As expected, the Anaheim City Council postponed action Tuesday night on a plan to float bonds that would make upgrades to the Honda Center — redoing the locker rooms and building a practice facility among other things — to lure the Sacramento Kings to town.
But for the first time an Anaheim city official spoke publically about the effort — Mayor Tom Talt addressed the issue at the council meeting, reports the Orange County Register.
“The good news is that we are continuing to move closer to bringing a professional basketball team to Anaheim,” Tait said. “Because there are ongoing discussions and negotiations, I have just a few details to share tonight. More information will be forthcoming in the next week or so.”
Meanwhile, up in Sacramento, that city’s mayor — former NBA player Kevin Johnson — called the process a “slow death” and said this “will likely be the Kings’ final weeks in Sacramento after 26 years” in a personal blog post.
Talt did talk about one detail, confirming that the plan was to keep public money out of the deal.
“First, I can tell you that a financing structure is being proposed that would allow for private investment to fund improvements at Honda Center,” Tait said.
“We have all seen the speculation in the media, but I want to assure everyone that should a deal go forward, the city taxpayers and the city’s general fund will not be put at risk in any way,” he added. “All of my colleagues on the City Council and city staff share my concern that the taxpayers cannot be exposed to any risk with this potential new deal.”
What this likely means is revenue bonds — where private investors purchase the bonds and are paid back, with interest, on money generated from the building. In this case, the extra money generated when the Kings — likely to change their name to the Royals — move into the Honda Center.
Because the city of Anaheim ultimately owns the Honda Center, it will likely have to guarantee the loans in some fashion — investors are big on guarantees, they want their money back — but that can be set up in a way that there are multiple layers of sources of funds in between the revenue falling short and the city having to pay.
The revenue may not fall short of paying off the bonds. However, selling a notoriously fickle market (the NHL’s Ducks are in the bottom 10 in the league in attendance and percentage of building filled) after a protracted and ugly NBA lockout this summer may end up being more of a challenge than the Kings owners and the city expect.