told the Sacramento Bee, explaining why she wouldn’t certify the measure.

She said groups submitted petitions with 34,000 signatures, 22,938 of which were valid. That was enough to qualify for the ballot. But Concolino found that there were nine different versions of the petition, each with different wording, and all lacking a significant clause that plainly states the proposal will become law if voters approve it.

Having nine different versions of the petition isn’t, in itself, a disqualifying factor, the city clerk said. But Concolino tossed 6,719 signatures because the petitions left out a crucial Notice of Intent language approved by her office and another 105 signatures because they were on petitions dated before she approved the request to circulate them.

That put the signatures, gathered at the urging of Sacramento Taxpayers Opposed to Pork (STOP) and Voters for a Fair Arena Deal, way below the 22,000 threshold. The city clerk said all the petitions lacked an enacting clause, required by one elections code section, and its faulty published Notice of Intent violated another. She expressed bafflement at a “random paragraph that is not even the same in each version of the petition.”      

Proponents of the petition said the problem wasn’t flawed, nitpicked-to-death petitions. It was a political power structure bent on building a new arena after a high-stakes showdown with Seattle over keeping the Sacramento Kings basketball team in town.

Mayor Kevin Johnson, a former star in the National Basketball Association (NBA), has spearheaded an effort to retain the coveted team. Last July, the NBA blocked a sale of the Kings by the Maloof family to a group in Seattle, favoring the pitch from Sacramento locals. Part of that pitch was a pledge to sell $258 million in bonds to subsidize construction of a $448 million arena. The city financing comes primarily from borrowing against future parking garage revenue, some of which would be generated, hopefully, by development around the arena.

One development-friendly study projected the arena would have an economic impact of $11.5 billion over the next 35 years. But half of that would come from additional businesses moving into the adjoining area. There are no commitments for any of that development.

The campaign against the proposed arena deal was marred in August when the Fair Political Practices Commission (FPPC) hunted down the mystery donor who contributed $100,000 surreptitiously to it through a law firm, which it failed to properly report. At first, suspicion was directed at the Maloof family, but the perp was billionaire Chris Hansen, the gracious Seattle loser who had nothing but praise for his able opponents.

The FPPC fined him $50,000.

Investors are reportedly in talks with the city to build a 250-room hotel nearby, along with a 600-unit apartment building, 475,000 square feet of office space and 300,000 square feet of retail space once the arena project is locked in. It is not, yet.

Sacramento filed an eminent domain lawsuit in Superior Court two weeks ago to acquire a former Macy’s-occupied property that covers about half the property needed for the arena. The parcel owner, California Public Employees' Retirement System (CalPERS), is amenable to sell and doesn’t oppose the action. But U.S. Bank, which holds a building lease, does not agree.

The city clerk’s decision on the petitions is expected to be appealed to the courts.

Critics of the city’s financial role in the development point to studies that indicate a large sporting venue provides small, if any, economic municipal benefits.  

A study in 2011 (pdf) by economics professors Robert A. Baade and Victor A. Matheson at College of the Holy Cross in Massachusetts looked at the experience of 125 teams in the five largest professional sports in North America—NFL, MLB, NHL, NBA and MLS—that have played in new stadiums since 1990. In general, most of the “significant cost” of new construction was borne by taxpayers.   

The report cited a multitude of previous studies that found the “economic impact of sports teams or events is a fraction of that claimed by the boosters, and in some cases actually show a reduction in economic activity.” Short-term gains are short-lived and long-term gains are negligible.

In the end, the study agreed with those studies that “evidence of significant direct economic benefits from sporting events, franchises, and stadiums is lacking.” While it found that people derived pleasure from having a sports franchise, “sports may make a city happy, but they are unlikely to make a city rich.”

–Ken Broder


To Learn More:

Kings Arena Proponents Praise Sacramento’s Decision to Reject Ballot Measure (by Ryan Lillis, Dale Kasler and Tony Bizjak, Sacramento Bee)

City of Sacramento Files Eminent Domain Lawsuit for Arena Land (by Ryan Lillis, Sacramento Bee)

City Says Sacramento Arena Would Be Economic Powerhouse; Subsidy Critics Disagree (by Dale Kasler, Sacramento Bee)

Financing Professional Sports Facilities (by Robert A. Baade and Victor A. Matheson, College of the Holy Cross Department of Economics ) (pdf)

FPPC Uncovers Mystery Donor Trying to Deep-Six a New Sacramento Arena (by Ken Broder, AllGov California)

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