Investing public dollars in private ventures is not risk-free. Who bears the risk and gets the benefits are crucial concerns that should shape public policy. Consider the case of the National Basketball Association’s Sacramento Kings.
On one hand, they have had 15 straight losing seasons. On the other, city residents are benefitting the Kings. Let us take a closer look.
The city of Sacramento borrowed $273 million to build the Golden 1 Center, where the Kings, privately owned and operated, play. That deal required the city to take out a loan six years ago. Revenues from city parking service the borrowing, principal and interest.
What could go wrong? In brief, the answer is the COVID-19 pandemic. California Gov. Gavin Newsom’s shelter in place mandate to slow the spread of the novel coronavirus hammered Sacramento’s service economy. Basketball fans stopped watching the Kings play in their publicly funded sports arena.
Meanwhile, leisure and hospitality business revenue in the downtown area near the Golden 1 Center dried up. Enterprises cut hours and closed permanently. Loans via the US Small Business Administration’s Paycheck Protection Program have been a lifeline for some downtown business owners. Others were not so fortunate.
It gets worse. According to a Sacramento Bee columnist, citing another reporter at the city’s only daily paper, which Chatham Asset Management, a hedge fund, owns, “the city owes $18.4 million annually on the arena. City parking revenues were budgeted to cover $5.3 million of that cost, but they may fall short.”
Here is the thing. The city services that its General Fund support are at-risk. The culprit is the debt that the city is on the hook for to finance the Golden 1 Center.
City residents did not vote to invest in the Golden 1 Center. Rather, former Sacramento Democratic Mayor Kevin Johnson, who starred for the NBA Phoenix Suns, steered this financial deal through the City Council for approval.
We return to the current moment. What happens if or when parking revenues that help the city to pay its Kings debt do not recover? The city might have to withdraw money from its General Fund to cover the debt on building the Golden 1 Center.
General Fund monies support a range of public services, from libraries to human services, fire, parks and police. Meanwhile, funding disparity reigns supreme in California’s capital city, say progressive groups. According to the People’s Budget Sacramento coalition, the city’s police and fire departments comprise nearly two-thirds of the $678 million General Fund.
Faye Kennedy is a Sacramento resident, co-Chair, California Poor People’s Campaign: A National Call for Moral Revival and Vice President, and a member of the Sacramento Area Black Caucus.
“Yes, let hope the city of Sacramento will not have to use its General Fund to cover its arena debts,” Faye said in an email. “We need funds to support services for the unhoused (motel vouchers, food, warming and cooling centers, triage centers, community navigators and safe parking sites), more affordable income-based housing, rental assistance, youth services, parks and libraries and specific new libraries in underserved communities.”
Seth Sandronsky lives and works in Sacramento. He is a journalist and member of the Pacific Media Workers Guild. Email sethsandronsky @gmail.com.
From The Progressive Populist, July 1-15, 2021
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