!

The Sacramento Entertainment and Sports

Complex:
Key Issues and Comparable Projects


M|ca| ve|nbeg, l|L
lat|c| la||eman



lo t|e C|ce o Sacamento C|ty
Counc|| Membe Steve lansen

Seotembe, 2013


915 I Street New City Hall 5
th
Floor
Sacramento, California 95814-2604
shansen@cityofsacramento.org O: 916.808.7004 F: 916.264.7680



uear lrlends,
Cver Lhe pasL decade, Lhere has been a long runnlng conversaLlon wheLher Lo and how Lo replace Lhe
aglng enLerLalnmenL and sporLs faclllLy ln naLomas where Lhe SacramenLo klngs play, whlch also ls home
Lo many of our blg concerLs, graduaLlons, and famlly evenLs.
1hroughouL Lhls clvlc conversaLlon, we ofLen hear abouL slmllar faclllLles ln oLher clLles and how Lhey
have fared. As a way Lo furLher lnform our dlscusslon ln SacramenLo, l commlssloned Lhe aLLached
reporL Lo glve Lhe publlc and clLlzens of SacramenLo lnslghL lnLo how some comparable deals were
sLrucLured, Lhe lessons learned, and Lhelr relaLlve success.
Whlle Lhls reporL ls noL lnLended Lo be exhausLlve, lL does glve us some polnLs of reference Lo
undersLand how Lhe new arena deal sLacks up, buL also where we can focus golng forward Lo ensure
LhaL we proLecL Laxpayers, mlLlgaLe rlsk, and provlde Lhe greaLesL beneflL Lo Lhe people of Lhe ClLy of
SacramenLo.
WlLh a new ownershlp group and Lhe March 2013 approval of a new non-blndlng Lerm sheeL, we were
able Lo keep Lhe SacramenLo klngs ln Lown and creaLe Lhe opporLunlLy for a new faclllLy. Powever, we
musL conLlnually examlne opLlons for maklng Lhls Lhe besL deal posslble.
l hope you flnd Lhls lnformaLlve. lease feel free Lo share your LhoughLs and lnslghLs as we move
forward. ?ou can conLacL me aL (916) 808-7004 or aL shansen[clLyofsacramenLo.org.
8esL,

SLeve Pansen


#
!"#$%&'(# *%++,-.

1|e C|ty o Sacamento |s mov|ng owao w|t| t|e oeve|ooment o an Lnteta|nment ano Soots
Como|ex (LSC), w||c| eoesents a substant|a| oub||c |nvestment |n t|e ev|ta||zat|on o t|e
centa| c|ty. 1||s eoot |ntenos to |e|o oov|oe context ano content o t|e oub||c o|a|ogue
cuent|y occu|ng |n Sacamento about t|e LSC. lt |s not a oma| econom|c |moact ana|ys|s,
ano t|ee ae |||e|y to be ot|e eoots t|at ev|ew t|e soec||cs o t||s oooosa| |n moe oeta||.

ln t||s eoot, we comoae t|e Sacamento oea| om a ||g| |eve| to ot|e ecent aena oea|s |n
comoaab|e metooo||tan aeas. ve ev|ew w|at t|ese ot|e oea|s te|| us about t|e oosoect
t|at t|e Sacamento ooect w||| |ave a bene|c|a| eect beyono t|e aena |tse|. v|||e
comoa|ng |t to ot|e oea|s to t|e extent ooss|b|e, we a|so exam|ne |ow t||s oea| |s stuctua||y
o|eent t|an t|ese ot|e aena oea|s.

b|t|mate|y, t|ee ae asoects o t|e
LSC, suc| as |ts ooooseo |ocat|on
ano Sacamento |tse|, t|at suggest
a successu| outcome o t||s
oeve|ooment ooect. 1|e |nanc|ng
o|an |s so||o ano ooes not equ|e
aoo|t|ona| evenues w|t| ||tt|e |moact
on t|e C|ty's Cenea| luno. l|us, |t |s
oat o a |age cooo|nateo
ev|ta||zat|on eot. 1|e acaoem|c
||teatue on bas|etba|| aenas a|so suggests t||s ooect |as a|| o t|e soec||c c|aacte|st|cs t|at
ma|e |t |||e|y to |ave a substant|a| oos|t|ve econom|c |moact, |n oat|cu|a o t|e Centa| C|ty.

ve oay c|ose attent|on to t|e oaametes o |ow t|e oea| w||| be stuctueo, suc| t|at |t oe||ves
max|mum oub||c bene|t. lence, we conc|uoe t||s eoot by ||g|||g|t|ng sevea| aeas t|at me|t
c|ose ongo|ng exam|nat|on. 1|ese |nc|uoe t|e stuctue o t|e oo|t s|a|ng between t|e
lnvesto Couo ano t|e C|ty, t|e govenance o t|e utue nonoo|t oa||ng ent|ty, ano t|e
oeve|ooment |g|ts suouno|ng t|e LSC.

$
/,$01-2%34 23 &5# !*6 7-28#$&

looosa|s o eo|ac|ng S|eeo 1a|n Aena, |nown o most o |ts ||e as A8CC Aena, |ave been c|cu|at|ng
s|nce at |east 2004. ln 2006, two measues wee out on t|e ba||ot. Measue 8 wou|o |ave |nceaseo t|e
county sa|es tax a quate cent o 1S yeas, ano Measue wou|o |ave ecommenoeo evenues om
Measue 8 go to uno t|e new aena. votes eecteo bot| measues.

Moe ecent|y, a 2012 oooosa| wou|o a|so |ave t|e aena, bu||t |n 1988, eo|aceo w|t| one to be |ocateo
|n t|e ||sto|c oowntown 8a||yaos" tact o t|e C|ty o Sacamento. ln t||s case, t|e C|ty o Sacamento
wo|eo w|t| t|e luA ano o|vate |nteests to oeve|oo a o|an o |nanc|ng w||c| |nc|uoeo $2S8 m||||on |n
C|ty cont|but|ons. 1|e C|ty wou|o a|so |ave acqu|eo aoo|t|ona| |ano ano wou|o |ave been oat|a||y
esoons|b|e o oeoeve|ooment costs, cost oveuns ano cao|ta| eoa|s.
1
1|e aena was to be owneo by
t|e C|ty o Sacamento. Leso|te conceteo eots by t|e C|ty to move owao w|t| w|at many oece|veo
as a geneous oe, t|e ownes o t|e Sacamento l|ngs at t|at t|me, t|e Ma|oo am||y, tuneo oown t|e
oooosa|.

ln !anuay o 2013, |t became |nown t|at a gouo o |nvestos baseo |n Seatt|e was o|ann|ng to acqu|e a
conto|||ng |nteest |n t|e Sacamento l|ngs ano move t|e anc||se not|. 1|e luA con|meo t|at an
aoo||cat|on |ao been ece|veo o e|ocat|on o t|e l|ngs. 1|e Mayo o Sacamento |mmeo|ate|y |n|t|ateo
a seac| o a |oca| gouo w||||ng to ouc|ase a conto|||ng |nteest. ln lebuay o 2013 t|e C|ty Counc|| o
Sacamento oasseo a eso|ut|on |n suooot o |eeo|ng t|e l|ngs |n Sacamento ano aut|o|zeo t|e C|ty
Manage to beg|n negot|at|ng w|t| an |nvesto gouo |nteesteo |n acqu||ng t|e l|ngs ano bu||o|ng a new
aena.

Cn Mac| 26, 2013, t|e C|ty Counc|| o Sacamento aoooveo a non-b|no|ng 1em S|eet between t|e C|ty
ano lnvesto Couo o t|e oeve|ooment o an Lnteta|nment ano Soots Como|ex |n oowntown
Sacamento.
2
1|e ooooseo aena wou|o bot| su|t t|e utue neeos o t|e l|ngs as we|| as oov|oe a
|ome o a w|oe va|ety o events |n oowntown Sacamento, t||s t|me on t|e s|te o t|e oowntown ma||.


62+923#3&: 2; 7-292:#4 <#,= *&-%$&%-#

1|e cuent ooooseo Lnteta|nment ano Soots Como|ex ca||s o $44/ m||||on |n tota| o oeve|ooment
o t|e aena |tse|. lt |s to be owneo by t|e C|ty o Sacamento w|t| t|e C|ty comm|tt|ng $2S8 m||||on to |ts
constuct|on. 1|e lnvesto Couo |s comm|tt|ng t|e ema|n|ng $189 m||||on.



1
C|ty o Sacamento C|ty Counc|| 8eoot: Lnteta|nment ano Soots Como|ex (LSC)" Sect|on S: Comoa|son o 2013 1em S|eet
w|t| 2012 1em S|eet, Mac|, 2013
2
Meo|a 8e|ease Sacamento Counc|| Membes aooove 1em S|eet o Lnteta|nment ano Soots Como|ex |n Lowntown
Sacamento" C|ty o Sacamento: C|ce o t|e C|ty Manage
%
1ab| e 1: Comoonents o C| ty o Sacamento' s loooseo l nvestment | n LSC

Souce o C| ty Cont| but| on
3
Amount ( M| | | | ons)
lub| | c la|| ng l| nance Mooe| $212.S
la|| ng l n astuctue luno $1.S
Sa| es 1ax Constuct| on 8ebate $1
S|eaton MClA lunos $S
Lano Cont| but| ons
4
$38
1ota| $2S8


1|e |agest souce o uno|ng com|ng om t|e C|ty |s t|e monet|zat|on o |ts oa||ng enteo|se t|oug| a
ooooseo lub||c la||ng l|nance Mooe|." 1||s met|oo o |nanc|ng, but w|t| a o|eent stuctue, a|so
como|seo t|e mao|ty s|ae o uno|ng om t|e C|ty |n t|e 2012 oea|. 1|e monet|zat|on o t|e C|ty's
oa||ng enteo|se |s accomo||s|eo t|oug| t|e ceat|on o a non-oo|t coooat|on seoaate om t|e
C|ty o Sacamento, t|e C|ty's oa||ng oooet|es ae t|en tanseeo to t|e new ent|ty. At t||s oo|nt, t|e
new ent|ty can |ssue bonos w|ose ooceeos can be useo to uno t|e LSC. 1|ese bonos wou|o not be a
oebt ob||gat|on o t|e C|ty, t|oug| t|ey cou|o |ave some |moact on t|e caoac|ty o t|e c|ty to |nance
oebt go|ng owao. 1|e next |agest oot|on o uno|ng com|ng om t|e C|ty |s $38 m||||on |n |ano
tanses. C|ty owneo |ano wou|o be tanseeo to t|e lnvesto Couo, w|o wou|o t|en be esoons|b|e
o cont|but|ng an equ|va|ent cao|ta||zeo va|ue to t|e constuct|on o t|e LSC.

1|e lnvesto gouo |s cont|but|ng $189 m||||on to constuct|on. ln aoo|t|on to t||s, |t |s comm|tt|ng to a
S t|c|et suc|age on a|| LSC events, to be em|tteo to t|e C|ty, a cao|ta| eoa| eseves ee o $1 oe
t|c|et, esoons|b|||ty o a|| oe-oeve|ooment exoenses, aang|ng a ooect como|et|on guaantee,
esoons|b|||ty o cost oveuns, coveage o a|| ooeat|ng exoenses, esoons|b|||ty o a|| cao|ta| eoa|s
ano |moovements ano e|mbusement o c|ty sev|ces on event n|g|ts. 1|ee |s a|so a oo|t-s|a|ng o|an
between t|e lnvesto Couo ano t|e C|ty w|t| a $1 m||||on annua| oayment guaanteeo to t|e C|ty.

1|e lub| | c la|| ng l| nance Mooe|

C|t|es acoss t|e nat|on ae oatne|ng w|t| t|e o|vate secto to |eveage t|e| oa||ng assets. 1|e C|ty o
Sacamento began cons|oe|ng suc| a oatnes||o as ea|y as 1993, ano cuent|y t|e Lowntown l|aza
Caage, Sacamento's |agest ac|||ty, |s o|vate|y ooeateo.
S
uot| t|e oesent ano 2012 LSC oooosa|
|nc|uoe monet|zat|on o t|e C|ty's oa||ng assets as t|e ma|n souce o oub||c uno|ng.

1|e C|ty cuent|y |as contacts w|t| o|vate ent|t|es t|at a||ow t|em to ooeate C|ty-owneo oa||ng
ac|||t|es on a ee o sev|ce bas|s. A moe como|ete monet|zat|on o C|ty owneo oa||ng assets wou|o
ta|e t||s one steo ut|e. ln t|e case o t|e ooooseo LSC oea|, a non-oo|t coooat|on wou|o be set uo,
w||c| |n tun wou|o |ave o-steet C|ty oa||ng assets tanseeo to |t. lt wou|o |ave a uoao o
L|ectos aooo|nteo by t|e C|ty Counc||. lev|ous|y |nvest|gateo by t|e C|ty, t|e |oea o t||s mooe| was
etuneo to t|e cente o o|scuss|ons w|en 1||n| ulC Sacamento oub||s|eo a se|es o eoots |n 2011 on
w|at t|e stuctue o suc| a oea| m|g|t be. 1|e Mooe| la||ng Concess|on Ageement" ano Leveag|ng

3
C|ty o Sacamento C|ty Counc|| 8eoot: Lnteta|nment ano Soots Como|ex (LSC)" Sect|on 1: Summay o loooseo 1em S|eet,
Mac|, 2013
4
Lst|mateo
S
Leveag|ng la||ng to Ceate Lconom|c Coootun|t|es o Sacamento", 1||n| ulC Sacamento, Lecembe 8t|, 2011
&
la||ng to Ceate Lconom|c Coootun|t|es o Sacamento" |a|o out w|at a ootent|a| monet|zat|on o t|e
C|ty's oa||ng assets m|g|t |oo| |||e as we|| as t|e ooootun|t|es, aovantages ano |essons |eaneo om
ot|e c|t|es.
6


A conestone o t|e C|ty's cont|but|on, t|e oub||c oa||ng |nance mooe| eoesents 82 o t|e $2S8
m||||on |n oub||c unos be|ng a||ocateo to t|e LSC. 1|e mooe| a|so sets Sacamento's |nanc|ng o|an aoat
om t|e mao|ty o ot|e aena oea|s. 1|e mooe| a||ows t|e C|ty to access utue oa||ng evenues |n t|e
oesent w|||e a|so |eeo|ng t|e bonos - t|e souce o t|e unos - om |av|ng a substant|a| |moact on t|e
C|ty's boow|ng caoab|||t|es by |eeo|ng t|em o t|e C|ty ba|ance s|eet. 1|e C|ty can t|en use t|ese
unos to |nvest |n a |age-sca|e |nastuctue ooect |||e t|e LSC, sou|ng econom|c act|v|ty. uonos
|ssueo om a oa||ng ent|ty ae a|so attact|ve to |nvestos, as w|en we||-manageo, oa||ng enteo|ses
ae genea||y oo|tab|e.

Cn|y ||g|-|eve| oeta||s o t|e lub||c la||ng l|nanc|ng Mooe| |ave been |a|o out |n t|e Mac| 2013 C|ty
Counc|| eoot.
/
v|||e t|e 1em S|eet w|t| t|e lnvesto Couo |as been s|gneo, t|e C|ty's cont|but|on
ano souces ae o|ma||y |a|o out |n t|e eoot |n a ooooseo at|e t|an |na||zeo om. 8evenues
geneateo by t|e C|ty-owneo nonoo|t must be su|c|ent to cove bot| oebt sev|ce on bonos |ssueo ano
$3 m||||on annua||y |n bac|||| to t|e C|ty's genea| uno. ln t|e event oa||ng evenues a|| s|ot, ooceeos
om t|e C|ty's 1ans|ent Cccuoancy 1ax (1C1) w||| be useo, negat|ve|y |moact|ng t|e C|ty's Commun|ty
Como|ex luno ano Cenea| luno to an un|nown oegee.
8


ln oat, oe|aos, because o t|e ust||eo concen geneateo by t|e exoe|ence o some oast aena oea|s,
t|e C|ty la||ng mooe| ma|es a se|es o vey consevat|ve assumot|ons. 1|e most |mootant |s t|at
evenue ooect|ons oo not e|y on utue gowt|. lts base ooect|ons ae om 2009 t|oug| 2011, a
oo|nt |n t|me w|en t|e county was exoe|enc|ng a sevee econom|c oowntun. l t|e next t||ty yeas |n
Sacamento ae s|m||a econom|ca||y to t|e oe|oo om 2008 to 2011, t||s w||| ceate s|gn||cant |sca|
stess a beyono t|e |nanc|ng o t|e aena ooect. v|||e t|e cuent mooe| ooes use consevat|ve
ooect|ons, o|ma||y oeve|ooeo by va||e la||ng Consu|tants |n lovembe o 2011, a oeta||eo ana|ys|s
o |ow susta|nab|e t|e oesent mooe| |s s|ou|o be maoe oub||c|y ava||ab|e.
9




6
1|e Mooe| la||ng Concess|on Ageement", 1||n| ulC Sacamento, lovembe 3o, 2011
/
C|ty o Sacamento C|ty Counc|| 8eoot: Lnteta|nment ano Soots Como|ex (LSC)" Sect|on 2: C|ty Souces o LSC Cao|ta|
luno|ng, Mac|, 2013
8
Sacamento's 1ans|ent Cccuoancy 1ax ate |s cuent|y 12, w|t| 10 o ooceeos go|ng to t|e Commun|ty Como|ex luno ano
2 go|ng to t|e Cenea| luno loooseo uuoget, l|sca| ?ea 2013/14 C|ty o Sacamento"
|tto://www.c|tyosacamento.og/|nance/buoget/ooooseo-buoget-2013-14/l?2013_14_loooseo_uuoget.oo
9
Ma|et, l|nanc|a| ano Cono|t|on Assessment o la||ng Assets: C|ty o Sacamento Ca||on|a" va||e la||ng Consu|tants,
lovembe 23, 2011
'
6,:# *&%4'#: 2; >#$#3& ?-#3, 7-28#$&: ,34 @5#'- !$232+'$ A%&$2+#:

1|e o||ow|ng sect|on |nc|uoes case stuo|es e|ateo to t|e oeve|ooment o t|ee aenas |s comoaab|e
metooo||tan aeas, t|e So|nt Cente |n lansas C|ty, t|e !ob|ng.com Aena |n C|enoa|e, A|zona, ano t|e
leoLx loum |n Memo||s. 1|ese cases wee c|osen because t|ey ae eoesentat|ve o t|e boaoe
ange o oea|s om t|e oast oecaoe. Lac| ece|veo s|gn||cant|y moe oub||c |nanc|ng t|an |s ooooseo
o t|e LSC. 1|e So|nt Cente ano t|e leoLx loum ae boao|y cons|oeeo to |ave been successu|,
t|oug| t|e| c|t|es' exoe|ence w|t| t|e| oeve|ooment |e|os set t|e aoooo|ate |eve| o exoectat|on o
t|e LSC. 1|e !ob|ng.com aena ooect |as not been a success ano |nc|uoes some |essons o ou
oeve|ooment ooect.

lansas C| ty: So| nt Cente

S|m||a to t|e LSC |n Sacamento, lansas C|ty's So|nt Cente |s
|ocateo |n t|e |eat o t|e c|ty's tao|t|ona| oowntown coe. A
|age, mu|t|-ouoose |nooo aena t|e So|nt Cente was oes|gneo
bot| as an event venue as we|| as a |ome o e|t|e a ooess|ona|
luA o llL team, o bot|. 1|e So|nt Cente ooeneo |n 200/, at a
tota| cost o $2/6 m||||on. lt |s owneo by t|e c|ty o lansas C|ty
ano ooeateo by Ansc|utz Lnteta|nment Couo (ALC).

lansas C|ty too| on a |age oot|on o t|e |nanc|ng o t|e So|nt
Cente t|an Sacamento w||| o t|e LSC, outt|ng uo $222 m||||on
o t|e tota| $2/6 m||||on. ALC out uo t|e ema|n|ng $S4 m||||on
neeoeo o constuct|on |n etun o a 3S-yea |ease. ALC assumeo esoons|b|||ty o a|| cost oveuns.
1|e mao|ty o lansas C|ty's uno|ng o t|e ooect comes om an |ncease |n taxes on |ote|s ano enta|
cas votes oasseo |n 2004 soec||ca||y to uno t|e So|nt Cente. 1|e |nceases |n |ote| ano enta| ca
taxes oo not como|ete|y cove oebt sev|ce on t|e aena, t|oug| t|ey ae cuent|y exceeo|ng
exoectat|ons. lo l?2010-11 lansas C|ty's evenue om t|e ooect tota|eo $13.9 m||||on, w|||e tota|
exoeno|tues wee $20.2 m||||on. 1||s |as s|nce |mooveo w|t| $14.9 m||||on |n evenues exoecteo |n t|e
aoooteo l?2013-14 buoget ano $1S.2 m||||on |n exoecteo exoeno|tues.
10


1ab| e 2: Summay o 8ecent Aena Lea| s Cwnes|| o ano l| nanc| ng





10
C|ty o lansas C|ty, Mo. l?2013-14 Aoooteo uuoget" C|ty o lansas C|ty, May 2013 lage 3S8
Aena C| ty Cwne Coeato ?ea
Como| ete
1ota|
Cost
lub| | c
luno| ng
lub
lunoeo
So| nt Cente lansas C|ty lansas C|ty ALC 200/ $2/6M $222M 80
!ob| ng. com
Aena
C|enoa|e C|enoa|e C|enoa|e 2003 $220M $180M 82
leoLx loum Memo||s Memo||s Memo||s
C|zz||es
2004 $2S0M $2S0M 100
Sacamento
LSC ( loooseo)
Sacamento Sacamento 1uL 2016 $44/M $2S8M S8
(

1|e So|nt Cente ooes not tun a o|ect oo|t o lansas C|ty. lt |as, |oweve, |eo to ot|e bene|ts t|at,
w|||e moe o||cu|t to measue, ae st||| tang|b|e. An econom|c |moact ana|ys|s est|mateo t|at $213
m||||on |n o|ect soeno|ng esu|teo om t|e So|nt Cente's |st |ve yeas, w|t| an accomoany|ng $9.4
m||||on |n mao taxes be|ng geneateo.
11
1|e Lowntown Counc|| o lansas C|ty est|mates t|at |n t|e same
|ve yeas t|e aea suouno|ng t|e So|nt Cente geneateo $1.S b||||on o|ect|y |nvesteo on cao|ta|
|moovements w|t||n |ve b|oc|s o t|e aena. A new lansas C|ty steetca w||| a|so be u||y ooeat|ona|
stat|ng |n 201S, ut|e |no|cat|ng a ev|va| o oowntown |s occu|ng. 8unn|ng a two-m||e |ooo
oowntown, |t w||| connect t|e Centa| uus|ness L|st|ct w|t| t|e lowe 8 L|g|t L|st|ct w|ee t|e So|nt
Cente |s |ocateo.

lansas C|ty |as not yet been ab|e to attact a ooess|ona| soots anc||se, ano t|ee |ave been concens
vo|ceo t|at lansas C|ty's oea| w|t| ALC o|on't |eave enoug| ootent|a| oo|t o a ooess|ona| anc||se.
Ansc|utz Lnteta|nment Couo |as a|eaoy ece|veo ooceeos om nam|ng |g|ts ano |uxuy su|te sa|es.
1|ese wou|o noma||y go to e|t|e eouce t|e oub||c's s|ae o |nanc|ng, o to attact|ng a ooess|ona|
soots anc||se. Soots econom|st !o|n vooman o vanoeb||t bn|ves|ty: lan||y, t|ee |s not muc|
|et o t|e c|ub |n t||s oea|."
12


Concens |ave a|so been a|seo t|at t|e So|nt Cente |as eect|ve|y cann|ba||zeo most o lemoe
Aena's v|ab|e evenue souces. uu||t |n 19/4 to eo|ace t|e Ame|can 8oya| Aena, lemoe Aena was to
|n|t|a||y be useo o an|ma| s|ows. Lu|ng t|e o|ann|ng o|ases |t was oec|oeo to ma|e lemoe a state-o-
t|e-at aena ab|e to |ouse a ooess|ona| luA o llL team. lansas C|ty st||| oays oebt sev|ce on lemoe
o about $2.3 m||||on a yea, ano oooosa|s |ave been |oateo to aze t|e aena ano eo|ace |t w|t| an
Ag|cu|tua| Lvents Como|ex, |oweve, no ageements |ave been s|gneo.

lansas C|ty's So|nt Cente |as been ab|e to attact ove S00 events ano S.6 m||||on v|s|tos s|nce ooen|ng
|n 200/
13
, ano |t |as been a cata|yst o ove $1.S b||||on |n o|ect cao|ta| |nvestment w|t||n |ve b|oc|s.
lansas C|ty |as a|so been ab|e to exceeo ooecteo co||ect|ons om |ts |ote| ano enta| ca taxes t|at |e|o
uno t|e c|ty's eoayment on t|e aenas oebt sev|ce. A|t|oug| |t |as yet to attact a ooess|ona| soots
anc||se - ano |n |so|at|on m|g|t be seen as a s||g|t |oss o t|e C|ty |nanc|a||y - t|e So|nt Cente can be
|age|y catego|zeo as a success ano |s a o|me examo|e o an anc|o o |age econom|c oeve|ooment
goa|s. Lue to obust |nvestment suouno|ng t|e aena, so||o yea|y attenoance, ano an |ncease |n tax
evenues o t|e C|ty, t|e So|nt Cente |s a oos|t|ve o |ts c|ty.



11
l|ve ?eas o Lconom|c lmoact, So|nt Cente" Leve|ooment Stateg|es, Cctobe 2012
12
l ?ou uu||o |t, v||| 1|ey Come` 1|e So|nt Cente Camb|e |n lC" !o|n vooman, 200/
13
l|ve ?eas o Lconom|c lmoact, So|nt Cente" Leve|ooment Stateg|es, Cctobe 2012
)
C| enoa| e, A.: !ob| ng. com Aena

1|e !ob|ng.com Aena ooeneo |n t|e C|ty o C|enoa|e |n 2003.
Locateo n|ne m||es not|west o l|oen|x, t|e aena |s owneo
ano ooeateo by t|e C|ty o C|enoa|e ano cost a tota| o $220
m||||on to bu||o. $180 m||||on o t|e $220 m||||on tota| was
|nanceo by C|enoa|e, t|e ema|n|ng $40 m||||on coveeo cost
oveuns ano was |nanceo by t|e l|oen|x Coyotes.

L||e t|e So|nt Cente, t|e c|ty o C|enoa|e too| on a |age
oot|on o t|e cost o bu||o|ng t|e !ob|ng.com Aena. Cnce
como|eteo, t|e l|oen|x Coyotes e|ocateo om l|oen|x w|ee
t|ey |ao been o|ay|ng |n t|e Ame|ca vest Aena s|nce 1996. Ate |ncu|ng s|gn||cant |osses, t|e
Coyotes oec|aeo ban|uotcy |n 2009. 1|e llL steooeo |n ano acqu|eo t|e team. ln ooe to |eeo t|e
llL om tanse|ng t|e Coyotes, t|e C|ty o C|enoa|e oa|o $2S m||||on o eac| o t|e 2010-2011 ano
2011-2012 seasons.
14
1|e C|ty |as a|so comm|tteo to |eeo|ng t|e Coyotes on |ts eno, aooov|ng $324
m||||on ove 20 yeas |n a ev|seo Aena Management Ageement.
1S
leno|ng aooova|, a oea| o t|e sa|e
o t|e Coyotes |s a|so |mm|nent.

L||e ot|e aenas, t|e !ob|ng.com Aena |s oat o a geate econom|c oeve|ooment o|an. loweve, |ts
|ocat|on, un|||e many ot|e mooen aenas ano Sacamento's ooooseo LSC, |s outs|oe t|e eg|on's
tao|t|ona| coe o l|oen|x. lt s|ts aoacent to bn|ves|ty o l|oen|x Stao|um ano t|e vestgate
Lnteta|nment L|st|ct, a m|xeo use oeve|ooment cons|st|ng o eta||, enteta|nment, commec|a| o|ce
soace, ano es|oent|a|. 1|e vestgate Lnteta|nment L|st|ct was o|g|na||y o|anneo to soan e|g|t m||||on
squae eet o oeve|ooment, |oweve, |n 2011 t|e oooety was oec|oseo uoon w|t| on|y t|e |st o|ase
o constuct|on be|ng como|eteo.

lt wou|o be o||cu|t to catego|ze t|e !ob|ng.com Aena as a success. As|oe om |n|t|a| constuct|on costs,
t|e C|ty o C|enoa|e |as been equ|eo to eoeateo|y cont|bute aoo|t|ona| uno|ng |n ooe to |eeo t|e
Coyotes. Some |ave ooooseo |ett|ng t|e Coyotes move to anot|e c|ty, |oweve, an ana|ys|s by L|||ott L.
lo||ac| ano Co. est|mates t|at w|t| t|e cuent ageements |n o|ace |os|ng t|e Coyotes at t||s oo|nt wou|o
cost C|enoa|e $3.S m||||on annua||y. v|t|out t|e team, aena management, ma|ntenance ano cao|ta|
costs wou|o |ncease substant|a||y.

An ana|ys|s oeomeo by t|e LSl Coooat|on on be|a| o t|e l|oen|x Coyotes est|mateo t|e Coyotes
ano !ob|ng.com Aena's ooeat|ons aooeo nea|y $120 m||||on |n |oca| |nousty outout |n 200/. v|||e
s|gn||cant, t|e team ano aena ooeat|ons on|y cont|buteo an est|mateo $1.2 m||||on |n o|ect ano $3.3
m||||on |n |no|ect bus|ness taxes.
16
v|en comoaeo to C|enoa|e's out|ays to s|mo|y |eeo t|e Coyotes |n
town, t|e etun on |nvestment ooes not wo| out oos|t|ve|y.

As |n ot|e examo|es, an aena can't a|ways be measueo |n a vacuum. An agument cou|o be maoe as to
t|e econom|c bene|ts o t|e vestgate Lnteta|nment L|st|ct. loweve, w|||e ooou|a, o|ans wee neve
u||y ea||zeo ano a s|gn||cant oot|on o oeve|ooment was |a|teo. Aoo to t||s |ts 2011 oec|osue, ano
bot| t|e aena ano |ts suouno|ng oeve|ooment |oo| to be |n toub|e.

14
l ?ou uu||o lt, 1|ey M|g|t lot Come: 1|e 8|s|y Lconom|cs o Soots Stao|ums", 1|e At|ant|c 2012
1S
lesentat|on, lovembe 2/, 2012 - C|enoa|e C|ty Counc|| vot|ng Meet|ng
16
l|oen|x Coyotes Lconom|c lmoact Ana|ys|s, LSl Coooat|on, 2008
*

Memo|| s: leoLxloum

uu||t ent|e|y on oub||c |nanc|ng, t|e leoLxloum ooeneo |n 2004 at a
cost o $2S0 m||||on. lt seves as t|e |ome o t|e Memo||s C|zz||es,
w|o oev|ous|y o|ayeo at lyam|o Aena. Cwnes||o |s eta|neo by t|e
C|ty o Memo||s, w|t| management be|ng |ano|eo by t|e oaent
comoany o t|e Memo||s C|zz||es.

A|t|oug| be|ng como|ete|y unoeo by oub||c bonos, leoLxloum |as
t|us a been successu| |n oay|ng a|| oebts assoc|ateo w|t| t|e aena.
A va|ety o evenue souces wee set uo to ass|st w|t| oebt sev|ce on
t|e bonos, |nc|uo|ng |ote| ano mote| taxes, seat use ees ano a ebate o luA-e|ateo sa|es tax. v|||e t|e
Memo||s ano S|e|by County Soots Aut|o|ty - t|e ent|ty w|o ma|es t|e oebt sev|ce oayments on t|e
aena - o|o |ave to o|o |nto eseves |n 2009, t||s |asn't |aooeneo s|nce t|e economy |as |mooveo.

A 2010 eoot w|tten by ?ounge Assoc|ates est|mates t|e econom|c |moact o t|e leoLxloum ano
Memo||s C|zz||es to be $223 m||||on annua||y.
1/
1|e ana|ys|s ocuseo on team ooeat|ons, luA event
soeno|ng ano soec|a| event soeno|ng. Lue to |ts be|ng |n|eent|y |ao to quant|y, no attemot was maoe
to measue t|e |nceaseo econom|c act|v|ty oue to oeve|ooment |n t|e suouno|ng aea. 1|e eoot a|so
ouno t|e aena ano team toget|e emo|oy 1,3/4 |no|v|oua|s ano cont|bute $S.3 m||||on a yea |n |oca|
tax evenue.

As t|e So|nt Cente eo|aceo lemoe Aena, ano as Sacamento's ooooseo LSC w||| |||e|y eo|ace S|eeo
1a|n Aena, t|e leoLxloum eect|ve|y eo|aceo lyam|o Aena as t|e oeeeo eg|ona| enteta|nment
venue. 1|e esu|t was lyam|o Aena |ost |ong tem tenants ano e|| on |nanc|a||y o||cu|t t|mes. Ate
be|ng sevee|y unoeut|||zeo s|nce 2004, o|ans |ave now been oma||zeo o t|e aena to be conveteo
|nto a uass lo S|oos eta|| |ocat|on.

Memo||s' ab|||ty to cove a|| assoc|ateo oebt sev|ce, couo|eo w|t| a s|gn||cant oos|t|ve econom|c |moact,
a|so suggests t|at t|e leoLxloum s|ou|o be catego|zeo as a success. 1||s |s oeso|te t|e ent|e cost o
t|e aena be|ng ta|en on by t|e C|ty o Memo||s. leoLxloum |s an examo|e t|at oemonstates aena
oeve|ooment stategy |s not one s|ze |ts a||. C|t|es |ave exoe|enceo success o a||ue |n a w|oe va|ety o
cases w|t| an equa||y w|oe va|ety o |nanc|ng mooe|s.

1|e C|a| | enge o uant| y| ng Cutcomes

1|ee |s oten s|gn||cant oub||c oebate beoe t|e constuct|on o any soot|ng ac|||ty ut|||z|ng oub||c
uno|ng. 1wo ma|n convesat|ons oten oom|nate. low w||| t|e ooect be |nanceo ano w||| t|e ooect
y|e|o tang|b|e econom|c bene|t` Acaoem|cs |ave maoe va|ous attemots at quant|y|ng t|e econom|c
bene|ts o oub||c subs|o|es |n suooot o soot|ng aenas ano stao|ums. 1|ese ana|yses |ave ouno
soot|ng ac|||t|es oo not, as a genea| u|e, oov|oe a substant|a| measueab|e c|ange |n va|ab|es o
ovea|| eg|ona| econom|c act|v|ty.
18
loweve, |t not ent|e|y c|ea t|at |s t|e aoooo|ate va|ab|e to

1/
Lconom|c lmoact Ana|ys|s o t|e Memo||s C|zz||es ano t|e leoLxloum, ?ounge Assoc|ates, Seotembe 2010
18
See 1|e |moact o stao|um ano ooess|ona| soots on metooo||tan aea oeve|ooment." uaaoe ano Lye, Cowt| ano C|ange,
1990, loess|ona| soots as cata|ysts o metooo||tan econom|c oeve|ooment." uaaoe, !ouna| o bban Aa|s, 1996, 1|e
!+
measue ano a|most a|| stuo|es ac|now|eoge t|at ceta|n ooects |ave been successu|. v|at seoaates
t|e successu| ooects om t|e unsuccessu| ones`

Cne mao ecent stuoy exam|nes t|e s|t|ng o bas|etba|| aenas soec||ca||y.
19
1|e aut|o oeoms a
comoe|ens|ve ||teatue ev|ew ano e|nes oev|ous mooe|s, uooat|ng t|em o met|ooo|og|ca| easons
as we|| as aoaot|ng t|em soec||ca||y o bas|etba|| aenas. le oo|nts out t|at aenas |ave been successu|
|n ceta|n ma|ets, ca|||ng out |n oat|cu|a At|anta, uoston, C||cago, Lenve, lno|anaoo||s, ano C||a|oma
C|ty. l|s ana|ys|s suggests t|at t|e geatest econom|c |moact aooeas to come |n c|t|es w|ee t|ee |s on|y
one ooess|ona| soots team, as |n t|e case o Sacamento. ln oat|cu|a, t|e stuoy ouno t|at aenas |n
t|ese c|t|es o|o |ave a oos|t|ve |moact on oe-cao|ta |ncome, a boao measue o econom|c oosoe|ty, a
|no|ng t|at o|o not |o|o tue o mu|t|-soot c|t|es. le caut|ons, t|oug|, t|at s|ng|e aena c|t|es oten
oov|oe |age subs|o|es o aenas t|an mu|t|-soot c|t|es ano |ence t|at t|e net bene|t may not be as
||g|.

Anot|e |ey |no|ng |s t|at t|e s|t|ng o bas|etba|| aenas |n t|e centa| c|ty may |ave esu|t |n |nceaseo
econom|c act|v|ty |age|y as a esu|t o an |ncome tanse om sububan aeas. lence econom|c
oeve|ooment at t|e |eve| o t|e ent|e eg|on may not |ave been s|gn||cant|y |moacteo by t|e s|t|ng o an
aena, at|e t|e aena anc|oeo aoo|t|ona| oeve|ooment |n t|e centa| c|ty t|at m|g|t |ave ot|ew|se
occueo |n t|e sububs. 1||s oov|oes an |nteest|ng qua|||cat|on o t|e content|on t|at eg|ona|
govenments s|ou|o oov|oe moe uno|ng to suooot t|e |nvestment by Sacamento. 1|e aut|o a|so
notes t|e most |mootant oetem|nate o an aena's success |s t|e econom|c oeve|ooment context o t|at
c|ty, at|e t|an t|e natue o t|e aena ooect |tse|. 1|oug| t||s context |s |n|eent|y o||cu|t to
quant|y, t|ee |s substant|a| ooootun|ty o aoo|t|ona| oeve|ooment |n Sacamento as we|| as some ea|y
anecoota| s|gns o t|e oos|t|ve |n|uence o t||s soec||c aena ooect.
20
1|e aut|o conc|uoes t|at aenas
ae most successu| w|en t|ey como|ement ot|e econom|c oeve|ooment act|v|ty at|e t|an seve as
t|e so|e cata|yst o oeve|ooment.
21



B#. C::%#: ;2- &5# 7-292:#4 *,$-,+#3&2 !3&#-&,'3+#3& ,34 *92-&: 62+9=#"

1|e C|ty o Sacamento |s mov|ng a|eao on t|g|t t|me||nes w|t| oeve|oo|ng t|e Lnteta|nment ano Soots
Como|ex oowntown. ln comoa|son to t|e 2012 oooosa|, t|e oesent tems |ave t|e C|ty s|ou|oe|ng a
sma||e s|ae o t|e tota| cost, w||c| |as two o|may causes.

l|st, tota| costs o oeve|ooment |ave |sen to $44/ m||||on om $390 m||||on, w|t| t|e C|ty's cont|but|on
ema|n|ng stat|c at $2S8 m||||on. Secono, t|e C|ty |s no |onge comm|tt|ng to as w|oe a ange o sot costs
ano |as out mec|an|sms |n o|ace o geate cost conta|nment. 1|e oev|ous oea| |ao t|e C|ty
esoons|b|e o S0 o oeoeve|ooment exoenses, w|t| oat|a| esoons|b|||ty o cost oveuns ano S0
o cao|ta| eoa|s ano ma|ntenance. 1|ese |ao t|e ootent|a| to |nceases t|e C|ty's ||ab|||ty s|gn||cant|y.
1|e C|ty wou|o a|so |ave been comm|tt|ng to |ano acqu|s|t|ons ano uno|ng a new lem|um" oa||ng
gaage o venue events, bot| wee to be |n aoo|t|on to t|e C|ty's $2S8.S m||||on |n cont|but|ons. 1|e

gowt| eects o soots anc||ses, stao|a, ano aenas." Coates ano lumo|ey, !ouna| o lo||cy Ana|ys|s ano Management, 1999
ano Stao|ums ano aenas: Lconom|c oeve|ooment o econom|c eo|st|but|on`" Coates, Contemooay Lconom|c lo||cy, 200/
19
Ae uas|etba|| Aenas Cata|ysts o Lconom|c Leve|ooment`" Ceoey loo|ete, !ouna| o bban Aa|s, 2012
20
Sacamento aena o|ans sou ta|| o sa|es neaby," 1ony u|zac|, 1|e Sacamento uee, August 28, 2013
21
loo|ete, 2012
!!
|ano acqu|s|t|ons wee exoecteo to tota| nea|y $8 m||||on, w|t| t|e oem|um oa||ng stuctue ooecteo
to be an aoo|t|ona| $14.S m||||on.
22


1|e use o t|e lub||c la||ng l|nance Mooe| sets Sacamento's ooooseo Lnteta|nment ano Soots
Como|ex aoat somew|at om ot|e aena oea|s. 1|e mooe| a||ows o one-t|me access to utue oa||ng
evenue steams |n t|e oesent, w|||e a|so ensu|ng t|e C|ty's boow|ng caoac|ty ema|ns |age|y |ntact
oue to t|e act t|e bonos |ssueo wou|o not be a oebt ob||gat|on o t|e C|ty. A|so, s|nce t|e C|ty |s not
se|||ng |ts oa||ng enteo|se but at|e tanse|ng |t to a C|ty-conto||eo nonoo|t, a|| evenues |n excess
o oebt sev|ce ano ooeat|ng costs w||| accue to t|e C|ty's genea| uno. Cnce bonos useo to uno t|e
LSC ae oa|o o, t|e C|ty w||| see a|| evenues om t|e oa||ng enteo|se bac| |n t|e Cenea| luno.

1|ee ae many easons to be||eve t|at w|t| caeu| cons|oeat|on ano attent|on to oeta|| oesent o|ans
cou|o be a gooo |nvestment o t|e lnvesto Couo, t|e Sacamento l|ngs ano most |mootant|y t|e C|ty
o Sacamento. 1|ee ae a|so oo|nts o t|e ageement t|at s|ou|o be caeu||y mon|toeo ano ootent|a||y
aousteo.

los| t| ve Comoonents o Lea|

1. L|m|teo Cenea| luno lmoact

8eoesent|ng 82 o t|e $2S8 m||||on |n C|ty comm|tments, t|e lub||c la||ng l|nance Mooe| |s t|e s|ng|e
|agest comoonent o oub||c |nvestment. lt |s a|so t|e on|y comoonent esoons|b|e o a yea|y
cont|but|on to t|e C|ty's genea| uno. Account|ng o $9.66 m||||on yea|y, o 2.6 o t|e genea| uno,
t|e cuent oooosa| oeoaeo by C|ty sta |oent||es va|ous souces o uno|ng to be useo |n ooe to
ensue t|e genea| uno ema|ns w|o|e.
23
lt |s |mootant to note t|at |n t|e event oa||ng evenues o
ot|e bac|||| souces a|| s|ot, t|e genea| uno cou|o be at |s|. 1|e consevat|ve assumot|ons useo
t|oug|out t|e oooosa| s|ou|o cont|nue to be eva|uateo to ensue bac|||| evenue steams ema|n
su|c|ent.

,-./01.2 34 5671481 9: /01 ;.9;971< =>?2 /01 894/.36-/3947 /9 /01 @141.5A :-4< :.9B /01 ?3/CD7 ;5.E34@
14/1.;.371 F9-A< @.9F 45/-.5AAC F3/0 /01 ?3/C 54< F3/0 34:A5/394G H01 75B1 B-7/ 5A79 61 /.-1 :9. t|e
souces be|ng useo to bac|||| t|e genea| uno. Cne examo|e |s t|e $3 m||||on t|e new oa||ng nonoo|t
w||| cont|bute to t|e genea| uno go|ng owao. l t||s va|ue wee to ema|n stat|c t|oug|out t|e ||e o
t|e LSC, |t wou|o eoesent a o|m|n|s||ng va|ue eac| yea |n ea| tems. v|||e t|e oooosa| conta|ns a
eeence to w|ee |nceaseo evenues m|g|t be a||ocateo, oeta||s s|ou|o be soe||eo out moe u||y.


2. lo lnceaseo Lebt Cb||gat|on

Anot|e oos|t|ve |n us|ng t|e oub||c oa||ng |nance mooe| as t|e |agest oot|on o t|e C|ty's cont|but|on
|s t|at |t w||| not be a oebt ob||gat|on o t|e C|ty. 1||s |s oone by tanse|ng C|ty owneo oa||ng
oooet|es to a new|y ceateo nonoo|t coooat|on. 1||s coooat|on w||| t|en |ssue t|e bonos om
w||c| a oot|on o t|e ooceeos w||| uno t|e LSC. 1|e C|ty o Sacamento w||| t|eeoe eta|n boow|ng
ootent|a| equa| to t|at o beoe t|e uno|ng o t|e LSC, as we|| as |nceaseo ||ab|||ty coveage. loweve,

22
C|ty o Sacamento C|ty Counc|| 8eoot: Lnteta|nment ano Soots Cente (LSC)" Sect|on S: Comoa|son o 2013 1em S|eet
w|t| 2012 1em S|eet, Mac|, 2013
23
Sacamento's l? 2013-2014 Cenea| luno buoget |s $3/2 m||||on. |tto://www.c|tyosacamento.og/
!#
t||s boow|ng w||| ceate some |eve| o eoutat|ona| |s| ano t|eeoe |s not ent|e|y w|t|out an |moact
on t|e C|ty's ab|||ty to boow |n t|e utue.

3. C|ty lot 8esoons|b|e o Constuct|on Cveuns

loo cost conta|nment ano esoons|b|||ty o cost oveuns ae |n many cases t|e cause o |age t|an
exoecteo out|ays o mun|c|oa||t|es on |age-sca|e ooects suc| as t|e LSC. lt |s oeeab|e o t|e
taxoayes t|at a|| costs be accounteo o ano ageeo uoon beoe|ano. 1|e oev|ous oea| |ao t|e C|ty
esoons|b|e o S0 o oeoeve|ooment exoenses, oat|a| esoons|b|||ty o cost oveuns ano S0 o
cao|ta| eoa|s ano ma|ntenance. 1||s |s no |onge t|e case. v|t| t|e oeve|ooe cove|ng cost oveuns,
t|e C|ty o Sacamento can moe eao||y eva|uate |ts cont|but|on w|t|out ea o un|nown costs a|s|ng.

4. A C|ty Cwneo uu||o|ng

v|en como|eteo, Sacamento's Lnteta|nment ano Soots Como|ex w||| be w|o||y owneo by t|e C|ty o
Sacamento. Aenas t|at ece|ve |age oub||c subs|o|es yet ema|n o|vate|y owneo ae oten t|e subect
o oub||c oebate as to t|e |ntent|ons ano bene|ts o suc| aangements. ln t||s case t|e aena w||| be t|e
oooety o t|e C|ty o Sacamento, ano a management ageement w||| be maoe w|t| t|e lnvesto gouo.
1|e ex|st|ng latomas ac|||ty, by contast, |s o|vate|y owneo.

S. lat o a Lage 8ev|ta||zat|on Lot

1|e new Lnteta|nment ano Soots Como|ex, w|t| |ts |ocat|on |n Lowntown l|aza, |as a stong |||e|||ooo
to seve bot| as a cata|yst to ev|ta||ze t|e Lowntown l|aza aea as we|| as to be an anc|o o t|e
cont|nu|ng ev|ta||zat|on o Sacamento's oowntown as a w|o|e. A 2011 ana|ys|s comm|ss|oneo by 1||n|
u|g Sacamento ano oeomeo by Cao|to| lub||c l|nance Couo est|mateo t|at Sacamento cou|o
exoe|ence ove $2 b||||on |n econom|c bene|ts w|t||n |ve yeas o t|e aena ooen|ng. 1|e bas|s o t||s |s
t|e ove $1.S b||||on |n o|ect cao|ta| |nvestment lansas C|ty saw w|t||n |ve b|oc|s o t|e So|nt Cente.
24

Sacamento ano lansas C|ty ae o s|m||a s|ze ano oemogao||cs. 1||s ana|ys|s was oeoaeo o a
oev|ous ves|on o t|e LSC, |oweve ooooseo constuct|on costs |ave |nceaseo, |t |s t|eeoe
easonab|e to assume t|ese numbes wou|o |se. 1|e C|ty |as comm|tteo to wo||ng w|t| t|e lnvesto
Couo to secue ent|t|ements on uo to 1.S m||||on squae eet o aoo|t|ona| oeve|ooment |n t|e
suouno|ng aea.

lmoacts |||e t|ese ae bot| magn||eo, ano esoec|a||y |mootant, ou|ng t|mes o econom|c oowntun ano
ecovey. bnoeut|||zat|on o bot| |abo ano cao|ta| |n t|e Sacamento eg|on means t|at soeno|ng |s
moe |||e|y to |ncease outout t|an ou|ng an econom|c boom. v|t| t|e constuct|on secto |ut
oat|cu|a|y |ao ou|ng t|e |ast ecess|on, |no|v|oua|s ae ava||ab|e o |mmeo|ate |||ng t|at w||| moe
eao||y esu|t |n |mmeo|ate |moacts. Constuct|on o t|e Lnteta|nment ano Soots Como|ex |as t|e
ooootun|ty to seve as not on|y a one-t|me boost to t|e |oca| economy t|oug| constuct|on soeno|ng,
but a|so as an anc|o o ut|e ev|ta||zat|on o oowntown Sacamento. 1|e |atest tems a|so suggest
t|at Sacamento w||| ece|ve a ||g|e |eve| o o|vate |nvestment om t|e lnvesto Couo.

A mao quest|on t|at |s oten as|eo |n econom|c oeve|ooment |s w|et|e a oat|cu|a oub||c |nvestment
o tax |ncent|ve oac|age actua||y c|anges bus|nesses oec|s|ons on w|ee to s|te t|e| ac|||t|es. A geat

24
v lo ve|oc|ty: v|at t|e lansas C|ty Lxoe|ence Means o Lconom|c lmoact |n Sacamento" Cao|to| lub||c l|nance Couo,
lovembe, 2011
!$
oea| o eseac| |no|cates t|at many tyoes o oub||c |nvestment, suc| as enteo|se zones,
2S
may not. ln
t|e case o t|e LSC, t|ee |s no quest|on t|at w|t|out t|e comm|tment to bu||o t|e aena, Sacamento
wou|o |ave |ost a mao emo|oye ano econom|c o|ve o t|e eg|on as we|| as a s|gn||cant souce o
c|v|c o|oe. lt |s a|so qu|te un|||e|y t|at |t wou|o |ave attacteo to soec||c |nvestos ano |nvestment - to
t|e centa| c|ty |n oat|cu|a - t|at w||| be |nanc|ng t|e aena.

lo| nts o Cont| nueo Attent| on

bt|||z|ng exoe|ences om oev|ous aena |nanc|ng mooe|s, oo|nts o concen |ave been |oent||eo |n t|e
cuent ooooseo o|an ano 1em S|eet o Sacamento's LSC. Caeu| cons|oeat|on ano obsevat|on o
t|e be|ow oo|nts ou|ng ut|e oeve|ooment o t|e oooosa| s|ou|o ensue t|e oub||c |s ootecteo ano
t|e |nanc|ng mooe| |s successu|.

1. Lnteta|nment ano Soots Como|ex lo|t S|a|ng

1|e 1em S|eet |ays out c|te|a ano met|cs o t|e ouoose o ca|cu|at|ng oo|t s|a|ng between t|e C|ty
ano t|e ent|ty manag|ng t|e LSC. lt |s assumeo t|e lnvesto Couo w||| estab||s| seoaate ent|t|es o t|e
management o t|e LSC ano l|ngs esoect|ve|y. l|ngs LSC Co. w||| be esoons|b|e o t|e management o
t|e LSC, w|||e l|ngs 1eam Co. w||| be esoons|b|e o t|e management o t|e Sacamento l|ngs. uecause
l|ngs LSC Co. w||| ma|e an |ntena| aangement between |tse| ano l|ngs 1eam Co. ceta|n tems o t|e
oo|t s|a|ng ageement me|t exta attent|on. l|ngs LSC Co. cou|o |no |t aovantageous to stuctue
tems w|t| l|ngs 1eam Co. to t|e| bene|t ano not |n t|e best |nteest o t|e C|ty.

2. 1|c|et Suc|age

ln ooe to monet|ze t|e C|ty's oa||ng enteo|se, t|e $9 m||||on |t oov|oes annua||y to t|e C|ty's Cenea|
luno must be eo|aceo. 1|e |agest comoonent o ooooseo unos to be useo |n bac|||||ng t|e Cenea|
luno |s a S t|c|et suc|age on a|| LSC events. 1||s suc|age as ooooseo |s exoecteo to cont|bute $3./
m||||on annua||y to t|e C|ty's Cenea| luno. 1|e assumot|ons unoe|y|ng t|e geneat|on o t||s evenue
must be c|ose|y exam|neo as t|ey ae t|e o|may souce to bac|||| t|e Cenea| luno.

3. Covenance Stuctue

1|e lub||c la||ng l|nance Mooe| |s t|e |agest cont|but|on on be|a| o t|e C|ty ano ootent|a||y |ts
geatest asset. v|||e t|e conceot o t|e lub||c la||ng l|nance Mooe| |s |a|o out |n t|e oooosa|, ano
seems aoooo|ate at a ||g| |eve|, aoo|t|ona| oeta||s ae neeoeo. An |noeoenoent t||o oaty ev|ew o t|e
oeta||s o t|e mooe| ano ooect|ons m|g|t be bene|c|a|. 1|e $212.S m||||on |n unos om t|e lllM
eoesents 82 oecent o t|e tota| oub||c unos be|ng cont|buteo. 1|e v|ab|||ty o t||s souce |s essent|a|,
t|eeoe moe |nomat|on |s neeoeo to oetem|ne |ts e||ab|||ty. Ct|e oeta||s aouno t|e mooe| wou|o
a|so be |e|ou| to ut|e t|e o|scuss|on on |ts v|ab|||ty ano susta|nab|||ty. lo |nstance, a moe concete
oesc|ot|on o |ts govenance stuctue to ensue t|e C|ty's |nteests ae ootecteo ano oeta||s on evenue
a||ocat|on ate t|e tems o t|e bonos |ave exo|eo to ensue t|e |ea|t| o t|e C|ty's Cenea| luno.



2S
Lo enteo|se zones ceate obs` Lv|oence om Ca||on|a's enteo|se zone oogam" lo||o ano leuma|, !ouna| o bban
Lconom|cs, 2010
!%
4. Lowntown l|aza la||ng Caage

v|||e oats o t|e gaage w||| be oemo||s|eo o constuct|on o t|e LSC, t|e C|ty |s cont|but|ng
ooeat|ona| conto| o t|e ema|n|ng oa||ng soaces to t|e lnvesto Couo o a oe|oo o 3S yeas w|t|
t|e oot|on o two S-yea extens|ons. Cne t|ousano o t|ese soaces w||| be equ|eo to be maoe ava||ab|e
as oem|um oa||ng o LSC events. 1|e C|ty w||| co||ect oossessoy |nteest tax on t||s oooety, t|e va|ue
o w||c| |as been actoeo |nto bac|||| o t|e C|ty's Cenea| luno. loweve, t|e oesent va|ue o t||s
oea| |s not u||y eoesenteo |n t|e 1em S|eet. v|||e |t |s not a souce o use o unos, |t |s C|ty-owneo
oooety o w||c| use |s be|ng tuneo ove to an outs|oe ent|ty. 1|eeoe t|e va|ue o t||s s|ou|o |||e|y
be aoooo|ate|y ecogn|zeo.

S. Leve|ooment 8|g|ts Suouno|ng t|e LSC

1|e 1em S|eet states t|e C|ty w||| comm|t to wo||ng w|t| t|e lnvesto Couo to secue ent|t|ements o
a |age aea aouno t|e LSC. l t|e |nances o t|e team o lnvesto Couo a|te, |t wou|o ma|e
oeve|ooment suouno|ng t|e LSC o||cu|t. 1|e cuent oea| essent|a||y ||nges t|e C|ty's Lowntown l|aza
econom|c oeve|ooment on t||s oooosa|. l t|e lnvesto Couo |s ||g||y successu|, t|e suouno|ng aea
oeve|ooment cou|o be successu|. loweve, | t|e oooos|te |s tue, |t |s un|||e|y t|at t|e suouno|ng aea
w||| be oeve|ooeo as env|s|oneo. lt may be aovantageous to set t|m|ng oaametes o t|ese |g|ts to
ensue easonab|e oeomance by t|e lnvesto Couo.

6. L|g|ta| S|gnage l|an ano Ct|e Sot Costs

Lea|s suc| as t||s oten come w|t| a |ost o sot costs. 1|e 1em S|eet conta|ns oov|s|ons o t|e C|ty to
wo| |n gooo a|t| w|t| t|e lnvesto Couo to secue |g|ts o t|ee o|g|ta| s|gns to be ooeateo on c|ty
oooety ano t|ee to be ooeateo on oooet|es outs|oe c|ty ||m|ts. ln t|e event o|acement o t|e t|ee
s|gns outs|oe c|ty oooety cannot be estab||s|eo, t|e C|ty w||| wo| to |no t|ee aoo|t|ona| su|tab|e
|ocat|ons w|t||n t|e c|ty. Sta|e|o|oes |ave a|so |no|cateo aoo|t|ona| sot costs may a|se. v|t| oea|s suc|
as t|ese, aoo|t|ons can ange |n s|ze om sma|| to |age. 1|e oat|es |nvo|veo s|ou|o wo| to ensue t|e
v|s|b|||ty o t|ese aoo|t|ona| costs, as we|| as wo| to ut|e ootect t|e |nteests o t|e taxoaye.



!&























Ac|now| eogements

1||s eoot bu||os on t|e conc|us|ons o a oe||m|nay ev|ew o t|e aena oea| oeomeo by lunoen
Stateg|c latnes, a u|| sev|ce ea| estate oeve|ooment aov|soy oact|ce soec|a||z|ng |n oest|nat|on
assets. lt a|so bene|teo geat|y om t|e exoet eeobac| o Lan|e| 8abovs|y.

About t|e aut|os

M|ca| ve|nbeg, l|L |s t|e CLC o lea|t|y Systems loect, a Sacamento-baseo consu|tancy. le |as
|teen yeas o exoe|ence as a oo||cy ana|yst |n t|e aeas o econom|c oeve|ooment ano |ea|t|cae,
|nc|uo|ng oub||s||ng oee-ev|eweo acaoem|c stuo|es on ac|||t|es s|t|ngs. As 8eseac| le||ow at t|e
lntenat|ona| Lconom|c Leve|ooment Counc||, |e ovesaw t|e eoat|ng o t|e cu|cu|um o t|e
Cet||eo Lconom|c Leve|ooe (CLcL) oogam. As a v|ce les|oent o v|||e|m 8 Con|on, |e was a oat o
t|e team t|at oeve|ooeo Aoena ventues, t|e nat|on's |st lew Ma|et ventue Cao|ta| Comoany. le
|as aut|oeo numeous econom|c |moact ana|yses |nc|uo|ng t|e Lconom|c lmoact o t|e Aooab|e Cae
Act on Ca||on|a o t|e uay Aea Counc|| Lconom|c lnst|tute w|ee |e |s cuent|y Sen|o le||ow. le |as
a l|L |n oo||t|ca| sc|ence w|t| a ocus on econom|c oeve|ooment om t|e bn|ves|ty o lot| Cao||na,
C|aoe| l|||, ano gaouateo om l|nceton w|t| |onos w|t| a oegee |n oo||t|cs.

lat|c| la||eman |s t|e lo||cy L|ecto at lea|t|y Systems loect. lev|ous|y |e was a 8eseac|
Assoc|ate w|t| t|e uay Aea Counc|| Lconom|c lnst|tute ano beoe t|at a Consu|t|ng Ana|yst w|t|
Accentue. lat|c| |o|os a oegee |n Lconom|cs om Ca||on|a State bn|ves|ty Long ueac|.