Sacramento City Treasurer John Colville told city council members this week that Sacramento could be short of the revenue it needs to make payments on bonds for two major projects. Adam Steinhauer, editor-in-chief of the Sacramento Business Journal, spoke with CapRadio's Steve Milne about what this means for the city.
On why the city is short and which projects could be affected
With hotels struggling and downtown parking meter revenue down the city of Sacramento could be $16 million short of revenue it needs to make payments on the bonds for the two projects.
The problems are around a 2015 bond issue to build Golden 1 Center, a bond issue to expand the SAFE Credit Union Convention Center and a separate bond issue for a new ballroom within the center. The shortfall for the convention center is expected to be $10 million over the next two years.
In April, the city collected just $473,306 from hotel tax or Transient Occupancy Tax, which is what people pay when they stay at a hotel. That's a year-over-year drop of 85%.
On what the city can do about this
Refinancing could reduce the payment owed in the 2020-2021 fiscal year by $12 million, and by $17 million in the 2021-2022 fiscal year. However, under this scenario, the city could end up paying around $90 million more over the entire repayment term.
On what role the Sacramento Kings play
The arena bond was supposed to be paid through lease payments collected from the Sacramento Kings, as well as the city’s parking revenue. The pandemic has caused a general lack of activity downtown, and parking revenue has declined sharply.
Colville said that under the city’s deal with the Kings, the organization isn’t required to pay the full lease amount if the team doesn’t play a certain number of home games at the arena. The NBA halted the season in March this year and picked it up again at the end of July, but with games played in Florida.
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