I keep reading stories about cities doing convoluted tax deals and giving away hundreds of millions of dollars to keep sports teams from moving away. This strikes me as odd – communities giving away precious resources to millionaire sports team owners while they can’t balance their budgets. Sacramento might win the award for fiscal battiness this year. Here is a description of the state’s current effort to raise money for a sports stadium from the Sacramento Bee:
The city says it can raise $212 million by setting up a nonprofit corporation to borrow against future revenue generated by its downtown garages. That would represent the bulk of the city’s $258 million contribution to the new $447.7 million arena proposed by billionaire Ron Burkle and two other investors trying to keep the Kings from moving to Seattle.
Most of the rest of the city’s share would come from giving the Burkle group parcels of city land worth an estimated $38 million. Burkle could sell the property or develop it himself.
The clever officials in Sacramento, perhaps having seen the disaster that Chicago made of privatizing its parking operations, have decided to set up a non-profit agency and securitize the city’s future parking revenues via a bond offering. But there is a broader question about whether the city can afford to put any money toward a sports stadium. Here, in black and white, is how the city’s financial condition was described in a recent bond offering (emphasis mine):
Due to a variety of factors, including the continuing housing downturn, high unemployment, and increasing pension costs, the City is undergoing, and will continue to be subject to, significant financial stress. The Adopted Budget for Fiscal Year 2012-13 projects that overall General Fund revenues will be $367.5 million, as compared to $359.9 million in the Fiscal Year 2011-12 Amended Budget.