78 replies to this topic

[Bill Z]

On the surface this looks pretty good.

And below the surface it may still look good.

But being skeptical, I think I understand mylo a little.

One of the items says the existing Cal Expo will be sold to the developers who will turn it into mixed use residential. I guess the question is, how much will the developers have to pay for Cal Expo and it's land? A single dollar? or fair market value? and what is fair market value for that real estate? If the developers get it on the cheap, then that is a case of mylo's fears that taxpayers are losing something for this to go through. But then the question still is, does the gain outweigh the loss, I guess that is TBD, but I think it sounds pretty good, however, almost too good to be true, which always raises the eyebrows of the skeptics which is a good thing.

[Dave Burrell]

"Creative financing" to make a deal work for a private for-profit conglomerate. I'll keep my money out, thank you.

how much money do you have into this?

We're getting taxed the same either way, I'd be happy to get some great quality concerts and sporting events out here and that will also bring in more revenue income for local business and the city, plus more jobs too! Its not costing you or me any additional taxes, you're not losing any money

How is the maloofs getting something out of this for providing a place for entertainment and sports for the next 30 years such a bad deal? like I said before, they're not in it for charity

Thinking more about this, I truly believe it's the ongoing level of financial illiteracy that creates this misconception of "free" or "no loss".

it's also a case of being too short sighted on the other side

[mylo]

OK, let's turn this around. Mylo, how do you suggest we pay for a new arena?

I think we need to do the math. Find out how much we could possibly make from this investment and determine a reasonable contribution that would see our investment pay off. Look at tourism, increased sales taxed, hotels, etc. All the usual stuff.

Take that to vote, asking if taxpayers want to contribute $1M for a $2M profit in 3 years. If the numbers make sense, are well audited, etc. then it's an easy win!

If the voters say yes, then build the arena.

Any shortfall ($600M - $1M = $599M) will have to be provided by other means. This most likely is the people that profit the most from these deals. NBA, Maloofs, Entertainment, Developers, etc. They will likely pass these costs on through ticket sales, parking, etc. They invest in the business because it is profitable for them.

Taxpayers should not be in the business of giving away their money to increase corporate profit margins. We should invest as much as we want to get out of it.

If the numbers don't work, they don't work. Go do something else. If the investment is not profitable, there is no reason for an Arena that justifies taking a loss. Entertainment may just not be worth it.

[Dave Burrell]

OK, let's turn this around. Mylo, how do you suggest we pay for a new arena?

I think he said he was ok with being taxed for it instead

[cw68]

I think we need to do the math. Find out how much we could possibly make from this investment and determine a reasonable contribution that would see our investment pay off. Look at tourism, increased sales taxed, hotels, etc. All the usual stuff.

Take that to vote, asking if taxpayers want to contribute $1M for a $2M profit in 3 years. If the numbers make sense, are well audited, etc. then it's an easy win!

If the voters say yes, then build the arena.

Any shortfall ($600M - $1M = $599M) will have to be provided by other means. This most likely is the people that profit the most from these deals. NBA, Maloofs, Entertainment, Developers, etc. They will likely pass these costs on through ticket sales, parking, etc. They invest in the business because it is profitable for them.

Taxpayers should not be in the business of giving away their money to increase corporate profit margins. We should invest as much as we want to get out of it.

In this scenario, how would you credit the over-all boost to Sacramento that can't be captured specifically in revenue?

This is kind of like apples and oranges, but it kills me how some people look for a ROI on certain things, but not others. Like when someone wants the ROI on a solar heater for a pool when there's no ROI on the money spent on the pool itself. Or need a dollar reason as to why they should spend the extra money on an efficient A/C because just being more comfortable isn't good enough but they drive a luxury car. Some things are beneficial in a non-revenue way. Of course there's the argument that tax money should ONLY have a return in a revenue way. But then there's the argument that tax money CAN'T always have a revenue return... circles circles circles

[Chad Vander Veen]

On the surface this looks pretty good.

And below the surface it may still look good.

But being skeptical, I think I understand mylo a little.

One of the items says the existing Cal Expo will be sold to the developers who will turn it into mixed use residential. I guess the question is, how much will the developers have to pay for Cal Expo and it's land? A single dollar? or fair market value?

They said last night it would be appraised and sold at market value.

[mylo]

In this scenario, how would you credit the over-all boost to Sacramento that can't be captured specifically in revenue?

This is kind of like apples and oranges, but it kills me how some people look for a ROI on certain things, but not others. Like when someone wants the ROI on a solar heater for a pool when there's no ROI on the money spent on the pool itself. Or need a dollar reason as to why they should spend the extra money on an efficient A/C because just being more comfortable isn't good enough but they drive a luxury car. Some things are beneficial in a non-revenue way. Of course there's the argument that tax money should ONLY have a return in a revenue way. But then there's the argument that tax money CAN'T always have a revenue return... circles circles circles

I concur, there are social benefits that are not quantitative. However, those must be weighed against opportunities that could also benefit from this money. We're not taking a $50 throw away on a nice steak dinner, this is hundreds of millions of dollars. The potential impact of this tax money on other issues could be fantastic, more easily measured, better controlled/released, etc.

If you're going to "donate" it for social benefit, I would look towards non-profits, etc. Organizations that are truly out to provide benefit, not line their own pockets.

I also think that in times of economic hardship, high unemployment, people losing their homes, etc. Most people are not in the mood to donate anything right now, and certainly not for entertainment.

[cw68]

I concur, there are social benefits that are not quantitative. However, those must be weighed against opportunities that could also benefit from this money. We're not taking a $50 throw away on a nice steak dinner, this is hundreds of millions of dollars. The potential impact of this tax money on other issues could be fantastic, more easily measured, better controlled/released, etc.

If you're going to "donate" it for social benefit, I would look towards non-profits, etc. Organizations that are truly out to provide benefit, not line their own pockets.

Are residents of the Sacramento area for-profit or non-profit? The social benefits and community-strengthening benefits are big to me. A lot of Sacramento seems to be so under-realized. We've got this great waterfront -- can't use it. A downtown by highways and public transportation -- don't use it, it clears out after work hours.

Besides, who the hell is going to put up the money in the beginning anyway? It's the American way -- you have to have money to spend money to make money. Hopefully the corporations benefit the people along the way. I see the benefits to the people.

[mylo]

Are residents of the Sacramento area for-profit or non-profit? The social benefits and community-strengthening benefits are big to me. A lot of Sacramento seems to be so under-realized. We've got this great waterfront -- can't use it. A downtown by highways and public transportation -- don't use it, it clears out after work hours.

Besides, who the hell is going to put up the money in the beginning anyway? It's the American way -- you have to have money to spend money to make money. Hopefully the corporations benefit the people along the way. I see the benefits to the people.

I too, can see benefits. However, I favor transparency. Show the taxpayers the quantifiable benefit aswell as highlight the social reward. Let them vote on it. If they're willing to "take a loss" for the soft-win, run with it!

They did that. The voters said they didn't want these soft benefits.

Do not try and hide the same plan, spending the same taxpayers money, masked behind real estate transactions.

If people aren't "smart enough" to see the side benefits to their community, then let their community suffer. That's democracy.

Alternatively, this is a for-profit business. We can talk about the "revitalization" and all that other b.s. The fact is, the arena is a large business that government should not be investing in. Leave entertainment corporations up to run such endeavors. If there truly is a profitable business to be made by development the railroad wasteland into an entertainment center, let the developers make their money when it's worth it for them.

[cw68]

I too, can see benefits. However, I favor transparency. Show the taxpayers the quantifiable benefit aswell as highlight the social reward. Let them vote on it. If they're willing to "take a loss" for the soft-win, run with it!

They did that. The voters said they didn't want these soft benefits.

Do not try and hide the same plan, spending the same taxpayers money, masked behind real estate transactions.

If people aren't "smart enough" to see the side benefits to their community, then let their community suffer. That's democracy.

Alternatively, this is a for-profit business. We can talk about the "revitalization" and all that other b.s. The fact is, the arena is a large business that government should not be investing in. Leave entertainment corporations up to run such endeavors. If there truly is a profitable business to be made by development the railroad wasteland into an entertainment center, let the developers make their money when it's worth it for them.

The did vote against an additional tax.

Gov't give breaks to businesses all the time to entice them to stay where they are/pick up and move. It's not like this is something new. If you want this transparent, then call for ALL economic incentives to be transparent and voted upon. Can we say: even more gridlock?

[SacKen]

In all of Mylo's rambling about imaginary numbers he created in his head for the sake of argument, I still fail to see where it will cost the tax payers any money. Imaginary gains from any property is not enough unless you can show that there is a chance in hell that those gains would ever actually be realized. I'm willing to bet that they aren't. Everything will sit there and continue to rot without anything being sold that would net the tax payers any income. So why not use the asset to get something useful!

If the Maloofs are happy, the developers are happy, the City is happy, the Cal Expo board is happy, and the tax payers get a new arena, new jobs, new tax revenue, a revitalized downtown, new fairgrounds, and a Sacramento with some hope and not one that resembles the Sacramento of 1980... all without raising my taxes... then I'd say it's a good deal!

This is bartering. It's not about the exact value of the items, but what that value is to each party involved.

[Robert Giacometti]

Imo, this deal is light years better than the one the BOS tried to get us to build by raising our taxes to build the Arena and then giving all the revenue gereated by the Arena to the Maloofs. In that scenario, the Maloofs weren't contributing any money to build it, yet reaping all the financial rewards.

In this deal, as I understand it, the Maloofs are ponying up $300 Million towards the cost of building the Arena and eventually the ownership reverts back to the city.

I like the fact the Arena is downtown. If Sac City is smart they will get on the ball and adopt some sort of user fee associated with the Arena to help pay for future infrastructure improvements or renovations.

In any deal like this, you can't be so blinded at looking at what you are getting that you can't accurately understand what it is you are giving up. I think Mylo raises some good questions.

The reality is the Maloofs wouldn't want Arco after building another Arena and be stuck with paying the taxes and upkeep on that place. So they are giving away something that might be a liability to them in the future. I don't think Arco will have much value with another Arena in town, so the new owners of Arco aren't really getting a bargain.

As we have learned here in Folsom, selling vacant land can have many different values depending on the zoning and wether it comes with entitlements. ( If anyone doesn't understand this I'll glady go over it again). Clearly the Maloofs are seeing this land as being the Jewel of the deal.

The best part of this deal is that it will open the eyes of everyone, or should, that you DON'T always need to raise taxes to get something done! The lesson should be when politicians come telling you they need more money, just tell them NO! If its that important they will find another way to get it done, but if you are naive enough to keep giving them your money, they will keep on taking it!

[mylo]

Money is money. Whether it's assets we already have, or taxes on money we are going to earn (or spend in the case of sales). It's money. There is no imagination involved in giving a for-profit corporation MILLIONS of dollars of taxpayers money. If this went to vote, it would fail. The only reason this may work is because they have apparently found a way to do it without voter approval.

Ken, I'm not talking about imaginary gains. I'm talking about current asset market value. We're going to SELL Arco arena, and take any money we make from the deal and GIVE it to the Maloofs. But, of course, you knew that. You just want an arena so you're okay with giving away hundreds of millions of dollars of taxpayers money so you can watch a stupid game.

[john]

Mylo, I'm starting to think if the Maloofs paid $20M a year in rent for 30 years to fund an arena 100% and the arena still goes to the city, you'd still think we got a raw deal.

[mylo]

Mylo, I'm starting to think if the Maloofs paid $20M a year in rent for 30 years to fund an arena 100% and the arena still goes to the city, you'd still think we got a raw deal.

Not at all. See above (the 3 times I've said it). If the deal has changed and the numbers work, put it to vote and let's light this candle! I would absolutely love a new entertainment district. Let's see it work! I just refuse to use taxpayers money, from people that are losing homes, jobs, and livelyhoods, on a net-loss business proposition.