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Bill would create state-run bond fund to build stadiums
Timothy Roberts
San Jose Business Journal

A bill pending in the California Legislature may help cities find ways to build the stadiums and stages that they have shied away from in recent years.

The legislation would raise millions of dollars for the construction of sports and entertainment venues in California, providing a windfall for communities trying to build such facilities, especially if their voters are not inclined to pay for one.

"We have a dearth of these facilities," said state Sen. Kevin Murray, the Culver City Democrat who wrote the measure. "Cities and counties aren't willing to put any money into these things these days."

The tactic could conceivably be used in the Sacramento area, where friends of the Sacramento Kings have been trying to line up money for a new arena to replace Arco.

But Maloof Sports & Entertainment declined when asked to participate in the legislation. The owners of the Sacramento Kings and Monarchs feel the best thing they can do for the community is to focus on its sports teams instead, spokeswoman Sonja Brown said Wednesday.

In San Jose, baseball fans are trying to lure the Oakland A's to town, and the city is preparing to buy 14 acres south of Diridon Station as a potential site for the stadium.

But an ordinance prevents the city from spending money on a sports facility until the voters have approved it, leaving the City Council to buy land for housing that could be used for baseball if the voters approve the idea later.

How the bill would work

The Murray bill, called the California Public Performance Facilities Act, would give the California Infrastructure and Economic Development Bank (the "I-Bank") the authority to build stadiums, sports pavilions and performance halls. The I-Bank could enter into agreements with public agencies to operate the facility for a county or a city.

To pay for the facilities, the I-Bank would be able to issue revenue bonds and to charge fees, and sell premium seat licenses, and naming and sponsorship rights to pay them off.

The law would prohibit the use of state funds.

There would be no need to seek voter approval of the funding because the revenue bonds would be paid off by income from the facility, Murray said.

"You only have to go to the citizens when you spend your citizens' money," he said.

The bill, SB 4, passed the state Senate and is expected to go to the Assembly soon.

"It would give local governments like San Jose and Oakland another option for financing when they are considering new stadiums," said state Sen. Liz Figueroa, a Fremont Democrat who voted for the bill.

OK, but ...

A self-appointed watchdog of San Jose city spending said he would not object to the use of I-Bank-issued revenue bonds as long as San Jose taxpayers would not get stuck paying for them if the venue became a money-loser.

"You would really want to read the fine print," said Dale Warner, a retired lawyer and member of Ballpark Tax Watchdogs.

Several people in Sacramento government and development circles said the legislation hasn't generated much buzz. That's because the legislation doesn't solve the basic problem of funding an arena such as a replacement for Arco.

Wendy Saunders, Sacramento's economic development director, likes the idea as a low-cost financing alternative, and figures the city of Sacramento should consider using it, if the legislation passes. But, she noted, "it's not like free money. It's not a grant."

Municipalities have various options for selling bonds to finance facilities, such as the joint powers authority used to pay for Raley Field in West Sacramento. But perhaps this legislation would have some benefit that doesn't exist elsewhere, said Steve Thurtle, Northern California division manager for Richland Planned Communities, a big Natomas landowner that was part of an earlier arena financing plan. He's glad the Legislature is supporting a regional financing mechanism that could help get an arena built for the Kings.

There's still some chatter about a new arena, he said, but no specific proposal has surfaced.

Still, the big question remains how to pay the debt, observers said. The legislation would aid in the financing, but it wouldn't come up with the bulk of the funds.

Not aimed at any one team or city

Murray said he intends the bill as one tool to help cities or counties fund their stadiums and concert halls, although the bill does not set a limit on how much money can be spent on a particular facility.

Lew Wolff, owner of the Oakland A's Major League Baseball team, said he's talked to Murray but wasn't familiar with the bill. But, he said, "anything that states and cities can do to generate business is positive."

Added Larry Stone, Santa Clara County assessor and supporter of Major League Baseball in San Jose, "I'd be in favor of any legal, creative way to improve our chances to put together a finance package."

Anschutz Entertainment Group, owner of the San Francisco Examiner, is listed as a supporter of the bill. It built the Staples Center in Los Angeles, where the Los Angeles Lakers basketball team and the Los Angeles Kings hockey team play. A spokesman did not immediately return phone calls.

Murray, however, said the bill is not aimed at any particular city or team. He did not court support from any region, and he amended the bill so that funds could not be used for renovations of existing facilities.

"I have avoided seeking local support because everyone fears someone is trying to steal someone else's team," said Murray, a former talent agent and entertainment attorney.

Sacramento Business Journal staff writer Kelly Johnson contributed to this story