RESOLUTION NO. 9 -5-315 ADOPTED BY THE SACRAMENTO CITY COUNCIL ON DATE OF JUN 1 3 199; A RESOLUTION ADOPTING CONTRACT BETWEEN THE CITY OF SACRAMENTO AND KINGS ARCO ARENA LIMITED PARTNERSHIP FOR THE PERIOD APRIL 1, 1995 TO JUNE 30, 1998 BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SACRAMENTO that: The contract entered into by the City Manager and ARCO Arena Limited Partnership for the period April 1, 1995 to June 30, 1998 for the employment of off-duty Police Officers is hereby adopted. MAYO ATTEST: CITY CLERK FOR CITY CLERK USE ONLY RESOLUTION NO.: '95,-315 DATE ADOPTED: JUN 1 3 1995 I 1995-0315 Council 6/13/1995 12:00:00 AM

RESOLUTION NO. 2017-0414 Adopted by the Sacramento City Council October 31, 2017 Granting A Waiver of Section 4.2 of the Comprehensive Project Agreement for the Exclusive Purpose of Allowing the Relocation of Convention Center Events to Sleep Train Arena BACKGROUND A. On May 20, 2014, Council approved the Comprehensive Project Agreement (CPA) with Sacramento Basketball Holdings LLC, Sacramento Downtown Arena LLC, and Sacramento Kings Limited Partnership. B. Section 4.2 of the CPA sets out a non-compete prohibition for Sleep Train Arena, which was designed, in part, to ensure that the Golden 1 Center remain economically viable for both the City and the Kings. C. On May 30, 2017, in Resolution 2017-0216, the City Council directed staff to move forward with a plan for the renovation and expansion of the Convention Center. D. This construction work on the Convention Center will result in some events needing to be relocated. E. Visit Sacramento has been working to identify alternate locations, including Sleep Train Arena and the Golden 1 Center, to house those events that will need relocation. F. Retention of Convention Center events in Sacramento is a priority for the City during the renovation and expansion of the Convention Center, in part, so that the City and region can retain the economic benefits of those events, including associated transient occupancy tax and sales tax. G. Due to scheduling conflicts, events cannot be relocated to the Golden 1 Center, and the relocation of these events to Sleep Train Arena will not affect the economic viability of the Golden 1 Center for either the City or the Sacramento Kings. Resolution 2017-0414 October 31, 2017 1 of 2 BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. The requirements set forth in Section 4.2 of the CPA are hereby waived until December 31, 2020 for the exclusive purpose of allowing for the relocation of Convention Center events to Sleep Train Arena located at 1 Sports Parkway in the Natomas area of Sacramento. Section 2. The City Council reserves the right to rescind this waiver at any time with not less than 30 days’ notice to Sacramento Basketball Holdings LLC, Sacramento Downtown Arena LLC, and Sacramento Kings Limited Partnership. Section 3. With the exception of Section 4.2, all other sections of the CPA remain in force. Adopted by the City of Sacramento City Council on October 31, 2017, by the following vote: Ayes: Members Carr, Guerra, Harris, Hansen, Jennings, Schenirer, Warren and Mayor Steinberg Noes: None Abstain: None Absent: Member Ashby Attest: The presence of an electronic signature certifies that the foregoing is a true and correct copy as approved by the Sacramento City Council. Resolution 2017-0414 October 31, 2017 2 of 2 2017-0414 Council 10/31/2017 12:00:00 AM

James Sanchez, City Attorney Shirley Concolino, City Clerk Russell Fehr, City Treasurer John F. Shirey, City Manager City of Sacramento City Council 915 I Street, Sacramento, CA, 95814 www.CityofSacramento.org Meeting Date: 2/19/2013 Report Type: Staff/Discussion Title: Sacramento Kings Support and Update Report ID: 2013-00173 Location: Citywide Recommendation: Pass a Resolution in Support of Keeping the Sacramento Kings in the City of Sacramento and the Pursuit of a New Sports and Entertainment Facility in Downtown Sacramento Contact: John Dangberg, Assistant City Manager, (916) 808-1222, Office of the City Manager Presenter: John Dangberg, Assistant City Manager, (916) 808-1222, Office of the City Manager Department: City Manager Division: Executive Office Dept ID: 02001011 Attachments: _____________________________________________________________________________________________________________ 1-Resolution _________________________________________________________________________ Approvals/Acknowledgements Department Director or Designee: John Dangberg via email 1 of 3 Approved as to form : Matthew Ruyak via email RESOLUTION NO. Adopted by the Sacramento City Council February __, 2013 SUPPORT OF KEEPING THE SACRAMENTO KINGS IN THE CITY OF SACRAMENTO AND THE PURSUIT OF A NEW SPORTS AND ENTERTAINMENT FACILITY IN DOWNTOWN SACRAMENTO BACKGROUND A. The Sacramento Kings are one of the most well-known employers in Sacramento, with a strong brand that provides national and international recognition for the region. B. The Sacramento Kings employ approximately 800 individuals in the Sacramento area and generate significant economic and fiscal benefits to the adjacent community, the City and the region. C. The Sacramento Kings are a major component of the region's entertainment industry and the region’s only major league sports team. D. For over 27 years the Sacramento region has proven itself as a strong market for the National Basketball Association (NBA). E. The Sacramento community has demonstrated long-standing support and willingness to invest in the Kings success in Sacramento. The investment has included the issuance of $73,725,000 of bonds to assist the team in 1997. F. The City and County governments have pursued initiatives in good faith to build a new arena for the team and the region. In 2012 the City, in partnership with the NBA, worked cooperatively to develop a comprehensive plan for the development of a new sports and entertainment facility in the downtown. G. The NBA has announced that the Sacramento Kings majority owners have submitted an application to relocate the team to Seattle, Washington and sell their interests to a new majority ownership group. H. A separate investment group has indicated its interest in submitting a competitive offer to acquire the majority interest in the Kings and enter into a public-private partnership to finance and develop a new sports and entertainment complex in downtown Sacramento. The investment group would make a long- term commitment to keep the Kings in Sacramento. 2 of 3 BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. The City of Sacramento expresses its continued support to keep the Sacramento Kings in the City of Sacramento. Section 2. The City of Sacramento expresses its continued commitment to enter into a public-private partnership to develop a new sports and entertainment facility for the region that meets NBA standards and represents a sound fiscal and economic development investment for the Citys and repres. Section 3. The City of Sacramento respectfully requests that the NBA support the City's efforts to keep the Kings in Sacramento long-term and approve the sale of the Kings to an ownership group that commits to keeping the Kings in Sacramento long-term. 3 of 3 2013-00173 Council Agenda Item 2/19/2014 12:00:00 AM

The ICON-Taylor Team Call to Action ARCO Arena Opened November 1988 Relevant Projects Pepsi Center – Denver, CO Sprint Center – Kansas City, MO Prudential Center – Newark, New Jersey CONSOL Energy Center – Pittsburgh, PA Sheraton Grand – Sacramento, CA City Hall – Sacramento, CA Project Feasibility Building Blocks Up front capital costs • Infrastructure analysis and planning (parking, roads, utilities, etc.) • Arena design concepts, scale and physical attributes • Reliable construction cost estimates • Overall budget and schedule Revenue drivers and forecasts • Arena naming rights and sponsor forecasts • Premium seating strategy and forecasts • Seating capacities and event mix forecasts • Understanding of typical team revenues (tickets, media, sponsor, etc.) Ongoing annual operating costs • Routine maintenance and repairs • Capital replacement costs • Facility operations staff and equipment • Utilities usage and surcharges Critical Questions 1. Why does Sacramento need a new arena and why should it be downtown? 2. What are the true underlying economics of a new arena project? 3. What would a new arena look like and how would it enhance our community? 4. How much will a new arena cost and when would it be completed? 5. What are the revenue streams generated by a new arena and how would those be used to help pay for the project and be shared between those who invested in the project? 6. What public sources could be activated to help fund the arena? 7. What investment would the Kings make toward the arena project and ongoing operating costs? 8. Who would own the new arena and who would operate it? 9. What are the redevelopment opportunities for the current arena site in Natomas? 10. What happens with the existing $65M City loan? Feasibility Analysis Game Plan Step 1 – Key Stakeholder Work Sessions Step 2 – Develop Program & Concept Design Step 3 – Create Project Budget & Schedule Step 4 – Produce New Arena PDP Step 5 – Follow Up Key Stakeholder Meetings Step 6 – Prepare Final Report to City Critical Path 90-Day Timeline Supplemental Meeting Materials Item 18 - Sports & Entertainment Complex 2/8/2011 12:00:00 AM Council

0:?,•4.,-'");c3 '-'1%/11,'""1 DEPARTMENT OF CITY OF SACRAMENTO EMPLOYEE RELATIONS CALIFORNIA 926J STREET ROOM 201 SACRAMENTO, CA 95814-2716 • 1,1-1 916-264-5424 FAN 916-264-8110 APPROVED BY THE CITY COUNCIL June 7, 1995 City Council Sacramento, California JUN 1 3 1995 OFFICE OF THE CITY PRK SUBJECT: ARCO OFF-DUTY POLICE EMPLOYMENT CONTRACT LOCATION AND COUNCIL DISTRICT: City STAFF RECOMMENDATION: It is recommended that the City ' Council approve the attached new contract between the City of Sacramento and the Kings ARCO Arena Limited Partnership for off-duty employment of Police Officers at ARCO Arena. CONTACT PERSON: Dee Contreras, Senior Employee Relations Representative Department of Employee Relations 926 "J" Street, Room 201 Sacramento, CA 95814 264-5424 FOR COUNCIL MEETING OF: June 13, 1995 (afternoon) SUMMARY This report recommends that the City Council approve the new three-year contract between the City of Sacramento and Kings ARCO Arena Limited Partnership for the period April 1, 1995 to June 30, 1998 for employment of off-duty Police Officers at ARCO Arena. The new contract incorporates new hourly rates for off-duty Police Officers agreed to with the Sacramento Police Officers Association (SPOA). Additionally, the new contract provides for a phased-in reimbursement method to the City so that the hourly rate at Kings games will be increased annually until such time as it equates to the hourly rate paid at all other ARCO events. COMMITTEE/COMMISSION ACTION: Not applicable. BACKGROUND INFORMATION: The City and SPOA in October, 1994 reached agreement on off-duty employment rates to be effective November 1, 1994. In the past, the City has entered into one-year contracts with ARCO Arena for off-duty employment of Police Officers to assure adequate security staffing to ARCO and to provide reimbursement to the City for wage rates, and indirect costs related to off-duty Police Officers. All other off-duty contracts with citizens, businesses, and other governmental agencies are normally short-term covering a single event and date. The proposed contract with ARCO incorporates the new off-duty rates negotiated with SPOA and provides for a three-year term in order to permit a phase-in of indirect costs by annual increases to the hourly rate of Kings games until this rate equals the hourly rate paid at other ARCO events. FINANCIAL CONSIDERATIONS: Under the proposed contract, the City will be initially reimbursed for the actual off-duty rates paid to Police Officers at Kings games and reimbursement for both off-duty rates and indirect costs for other ARCO events. The indirect cost for Kings games will be phased-in at 7% annually until such time as this rate equals the off-duty rate at other ARCO events. 2 POLICY CONSIDERATIONS: Approval of the attached contract by the Sacramento City Council will implement the City's agreement with the SPOA and will continue the practice of employment of off-duty Police Officers for security at ARCO Arena. MBE/VVBE EFFORTS: Not applicable. Respectively submitted, cf-d.L STEVE LAIUCH Director of Employee Relations Recommendation Approved: WILLIAM H. EDGAR City Manager Attachment 3 RESOLUTION NO. 95- 3/5 ADOPTED BY THE SACRAMENTO CITY COUNCIL ON DATE OF APPROVED BY THE CITY COUNCIL JUN 1 3 1995 OFFICE OF THE rzr-, n.c A RESOLUTION ADOPTING CONTRACT BETWEEN THE CITY OF SACRAMENTO AND KINGS ARCO ARENA LIMITED PARTNERSHIP FOR THE PERIOD APRIL 1, 1995 TO JUNE 30, 1998 BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SACRAMENTO that: The contract entered into by the City Manager and ARCO Arena Limited Partnership for the period April 1, 1995 to June 30, 1998 for the employment of off-duty Police Officers is hereby adopted. MAYOR ATTEST: CITY CLERK FOR CITY CLERK USE ONLY RESOLUTION NO.. DATE ADOPTED: 4 ; OFFICE OF THE CITY OF SACRAMENTO CITY CLERK CALIFORNIA VALERIE A. BURROWES, CMC/AAE CITY CLERK OPERATIONAL SERVICES CITY HALL ROOM 304 915 I STREET SACRAMENTO, CA 95814-2671 PH 916-264-5426 FAX 916-264-7672 June 19, 1995 Kings ARCO Arena Limited Partnership, L.P. Attn: Richard B. Benner One Sports Parkway Sacramento CA 95834 Dear Mr. Benner: On June 13, 1995, the Sacramento City Council adopted Resolution No. 95-315 authorizing the execution of Agreement No. 95-112 regarding employment of off-duty Police Officers. Enclosed, for your records, is one fully certified copy of said agreement and authorizing resolution. Sincerely, Mary Lou Silva Office Supervisor mls/1.1 Enclosures cc: Police Department Risk Management Item 1.1 - Arco Off Duty Police Employment Contract Council Agenda Item 6/13/1995 12:00:00 AM

AM END E D RESOLUTION NO. 2004-G41 ADOPTED BY THE SACRAMENTO CITY COUNCIL ON DATE OFAUG 0 5 2004 RESOLUTION DIRECTING THE CITY MANAGER TO NEGOTIATE THE TERMS OF A PUBLIC-PRIVATE PARTNERSHIP AGREEMENT TO CONSTRUCT AND OPERATE A NEW ARENA EITHER NEXT TO ARCO ARENA IN NORTH NATOMAS OR IN DOWNTOWN SACRAMENTO WHEREAS, according to a City-authorized study, confirmed by the Sacramento Chamber of Commerce, Arco Arena, which was constructed in 1988, will be at the end of its useful life within five years and any new facility will take approximately five years to construct; and WHEREAS, the cost of remodeling Arco Arena to meet today's codes and design standards could exceed the cost of demolishing the old arena and building a new one next to it, and it would be difficult to stage basketball games and other events during remodeling; and WHEREAS, the City currently owns 100 acres and the Sacramento Kings NBA Basketball Team owners (Kings) own 85 acres at the site, including the existing arena, and reciprocal ownership rights prevent either party from developing its own portion of the 185-acre site ("185-Acre Site") without the consent of the other party; and WHEREAS, 185-acre Arco Arena site could be jointly developed by the City and the Kings to: a. Demolish the current arena; build a new, more compact arena closer to the planned light rail station at the site; and develop the remaining site with a mix of -office and housing uses, and retail and entertainment ancillary to such uses that would share parking with the arena, and generate revenue to help pay the cost of the new arena; or -1- FOR CITY CLERK USE ONLY RESOLUTION NO. 2004-641 DATE ADOPTED: A UG 0 5 2004 753299v2 32426/0001 b. Be developed with a mix of -office and housing uses, and retail and entertainment ancillary to such uses that would generate revenue to help pay the cost of the new arena; WHEREAS, the experience of many cities is that locating arenas in urban core areas supports existing businesses, attracts new businesses, increases hotel and convention bookings, promotes use of transit infrastructure, and promotes residential development; WHEREAS, it may be of greater community benefit to locate an arena in downtown Sacramento; however, it may not be financially feasible; WHEREAS, the City Council has previously adopted a policy regarding public financing of a new arena, the most important elements of which are: the financing must not adversely affect the City's General Fund, which pays for City police, fire, library, streets, parks, recreation, code enforcement, and other essential municipal services; public funding should focus on public infrastructure; there should be no new taxes without a vote; and the financing must not adversely affect the payoff of the existing $83 million loan to the Kings; and WHEREAS, it would be consistent with the City's policy to pay for the cost of constructing a new multipurpose arena with private sources, as well as user fees, surcharges, assessments, and other revenues generated exclusively at the 185-acre Arco Arena site; and to require repayment by the private sector of the existing loan for the Arco Arena. NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SACRAMENTO that: The City Manager shall negotiate with the Kings and other stakeholders the terms and conditions of a partnership agreement to construct a new arena, provided that: 1. Private financial support would be, at a minimum, at a level consistent with the private financial support provided in similar situations in other municipalities, and would likely include lease payments to the city for a period not less than the period necessary to pay the total cost of the arena, and could include revenues -2- FOR CITY CLERK USE ONLY RESOLUTION NO. 2004-641 DATE ADOPTED: AUG 0 5 2004 753299v2 32426/0001 from naming rights, parking charges, surcharges on ticket and concession sales, media revenues and other identifiable sources of income. 2.. - Public funding measures would involve no taxes unless such taxes are approved by voters. 3. The City may also seek regional financial support from those cities and counties that would benefit from a multi-purpose arena, and to that end, invite Sacramento County representatives to the negotiations. 4. In addition to the private and public funding measures outlined above, the City would consider partnering with the private sector to jointly develop the 185-acre Arco Arena site, or portion thereof, and use the taxes and revenues generated from the joint development to help fund the new arena. The development may not involve a shopping center that would compete with Downtown Plaza. 5. The following guidelines shall govern the City Manager's negotiations: These guidelines are intended to be flexible and allow for negotiations to occur with stakeholders regarding alternative sites, project costs, and funding sources and amounts. a. The total cost of the arena shall not exceed $350,000,000, unless the non-City contributions are available to cover costs above $350,000,000. b. The City -shall commit funds generated by the sale and reuse of the 185-Acre Site to the project, not to exceed $50,000,000 without further direction from City Council. c. Total city investment is capped at $175 million. City's negotiating team shall maximize public benefits, maximize private investment and provide as much protection of the city's investment as possible. d. The ballot measure must specify maximum amounts and specify the City's contribution. e. The existing City loan to the Kings shall be repaid from private sources. -3- FOR CITY CLERK USE ONLY RESOLUTION NO. 2004-611 DATE ADOPTED: AUG 0 5 2004 753299v2 32426/0001 6. The staff shall report back to the Council on September 21, 2004, with a recommendation regarding a preferred site or sites for further consideration as well as a recommended financing strategy including the broad terms of an agreement regarding the arena. 7. The staff shall report back no later than October 26 with a recommendation regarding the preferred site and CEQA alternatives, an arena financing plan, refined terms of an agreement regarding the arena and recommended language for the March 08, 2005 ballot. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. MAYOR -4- FOR CITY CLERK USE ONLY RESOLUTION NO. 2004-641 DATE ADOPTED: AUG 0 5 2004 753299v2 32426/0001 2004-0642 Council 8/5/2004 12:00:00 AM

James Sanchez, City Attorney Shirley Concolino, City Clerk John Colville, City Treasurer Howard Chan, City Manager City Council Report 915 I Street, 1 st Floor Sacramento, CA 95814 www.cityofsacramento.org File ID: 2017-00935 July 25, 2017 Consent Item 20 Title: SacPark Parking Application and Marketing Agreement Location: Citywide Recommendation: Pass a Motion authorizing the City Manager, or his designee, to execute an agreement with Sacramento Downtown Arena, LLC to market, reserve and sell parking spaces via the City’s online parking reservation program, SacPark, to attendees of Golden 1 Center events. The term of the agreement will be three years with two, three-year options to extend. Contact: Matt Eierman, Parking Services Manager (916) 808-5849; Department of Public Works Presenter: None Attachments: 1-Description/Analysis 2-Contract Page 1 of 12 File ID: 2017-00935 ConsentItem 20 July 25, 2017 powered by Legistar™ City of Sacramento         Description/Analysis Issue Detail: In 2016, the City partnered with Parkeon USA to develop an online parking application (“SacPark”) that allows users to locate and reserve parking spaces for special events. Future features will include a mobile app that will provide direct GPS guidance to available parking spaces and allow the City to provide real-time push notifications to alert motorists of travel conditions. Additional features may be added as needed. Sacramento Downtown Arena, LLC (“Kings”) operates several parking garages near the Golden 1 Center. An estimated 6,500 vehicles enter the downtown area during large events. The City would like to market and sell parking spaces to Golden 1 Center attendees by using the SacPark reservation platform. In addition to the City’s website, customers will be able to access SacPark registered parking garages via the Kings’ website, the Kings’ mobile app, or Ticketmaster (collectively “Kings Ticketing Service”). Under the proposed agreement, the City will make available up to 1,000 parking spaces in City-owned parking garages to Sacramento Kings preferred ticket holders. These parking spaces will be available after 6:00 p.m. when garages have low occupancy and sold at market rates. These parking spaces will be allocated as follows: ? City Hall Garage – 400 parking spaces ? Capitol Garage – 400 parking spaces ? Old Sacramento Garage – 200 parking spaces The Kings will partner with the City to market SacPark reservation platform for events at the Golden 1 Center by using social media, the Kings website or mobile application. Policy Considerations: This recommended action is consistent with: 1. City Council’s motion directing staff to pursue parking modernization through technology and rate enhancements. 2. 2014 City of Sacramento Selected Parking Assets, Parking System Assessment. 3. The Central City Parking Master plan goal to leverage technology to use time limits, rates and enforcement to manage parking supply efficiently. Economic Impacts: None Environmental Considerations: The project is categorically exempt from CEQA pursuant to CEQA Guidelines sections 15301. The project involves the development and marketing of a Page 2 of 12 File ID: 2017-00935 ConsentItem 20 July 25, 2017 powered by Legistar™ City of Sacramento         mobile parking guidance application that would facilitate use of existing downtown parking facilities by patrons of events at downtown facilities. The action would result in no new construction or expansion of use, and would promote the efficient operation of existing public facilities. Sustainability: This action supports the City of Sacramento’s sustainability goals to improve and optimize the transportation infrastructure. Commission/Committee Action: None Rationale for Recommendation: It is estimated that up to 6,500 vehicles enter the downtown area during large events at the Golden 1 Center. To guide motorists to available parking, the City developed the SacPark reservation platform to maximize traffic flow near the event epicenter. The proposed agreement increases customer access and marketing to available parking information, by linking SacPark through the Kings Ticketing Service. In October of 2016, the City signed a Letter of Intent (LOI) with the Kings to pilot the SacPark reservation platform with the Kings and other private garage owners. To date, over 225,000 parking reservations have been processed using SacPark therefore significantly reducing wait times and traffic congestion in the downtown area. Per the LOI, the proposed agreement will commence October 1, 2016, the date the pilot started. Under this contract the City will be the exclusive external parking vendor approved or permitted to sell parking reservations using the Kings Ticketing Service. Financial Considerations: The City receives five percent commission of all paid parking transactions processed using the SacPark reservation platform, except for those reservations made for parking garages controlled by the City or the Kings. For those paid parking transactions marketed using the Kings Ticketing Service, the City and the Kings will each receive two and a half percent commission. Local Business Enterprise (LBE): There are no LBE considerations associated with the requested action. Page 3 of 12 Page 4 of 12 Page 5 of 12 Page 6 of 12 Page 7 of 12 Page 8 of 12 Page 9 of 12 Page 10 of 12 Page 11 of 12 Page 12 of 12 2017-00935 Council Agenda Item 7/25/2017 12:00:00 AM

DEVELOPMENT SERVICES DEPARTMENT DOWNTOWN ECONOMIC DEVELOPMENT DIVISION July 30, 2004 CITY OF SACRAMENTO CALIFORNIA City Council of the City of Sacramento Sacramento, CA 103015 TH STREET SUITE 250 SACRAMENTO, CA 95814 916-808-7223 FAX 916-808-8161 Honorable Members in Session: SUBJECT: REPORT BACK REGARDING THE SACRAMENTO SPORTS ARENA LOCATION AND COUNCIL DISTRICT: Citywide RECOMMENDATION: The staff recommends that the Council take the following actions: (1) Consider and take action on the resolution proposed at the July 22, 2004, as revised, that: a. Sets a cost benchmark for the Sacramento Sports Arena, and b. Establishes parameters for negotiations on the a new arena; (2) Direct the City Manager to retain special consultant assistance on the arena matter; (3) Direct staff to report back on September 21, 2004 regarding a. All alternative arena sites considered, and recommending preferred site(s) for further analysis; and b. A recommended financing approach. CONTACT PERSONS: Wendy Saunders, Downtown Development Manager, 808-8196 Richard Ramirez, Deputy City Manager, 808-5704 FOR COUNCIL MEETING OF: August 5, 2004 SUMMARY: This report recommends adoption of the attached resolution that (1) establishes negotiating parameters for a new Sacramento Sports Arena, (2) establishes the Council's intent to call a Special Election for March 8, 2005 to seek pubic advice on the arena Sacramento City Council Report Back Regarding Sacramento Sports Arena August 5, 2005 matter, and (3) establishes a work plan that requires staff to report back to the Council on September 21 and by October 26 regarding analysis of sites, establishing a preferred site, and regarding a financing strategy and plan. This report presents and analyzes the resolution proposed by Councilmember Cohn on July 22 and recommends certain modification, identifies tasks to be completed by September 21, and outlines the work plan and milestones between September 21 and October 26, the date that language must be approved for the March 8, 2005 ballot. BACKGROUND: On July 22, a draft resolution was presented by Council Member Cohn regarding (1) negotiating parameters for a new Sacramento Sports Arena, (2) establishing the Council's intent to call a Special Election for March 8, 2005 to seek pubic advice on the arena matter, and (3) directing staff to report back to the Council on September 21 with a site specific analysis and financing plan. Please see Exhibit A. Section 6 of the resolution established financial parameters for both the overall project cost and the relative share of costs to be borne by the public and private sectors. The resolution also required that staff report back to Council on September 21 with a definitive site selection and financing plan. The suggested financial parameters included in the resolution are described and analyzed below. Further, a work plan leading to the September 21 report to the Council, and the required actions thereafter, are also described. Funding Cap and Public Contribution Section 6.a. of the resolution states that the total cost of the arena shall not exceed $350 million. The suggested number is based upon the cost of an arena at the North Natomas location, excluding the costs associated with a public plaza, structured parking, and site resurfacing as presented in the July 22 staff report. Please see Natomas Financing Proposal, Exhibit B. The total arena cost under this scenario is $315 million. The resolution allows for an approximate 10% premium above the Natomas cost if a downtown location can be identified, thereby establishing the cap at $350 million. The revenue analysis on Exhibit A also describes the potential funding sources that have been identified to date. Unless additional and/or alternate funding sources can be identified, the maximum public resources available for contribution, under this scenario, would be $180 million, assuming voter approval of TOT and rental car tax increases. This amount is slightly more than half the suggested cap amount of $350 million. If one assumes that the only potential sources of public funds are those described in Exhibit A, the suggested negotiating parameters - a cap of $350 million, and public contribution of up to half of total costs - is reasonable given the total public financial capacity, as highlighted in the summary below. 2 Sacramento City Council Report Back Regarding Sacramento Sports Arena August 5, 2005 Basis for Financina Proposal (in millions Low Hig h Facility Cost ( Low = Natomas, High = 10% premium for DT location, rounded u p) $315 $350 City Share 50% $157.5 $175 Public Revenues Natomas Land Sale $41.6 $70.2 Car rental surcharge $12.9 $32.4 TOT Tax $30.8 $77 Total Public Capacity $85.3 $179.6 If, however, other funding sources become available due to the potential for regional contribution, additional public or private partners, or because the proposed location of the facility provides other funding opportunities, the cap and proportionate share of funding responsibility may not need to be as restrictive. For example, the July 22 staff report showed that other public revenues - such as parking or food and beverage surcharges - might be viable in the downtown area, where a nexus can be drawn between increased business and the location of the sports arena. The staff recommends that the negotiating parameters set forth in the resolution apply unless additional sources of funding can be identified that help bridge the project feasibility gap. The staff further recommends that, in order to preserve the opportunity for meaningful CEQA review of alternatives, and for ample opportunity for input, the Council request staff to report on all sites considered, and select a preferred site or sites for further analysis. The resolution, as revised, provides for additional flexibility in these matters. Proiect Work Plan and Milestones through October 26 The proposed resolution (Exhibit A) requires a progress report to Council on September 21. The City Clerk has determined that October 26 is the final date that the Council should place review of ballot language on the agenda for first consideration. Final Council approval of language would occur November 4, and the City Clerk would call the election on November 9. The staff proposes the following work be accomplished during this timeframe: Work Plan to September 21 1. Analyze the viability of various public funding alternatives. This would include review of the potential for success of various funding measures that require a public vote, including, but not limited to, County- or region-wide transient occupancy tax (TOT) and rental car tax 3 ^--r Sacramento City Council Report Back Regarding Sacramento Sports Arena August 5, 2005 increases; local or regional parcel tax; business improvement district(s); and food and beverage surcharges. Recommend to Council a strategy for pursuing arena funding. 2. Complete an alternative sites analysis and cost analysis, including comparison of the economic revitalization benefits of alternative locations and the funding opportunities associated with alternative sites. Recommend to Council preferred sites for further pursuit. 3. Negotiate and recommend to Council the broad terms of a public-private partnership between the City and MSE for a new Sacramento Sports Arena. Work Plan to October 26 1. Complete an arena financing plan based upon further of analysis of revenue streams, bonding capability and private contributions. 2. Refine cost estimates, site evaluation, and economic benefits analysis of preferred site(s). Recommend final site and alternatives, as provided for under CEQA; secure property commitments. 3. Negotiate refined business terms between City and Maloof Sports Entertainment (MSE). 4. Recommend ballot language. The revised resolution reflects the work plan outlined above. Exhibit C compares the original resolution proposed by Council Member Cohn on July 22 with the resolution now presented by staff for Council consideration. Only the recommended modifications are shown in the Exhibit. The work of the staff will be premised on the following assumptions: 1. Retaining the Kings NBA team in Sacramento is of community benefit for the City and is worth a certain amount of City investment. The value of the Kings' presence in Sacramento has yet to be defined, but the City's contribution can in no case be greater than the City's ability to contribute in a fiscally responsible manner. 2. If the City is to invest in a new sports arena, it should strive to locate the facility such that the City can derive maximum benefit from the spending power of the population that attends facility events. 3. If the City is to invest in a new sports arena, it should locate the facility such that it has positive revitalizing effects on areas in proximity to it. Sites Analysis A number of potential arena sites have been identified. Those discussed to date in addition to the 7th and K site include the waterfront property along Front Street north of 1-5 4 Sacramento City Council Report Back Regarding Sacramento Sports Arena August 5, 2005 and south of R Street; and a vacant block at 3rd and R Streets. Staff believes that additional opportunity sites may arise during the next several weeks. The proposed location of the arena at 7th and K would have had a dramatic and positive affect on the blight, vacancy, crime incidence and property abandonment that is ^ervasive in the general vicinity and is of specific concern at the corners of 7th and L and 7' and K Streets. The location of the arena at 7th and K, with its approximately two million annual visitors, would have provided an enhanced market for many existing businesses and would have encouraged new complementary investment. At this point, however, the staff believes that the costs associated with the 7th and K site, as estimated by staff and as perceived by Westfield, make it infeasible. Westfield has expressed that it would prefer to pursue the 7th and K theater project and other Downtown Plaza renovation opportunities rather than further analyze the arena potential at that location. If the arena proposal is at the 7th and K location is no longer pursued, the staff believes that alternative redevelopment endeavors to eliminate existing blight and bring new investment into the vicinity should be pursued as soon as possible. FINANCIAL CONSIDERATIONS: The staff will require considerable professional assistance to complete the work anticipated over the next three months. The staff expects to engage a sports facility development consultant; an architect and land-use planner; a civil engineer; a transportation consultant; a marketing and public information advisor; a real estate economist; and others, as deemed appropriate. Information regarding consultants under consideration is included in Exhibit D. All individual contracts for professional services are anticipated to be within the City Manager's contract authority. Sufficient funding is currently available in the Downtown Development Predevelopment Assistance CIP (KC67). However, since these expenses were not anticipated when the budget was established, it is likely that this fund will need to be replenished with additional tax increment funds prior to the end of the fiscal year. ENVIRONMENTAL CONSIDERATIONS: The proposed action is not a project for purposes of CEQA (15 California Code of Regulations 15378). POLICY CONSIDERATIONS: On July 31, 2001, Council adopted a resolution regarding "Principles Established for Council Consideration of a Downtown Sports and Entertainment District." In the staff report for the meeting of July 22, staff outlined the modifications to those principles required under various arena scenarios. At a later date, staff will report back on recommended modifications to this prior policy. ESBD CONSIDERATIONS: No goods or services are being purchased under this report 5 .T. Sacramento City Council Report Back Regarding Sacramento Sports Arena August 5, 2005 Respectfully Submitted: Wendy SaMib.efers DowntowriADevelopment Manager RECOMMENDATION APPROVED: ROBERT P. THOMAS City Manager Table of Contents: Attachments: Exhibit A - Resolution Proposed at July 22, 2004 Council meeting, pg. 7 Exhibit B - Natomas Financing Proposal, pg. 11 Exhibit C - Comparison: July 22 Proposed Resolution and August 5 Resolution, pg. 12 Exhibit D - Brief Biographies of Consultants, pg. 14 Resolution, pg. 17 6 i- EXHIBIT A RESOLUTION NO. ADOPTED BY THE SACRAMENTO CITY COUNCIL ON DATE OF RESOLUTION DIRECTING THE CITY MANAGER TO NEGOTIATE THE TERMS OF A PUBLIC-PRIVATE PARTNERSHIP AGREEMENT TO CONSTRUCT AND OPERATE A NEW ARENA EITHER NEXT TO ARCO ARENA IN NORTH NATOMAS OR IN DOWNTOWN SACRAMENTO WHEREAS, according to a City-authorized study, confirmed by the Sacramento Chamber of Commerce, Arco Arena, which was constructed in 1988, will be at the end of its useful life within five years and any new facility will take approximately five years to construct; and WHERAS, the cost of remodeling Arco Arena to meet today's codes and design standards could exceed the cost of demolishing the old arena and building a new one next to it, and it would be difficult to stage basketball games and other events during remodeling; and WHEREAS, the City currently owns 100 acres and the Sacramento Kings NBA Basketball Team owners (Kings) own 85 acres at the site, including the existing arena, and reciprocal ownership rights prevent either party from developing its own portion of the 185-acre site ("185-Acre Site") without the consent of the other party; and WHEREAS, 185-acre Arco Arena site could be jointly developed by the City and the Kings to: a. Demolish the current arena; build a new, more compact arena closer to the planned light rail station at the site; and develop the remaining site with a mix of retail, entertainment, office and housing uses, that would share parking with the arena, and generate -1- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: 17 revenue to help pay the cost of the new arena; or b. Be developed with a mix of retail, entertainment, office and housing uses that would generate revenue to help pay the cost of the new arena; WHEREAS, the experience of many cities is that locating arenas in urban core areas supports existing businesses, attracts new businesses, increases hotel and convention bookings, promotes use of transit infrastructure, and promotes residential development; WHEREAS, it may be of greater community benefit to locate an arena in downtown Sacramento; however, it may not be financially feasible; WHEREAS, the City Council has previously adopted a policy regarding public financing of a new arena, the most important elements of which are: the financing must not adversely affect the City's General Fund, which pays for City police, fire, library, streets, parks, recreation, code enforcement, and other essential municipal services; public funding should focus on public infrastructure; there should be no new taxes without a vote; and the financing must not adversely affect the payoff of the existing $83 million loan to the Kings; and WHEREAS, it would be consistent with the City's policy to pay for the cost of constructing a new multipurpose arena with private sources, as well as user fees, surcharges, assessments, and other revenues generated exclusively at the 185-acre Arco Arena site; and to require repayment by the private sector of the existing loan for the Arco Arena. NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SACRAMENTO that: The City Manager shall negotiate with the Kings and other stakeholders the terms and conditions of a partnership agreement to construct a new arena, provided that: 1. Private financial support would be, at a minimum, at a level consistent with the private financial support provided in similar situations in other municipalities, and would likely include lease payments to the city for a period not less than the period necessary to pay the total cost of the arena, and could include revenues from naming rights, parking charges, surcharges on ticket and concession sales, -2- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: media revenues and other identifiable sources of income. 2. Public funding would be limited to user fees, surcharges, assessments , and other revenues generated exclusively at the 185-acre site. 3. Public funding measures would involve no taxes unless such taxes are approved by voters. 4. The City may also seek regional financial support from those cities and counties that would benefit from a multi-purpose arena. 5. In addition to the private and public funding measures outlined above, the City would partner with the private sector to jointly develop the 185-acre Arco Arena site, or portion thereof, and use the taxes and revenues generated from the joint development to help fund the new arena. The development may not involve a shopping center that would compete with Downtown Plaza. 6. The following guidelines shall govern the City Manager's negotiations: a. The total cost of the arena shall not exceed $350,000,000. b. The City shall commit funds generated by the sale and reuse of the 185-Acre Site to the project, not to exceed $50,000,000. c. The City and other public partners, and MSE and other private partners, shall evenly split the balance of the cost of the arena; d. City contributions beyond those generated by reuse of the 185-Acre Site shall be subject to voter approval. e. The existing City loan to the Kings shall be repaid from private sources. 7. The staff shall report back to the Council on September 21, 2004, with a site- specific project and financing plan, and with a plan to schedule a Special Election in March 2005 for voter approval, that includes a financing plan acceptable to Council. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. -3- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: ^ MAYOR ATTEST: CITY CLERK 4 FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: Exhibit B Natomas Financing Proposal Project Cost Arena 293,000,000 Demolish Arco 10,000,000 Subtotal Construction 303,000,000 Cost Escalation 2 years (2% and 3%) 12,241,200 Total: Natomas Sports Facility 315,241,200 * not included: Plaza $23 million, structured parking $33 million, site clear and re-surface $14.4 million City Contributed Revenues Low Hig h Natomas Land Sale - 97 Acres 24,250,000 48,500,000 Natomas Property Re-use residential) Property Tax 419,000 /yr 3,352,000 4,190,000 Utility Tax 209,520 /yr 1,676,160 2,095,200 In lieu fees 41,904 /yr 335,232 419,040 TOT Exemption 12,000,000 15,000,000 Total City Revenues (leveraged)** 41,613,392 70,204,240 "City contribution from property sale suggested in reso: $50 million Potential Sources for MSE Contributed Revenues Low High Ticket tax: Kings (43 x 15,000) ($1 or $3) 645,000 5,160,000 19,350,000 Ticket Tax: Monarchs (17 x 9,000)($1 or $3) 153,000 1,224,000 4,590,000 Ticket Tax: Other (SED Report)($1 or $3) 775,450 6,203,600 23,263,500 F&B Surcharge - Arcol 22,000,000 /yr 3,520,000 8,800,000 Naming Rights ($1 mil or $3 mil/yr) 8,000,000 30,000,000 MSE Lease Payment 24,000,000 60,000,000 Parking Surcharge - arena events (10% or 12%) 4,400,000 6,600,000 Total MSE Revenues (leveraged) 52,507,600 152,603,500 Total All Revenues Potential Sources to Fill Gap 94,120,992 222,807,740 Fundin g Ga : Best Case (Highest Revenues - Cost) 92,433,460) Funding Ga : Worst Case (Lowest Revenues - Cost) 221,120,208 Potential Sources to Close Ga p TOT Increase 1% and 2%) 12,959,000 32,400,000 Rental Car Surcharge 30,800,000 77,000,000 I I EXHIBIT C NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SACRAMENTO that: The City Manager shall negotiate with the Kings and other stakeholders the terms and conditions of a partnership agreement to construct a new arena, provided that: 1. Private financial support would be, at a minimum, at a level consistent with the private financial support provided in similar situations in other municipalities, and would likely include lease payments to the city for a period not less than the period necessary to pay the total cost of the arena, and could include revenues from naming rights, parking charges, surcharges on ticket and concession sales, media revenues and other identifiable sources of income. 2. Public funding would be limited to user fees, surcharges, assessments, and other revenues generated exclusively at the 185-acre site. 3. Public funding measures would involve no taxes unless such taxes are approved by voters. 4. The City may also seek regional financial support from those cities and counties that would benefit from a multi-purpose arena. 5. In addition to the private and public funding measures outlined above, the City would partner with the private sector to jointly develop the 185-acre Arco Arena site, or portion thereof, and use the taxes and revenues generated from the joint development to help fund the new arena. The development may not involve a shopping center that would compete with Downtown Plaza. 6. The following guidelines shall govern the City Manager's negotiations. These guidelines are intended to be flexible and allow for negotiations to occur with stakeholders regarding alternative sites, proiect costs, and funding sources and amounts: a. The total cost of the arena shall not exceed $350,000,000. FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: Deleted: b. The City shall commit funds generated by the sale and reuse of the 185-Acre Site to the project, not to exceed $50,000,000. c. The City and other public partners, and MSE and other private partners, shall evenly split the balance of the cost of the arena; d. City contributions beyond those generated by reuse of the 185-Acre Site shall be subject to voter approval. e. The existing City loan to the Kings shall be repaid from private sources. 7. The staff shall report back to the Council on September 21, 2004, with a recommendation regarding a preferred site or sites for further consideration as well as a recommended financing strategy including the broad terms of an agreement regarding the arena. 8. The staff shall report back no later than October 26 with a recommendation regarding the preferred site and CEQA alternatives, an arena financing plan, refined terms of an agreement regarding the arena and recommended language for the March 08, 2005 ballot,. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. MAYOR ATTEST: CITY CLERK 2- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: Deleted: site-specific project and financing plan, and with a plan to schedule a Special Election in March 2005 for voter approval, that includes a financing plan acceptable to Council. 13 Exhibit D Consultant Biographies Steinmann Facility Development, Paul Jacobs, International Facility Group The Negotiating and Owners' Representative Team includes three members. Each will play a significant role in evaluating development options, negotiating MOUs and deal points, and representing the City of Sacramento in any Owner Representation and project monitoring services that may be required should the development of a new arena proceed. Initially the effort will be coordinated by Jim Steinmann, a resident of Lake Tahoe with an office in Fair Oaks. Jim has 32 years experience in public facility development throughout the United States and has represented local governments on more than 40 projects totaling over $3 billion in development cost. Jim has represented the City of Oakland in the renovation of the Oakland Arena for the Golden State Warriors, the City of San Diego for a new ballpark for the Padres, and the renovation and expansion of Qualcomm Stadium for the 1998 Super Bowl. Jim's local office, The SGS Group, has completed a number of strategic planning and facility master planning projects for the City of Sacramento, Sacramento County, and the State of California. Jim will lead the facility development, cost analysis, and implementation efforts for the Team. Paul Jacobs, Esquire, of the law firm Jacobs, Chase, Frick, Kleinkopf, & Kelley will be the lead negotiator. Mr. Jacobs lead the Denver City team for the development of the McNichols Arena for the Denver Nuggets, represented the ownership for the development of Coors Field, and has led the negotiation team for the City of San Diego for the development of Petco Park for the San Diego Padres. He is currently negotiating development and lease agreements between the City and the San Diego Chargers for a new stadium at Qualcomm Park. Our Team also includes International Facilities Group (IFG) represented by Kevin Greene. IFG has provided project management and lender or owner representation services for the development of 23 arenas, ballparks, and stadiums including nine NBA arenas for the Lakers, Bulls, Rockets, Nuggets, Trailblazers, Mavericks, Heat, Pacers, and the Spurs. IFG will provide valuable insights on ownership perspective, operating costs, and operating agreements and provide a wealth of information on NBA arena program and cost comparisons. IFG would also assist in on-site project management services to represent the City's interest if the project proceeds with construction. Margaret Mullen President & Chief Executive Officer, Downtown Raleigh Alliance Margaret Mullen will serve as an advisor to the City of Sacramento regarding the proposed new sports arena. Margaret Mullen is President and CEO, Downtown Raleigh Alliance. The Alliance is the non- profit organization charged with overseeing the revitalization of Downtown Raleigh, and is funding in part by an assessment on property owners in the 110-block area of Downtown. The Alliance oversees the "clean and safe" program, as well as marketing, advocacy, planning and economic development for Downtown. Prior to her move to Raleigh, Mullen was President and COO of Urban Realty Partners, a real estate development company in Phoenix, AZ, from November 1998-December 2002. Mullen's responsibilities included overseeing planning and zoning negotiations with municipalities, development and contract negotiations and operations management for the company's real estate interests. She oversaw construction of major office parks in Roseville and Fairfield, California, and handled lease negotiations and construction management for the firms Phoenix projects. As the founding CEO of the Downtown Phoenix Partnership in 1990, a public/private partnership between Phoenix and downtown property owners and tenants, Mullen was instrumental in the rebirth of Phoenix's downtown. Projects developed during her tenure include the downtown street beautification project, Bank One Ballpark, the artists' studios on Jackson, America West Arena, the Orpheum Theatre, Arizona Science Center, Phoenix Museum of History, and continued expansion of Arizona Center. Negotiations on Collier Center, the hotel at Arizona Center and two housing projects were completed before she left her post. Her accomplishments have earned her recognition from the International Downtown Association, the Distinguished Achievement Award from Arizona State University College of Extended Education, the prestigious Athena Award for businesswomen of the year in 1997, and many others. Mullen serves on the Boards of ArtSpace and Exploris in Raleigh. She is past chairman of the International Downtown Association. She served on the founding board of Home Base Youth Services, currently serves as Chairman of its Advisory Committee and was recipient of the Leadership with Integrity 2000 Award. She is also on the Boards of Homeward Bound and Mission of Mercy. She served on numerous other boards and commissions, as was a member of AZ Governor Janet Napolitano's transition team. She has consulted with cities such as Los Angeles, San Diego, Davenport and Washington, DC on downtown revitalization projects and plans. A lawyer by education, she has more than 30 years marketing and development experience with non-profit organizations. 360 Architects 360 Architecture offers a full range of comprehensive services from initial site studies, urban design and programming, to graphics and interior design. Currently the firm employs approximately ninety-five professionals and has offices in Kansas City, Missouri, and Columbus, Ohio. Founders George Heinlein and Brad Schrock started in 1995 after a combined twenty years experience devoted solely to the design of sports, public assembly, and civic facilities worldwide. Prior to forming Heinlein Schrock, both Brad and George were Vice Presidents in Charge of Design at HOK Sport. Prior to that, Brad served as project designer with Ellerbe Becket, Inc. Their extensive design portfolio includes such noteworthy facilities as Chicago's United Center for the NBA Bulls and NHL Blackhawks; the America West Arena for the NBA Suns; the American Airlines Arena for the NBA Heat, Nationwide Arena for the NHL Columbus Blue Jackets; Nashville Arena for the NHL Preditors; Coors Field for the Colorado Rockies; and the New Pacific Northwest Baseball Park for the Seattle Mariners. Both Nashville Arena and Coors Field have been recognized with Design Excellence Awards from the American Institute of Architects. 360 Architects is selective in the quantity and types of projects that we pursue each year, searching for unique opportunities and collaborations on projects that enable us to contribute to the creation of distinctive buildings. 360 Architecture's business philosophy is built upon dedicated personal attention from our principals and key staff members on each and every project, compelling us to accept only those projects that can receive the appropriate attention. It is this dedication and personal commitment to projects, combined with experience and approach to the design process that distinguishes 360 Architects in the marketplace. Projects: New York Jets Stadium, NFL Jets, New York, NY Washington DC MLB Site Selection Study, Washington DC Stockton Events Center, Stockton, CA Nationwide Arena, NHL Blue Jackets, Columbus, OH American Airlines Arena, NBA Heat, Miami, FL Sacramento Arena Study, NBA Kings, Sacramento CA Seattle Center Feasibility Study, NBA Sonics, Seattle, WA Safeco Field, MLB Mariners, Seattle, WA Kohl Center, NCAA Badgers, University of Wisconsin - Madison CommunityAmerica Ballpark, Northern League T-bones, Kansas City, KS Veterans Memorial Stadium, Single A Kernels, Cedar Rapids, IA University of Miami Ice Facility, Oxford, OH Ripken Youth Baseball Academy, Aberdeen, MD 360 Architects prepared all prior planning and architectural analysis related to the proposed Kings arena under the name Heinlein, Schrock & Sterns, Inc. 16 RESOLUTION NO. ADOPTED BY THE SACRAMENTO CITY COUNCIL ON DATE OF RESOLUTION DIRECTING THE CITY MANAGER TO NEGOTIATE THE TERMS OF A PUBLIC-PRIVATE PARTNERSHIP AGREEMENT TO CONSTRUCT AND OPERATE A NEW ARENA EITHER NEXT TO ARCO ARENA IN NORTH NATOMAS OR IN DOWNTOWN SACRAMENTO WHEREAS, according to a City-authorized study, confirmed by the Sacramento Chamber of Commerce, Arco Arena, which was constructed in 1988, will be at the end of its useful life within five years and any new facility will take approximately five years to construct; and WHERAS, the cost of remodeling Arco Arena to meet today's codes and design standards could exceed the cost of demolishing the old arena and building a new one next to it, and it would be difficult to stage basketball games and other events during remodeling; and WHEREAS, the City currently owns 100 acres and the Sacramento Kings NBA Basketball Team owners (Kings) own 85 acres at the site, including the existing arena, and reciprocal ownership rights prevent either party from developing its own portion of the 185-acre site ("185-Acre Site") without the consent of the other party; and WHEREAS, 185-acre Arco Arena site could be jointly developed by the City and the Kings to: a. Demolish the current arena; build a new, more compact arena closer to the planned light rail station at the site; and develop the remaining site with a mix of retail, entertainment, office and housing uses, that would share parking with the arena, and generate revenue to help pay the cost of the new arena; or -1- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: 17 b. Be developed with a mix of retail, entertainment, office and housing uses that would generate revenue to help pay the cost of the new arena; WHEREAS, the experience of many cities is that locating arenas in urban core areas supports existing businesses, attracts new businesses, increases hotel and convention bookings, promotes use of transit infrastructure, and promotes residential development; WHEREAS, it may be of greater community benefit to locate an arena in downtown Sacramento; however, it may not be financially feasible; WHEREAS, the City Council has previously adopted a policy regarding public financing of a new arena, the most important elements of which are: the financing must not adversely affect the City's General Fund, which pays for City police, fire, library, streets, parks, recreation, code enforcement, and other essential municipal services; public funding should focus on public infrastructure; there should be no new taxes without a vote; and the financing must not adversely affect the payoff of the existing $83 million loan to the Kings; and WHEREAS, it would be consistent with the City's policy to pay for the cost of constructing a new multipurpose arena with private sources, as well as user fees, surcharges, assessments, and other revenues generated exclusively at the 185-acre Arco Arena site; and to require repayment by the private sector of the existing loan for the Arco Arena. NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SACRAMENTO that: The City Manager shall negotiate with the Kings and other stakeholders the terms and conditions of a partnership agreement to construct a new arena, provided that: 1. Private financial support would be, at a minimum, at a level consistent with the private financial support provided in similar situations in other municipalities, and would likely include lease payments to the city for a period not less than the period necessary to pay the total cost of the arena, and could include revenues from naming rights, parking charges, surcharges on ticket and concession sales, media revenues and other identifiable sources of income. -2- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: t ^) 2. Public funding would be limited to user fees, surcharges, assessments, and other revenues generated exclusively at the 185-acre site. 3. Public funding measures would involve no taxes unless such taxes are approved by voters. 4. The City may also seek regional financial support from those cities and counties that would benefit from a multi-purpose arena. 5. In addition to the private and public funding measures outlined above, the City would partner with the private sector to jointly develop the 185-acre Arco Arena site, or portion thereof, and use the taxes and revenues generated from the joint development to help fund the new arena. The development may not involve a shopping center that would compete with Downtown Plaza. 6. The following guidelines shall govern the City Manager's negotiations. These guidelines are intended to be flexible and allow for negotiations to occur with stakeholders regarding alternative sites, project costs, and funding sources and amounts: a. The total cost of the arena shall not exceed $350,000,000. b. The City shall commit funds generated by the sale and reuse of the 185-Acre Site to the project, not to exceed $50,000,000. c. The City and other public partners, and MSE and other private partners, shall evenly split the balance of the cost of the arena; d. City contributions beyond those generated by reuse of the 185-Acre Site shall be subject to voter approval. e. The existing City loan to the Kings shall be repaid from private sources. 7. The staff shall report back to the Council on September 21, 2004, with a recommendation regarding a preferred site or sites for further consideration as well as a recommended financing strategy including the broad terms of an agreement regarding the arena. 8. The staff shall report back no later than October 26 with a recommendation regarding the preferred site and CEQA alternatives, an arena financing plan, refined -3- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: , 1^ terms of an agreement regarding the arena and recommended language for the March 08, 2005 ballot. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. MAYOR ATTEST: CITY CLERK -4- FOR CITY CLERK USE ONLY RESOLUTION NO. DATE ADOPTED: , a(- Council Agenda Item 8/5/2004 12:00:00 AM

Motion Document No. 2013-0080 March 26, 2013 1 MOTION DOCUMENT NO. 2013-0080 Passed by the Sacramento City Council March 26, 2013 Entertainment and Sports Center Term Sheet Report # 2013-00266 Location: Citywide Issue: Consideration of the preliminary term sheet for private development of a downtown entertainment and sports center. Recommendation: Review and approve the Entertainment and Sports Center term sheet. Contact: John Dangberg, Assistant City Manager, (916) 808-1222, City Manager's Office Motion Document Attachment: 1. 2. Direction to City Manager and motion language Preliminary Term Sheet OFFICE OF THE CITY COUNCIL CITY OF SACRAMENTO CALIFORNIA ANGELIQUE ASHBY VICE MAYOR DISTRICT ONE STEVE HANSEN DISTRICT FOUR March 26, 20 13 RE: Item 18: Entertainment and Sports Center Term Sheet I) The resolution attached to the staff report wilJ be withdrawn. The Council wilJ take action on the Term Sheet by motion and provide direction to the City Manager on the following: a. Direct the City Manager to bring back by April 2/ t '"1 1. In accordance with the Council adopted principals for economic reuse in Natomas, present a comprehensive plan with a schedule outlining next steps for implementation ofNatomas reuse, including: land planning, rezoning and redevelopment strategies that build upon the planning work already completed by the N atomas task force, City Economic Development Department and community forums (previous report submitted to Council September 13,2011, Agenda Item #6). The plan moving forward wilJ be a collective effort with the Investor Group to include outreach with the community, the Task Force, and will utilize (as stated in the Term Sheet dated March 23, 2013, Page 14, under "Natomas Land Use Entitlements") the process designated to expedite the "highest and best uses" consistent with City land use policies and the goals identified in the collective North Natomas Community Plan. The City will hire outside consultation if necessary to advance the Natomas Reuse Plan. ii. A comf{I'~,If:Jlsive ,solution for the Crocker Art Museum from the impacts of the ESC Term Sheet, including: I) Iesolml~t~ elimination of parking revenues earned from Lots X and Y upon the transfer of these properties to the inve«or group; 2) identifying a plan for off-street parking proximate to the Museum to replace the spaces lost from the transfer of Lots X and Y; and 3) restructuring the loan from the City to the Crocker in order to relieve debt burden and restore partial funding to the Studios for the Performing Arts. 111. A plan to finance and construct the Community Center Theatre modernization including ADA compliance work, and to assess the ability to finance a capital loan on reasonable terms to one other economicalJy catalytic children's theatre project (B Street Theatre). iu !l>e CoRtFal City that is 79% or mote ~rivately f,lR~. b. Motion: Approve the Sacramento Entertainment and Sports Center Term Sheet Si cerely, I Ange ·que Ashby, J.D./ s:;;_ 1 I &<-l'l'-"'-!"brV\~ Steve Hanse~Esq. City of Sacramento, Council District Four Vice Mayor ~ ) City of SacrLento, Council District One 915 I STREET 5'" FLOOR, SACRAMENTO, CA 95814 SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 1 of 19 The City of Sacramento (City), in recognition of the public benefits to be derived, and an investor group led by Mark Mastrov, Ron Burkle and Vivek Ranadive (Investor Group or Kings HoldCo) have developed terms for a public-private project that would result in the potential development of a new multi-purpose entertainment and sports center (ESC) and the redevelopment of the Downtown Plaza. The Investor Group has (i) submitted a proposal to the owners of the general partner of Sacramento Kings Limited Partnership (Kings TeamCo or Kings or Team) and the National Basketball Association (NBA) to acquire all of the equity in such general partner and (ii) intends to keep the Kings in Sacramento long-term, contingent on the development of a new ESC (as defined below). The NBA is evaluating options regarding the future home of the Kings franchise. This Term Sheet, if approved by the City, will be submitted to the NBA to assist it in its due diligence process, and will only be effective if the NBA approves the Investor Group as new owners of the Kings and the Investor Group consummates the acquisition of the Team. If the NBA approves the Investor Group as the new owners of the Kings and the Investor Group consummates the acquisition of the Team, Kings HoldCo would likely establish an affiliated entity to develop, construct, and operate the ESC (Kings ESCCo); an affiliated entity to operate the Team (Kings TeamCo); and possibly other related entities. The definitive documents will specify the legal entities participating in the proposed transaction. This Term Sheet sets forth the process and framework by which the parties agree to negotiate definitive documents and potential approvals to be considered by the City regarding the potential location, financing, ownership, design, development, construction, operation, use, and occupancy of a new, first class, state-of-the art, multi-purpose entertainment and sports center (ESC) that will serve as the home of the Kings and will also host family shows, concerts, sporting events, community-oriented events, and numerous other events. The Investor Group has also expressed an interest in acquiring and operating a WNBA franchise to play its home games in the ESC. The parties agree to prepare definitive legal documents that contain the basic terms set forth herein, with other agreed terms consistent with this Term Sheet that are customarily included in similar agreements for the location, financing, ownership, design, development, construction, operation, use, and occupancy of comparable facilities. The parties intend that the planning, design, development and construction of the ESC will be led by Kings HoldCo, which will have final decision-making authority for that process, subject to City review and the provisions included herein, but that the entire process be a cooperative, mutual endeavor in which the parties actively participate and work together, in good faith and with due diligence – a public-private partnership. Although this Term Sheet contains the proposed, non-binding terms of a potential transaction which the City has agreed to process, the parties agree that no obligation to enter into definitive transaction documents, or any transaction, shall exist and no project or definitive transaction documents shall be deemed to be approved, until after (i) the proposed project is reviewed in accordance with the requirements of the California Environmental Quality Act (CEQA), (ii) any additional conditions or changes to the project based on the CEQA review have been resolved in a manner acceptable to the City and Investor Group and (iii) all required permits for the project have been obtained by the City in accordance with applicable laws and regulations. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 2 of 19 Parties City of Sacramento (City) Investor Group or Kings HoldCo – Parent company that owns and controls affiliates described herein (and possibly others). Kings ESCCo – Kings HoldCo affiliate responsible for developing, constructing, and operating the ESC. Kings TeamCo – Kings HoldCo affiliate responsible for owning and operating the Team. Note: The definitive legal documents will identify the legal entities formed by the Investor Group to acquire the controlling interest in the Kings and to develop the ESC. Ownership The ESC shall be owned by the City or a public entity controlled by the City. The land on which the ESC will be developed shall be owned by Kings ESCCo and leased to the City or a public entity controlled by the City for $1.00 per year for a term that will be co-terminous with the term (including any extensions) of the lease of, and management agreement for, the ESC. If, at the end of the term of the lease and management agreement, the City desires to continue to operate the ESC, the City and Kings ESCCo shall enter into good faith negotiations regarding the terms pursuant to which the parties would extend the term of the land lease for the period of such continued operation. This ownership structure, as well as alternative ownership structures, will be considered by the City and the Investor Group, but must be designed so as to not negatively impact the tax status of the City’s financing. The ownership structure as mutually agreed upon by the City and Investor Group shall be detailed in the definitive legal documents, which may include appropriate refinements to the terms in this Term Sheet, provided that the final ownership structure does not adversely affect the interests of the Investor Group. Location The ESC is proposed to be located at the Downtown Plaza on property currently owned or controlled by the City and affiliates of JMA Ventures, LLC (JMA), and on other parcels to be acquired or leased by the Investor Group, as necessary. See Exhibit 1 for a map that illustrates the Downtown Plaza location. The exact location on the ESC shall be determined by agreement of the parties, following additional design and planning. The parties may consider other locations by agreement. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 3 of 19 Description The ESC shall be a new, first-class, state-of-the art, LEED certified, multi- purpose entertainment and sports center that will serve as the home of the Kings (and potentially a WNBA franchise), and will also host family shows, concerts, sporting events, community oriented events, and numerous other events. The ESC shall also include the practice and training facility of the Kings. See Exhibit 2 for a summary description of the ESC’s preliminary program elements. The definitive agreements will contain a more detailed description of program elements. Sources and Uses of Funds Except as otherwise specified herein, each party shall be solely responsible for securing its financing and other funding sources required for the planning, construction, and development of the ESC. See Exhibit 3 for a preliminary list of sources and uses of funds to develop the ESC. 1997 Lease Revenue Bonds The City, in coordination with the Kings, shall retire the 1997 Lease Revenue Bonds issued by the Sacramento City Financing Authority upon the Team vacating Sleep Train Arena (currently anticipated to take place in September 2016). The City (or a Financing JPA or other similar entity) shall issue new bonds in an amount sufficient to pay all principal, interest, and other amounts (including interest swap penalties (if any)) necessary to retire the 1997 Lease Revenue Bonds, on terms and conditions generally comparable to the terms and conditions of the 1997 Lease Revenue Bonds, including an amortization period of 30 years. Kings TeamCo shall make timely payments in an amount sufficient to pay debt service associated with the new bonds. Payment shall be made regardless of labor disturbances (strike/lockout) or other force majeure events. Kings TeamCo shall provide adequate security or collateral (or a combination thereof) (Security) for repayment of the bonds, which may include an ESC lockbox mechanism to capture revenues to pay annual debt service. "Adequate" means the value of the Security (applying reasonable risk assessment standards to such Security), if liquidated, would yield sufficient proceeds to repay all amounts outstanding on the bonds. If the City and the Investor Group cannot agree upon Adequate Security, the determination shall be made by an independent investment banking firm specializing in municipal finance. The parties shall use their respective commercially reasonable efforts to implement alternative structures that would allow for off-balance sheet financing, subject to Kings TeamCo providing Adequate Security. Kings TeamCo shall have the right, but not the obligation, to utilize proceeds from the sale of its approximately 85 acres of land at the site in North Natomas, as well as other sources, to pay down the current balance of the 1997 Lease Revenue Bonds and reduce the principal amount of the new bonds to be issued. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 4 of 19 ESC Development The City and the Investor Group intend to work together in a collaborative and cooperative manner to develop the ESC in a fiscally responsible manner. The Investor Group shall be responsible for, and shall lead all phases of the planning, environmental review, design, land acquisition, development, and construction of, the ESC and related infrastructure. The City shall have the right to provide meaningful input with respect to the development of the ESC, which input the Investor Group shall reasonably consider in good faith. City approval rights, as well as other standards, requirements, and timing related to design, development, and construction of the ESC shall be established in the definitive legal documents. The parties intend that the entire project will be conducted as a cooperative, mutual endeavor in which the parties actively participate and work together with due diligence and in good faith. The parties will put in place and manage a design process for the ESC whereby the City will have direct input and will participate in developing a design that achieves the best possible project within the agreed program description and project budget. The City will be entitled to provide its input, and to the extent required by existing law will have approval rights, with respect to the ESC design at various stages of the design process, including schematic design, design development, and construction document phases of the project. The parties will implement a similar process for project design and construction change orders. The ESC preliminary program is contained in Exhibit 2, which sets forth the intended size and components to be implemented through the design and construction of the project. The ESC shall be constructed in accordance with the program elements and the Quality Standard (as defined below), subject to recognition of the overall size of the ESC. The “Quality Standard” for the ESC shall be first-class and state of the art, comparable to other NBA facilities including Amway Center (Orlando), Barclay’s Center (Brooklyn), Chesapeake Energy Arena (Oklahoma City) and Pepsi Center (Denver). The standard of quality and design of the project shall be comparable, taken as a whole, to the standard of quality used in the design and construction of the facilities named above. The ESC design and construction must also comply with NBA rules, including those related to technology and guest experience. Schedule The parties shall work cooperatively and make commercially reasonable efforts to open the ESC by September 2016 and shall promptly after the date hereof agree upon a schedule of milestones regarding CEQA, permits and other important events such as to meet such timetable. The City agrees to assign the appropriate planning, engineering, building, safety and other staff to enable the parties to achieve such timeline. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 5 of 19 Pre-Development Expenses The Investor Group shall be responsible for project pre-development expenses; provided, that, for the avoidance of doubt, the Investor Group shall have no obligation to reimburse the City for any pre-development expenses incurred by the City prior to the date hereof. Completion Guarantee and Cost Overruns The Investor Group shall use reasonable best efforts to cause the general contractor responsible for the ESC to provide a project completion guarantee consistent with the Schedule referred to above, and the Investor Group shall provide cost-overrun protection covering all elements of the development, construction, and delivery of the ESC. The project completion guarantee shall include separate written guarantees from financially viable individuals or entities, in form and substance satisfactory to the City, that the ESC will be completed timely. The terms and conditions of the project completion guarantee and cost- overrun protection shall be subject to approval by the City, in its reasonable discretion. Real Estate Development Subject to standard regulatory approvals, the City shall work in good faith with the Investor Group to modify existing zoning, as necessary, to allow up to 1,500,000 square feet of development and the ESC on the Downtown Plaza site. Such real estate development may include for the following: ? Office – 475,000 Square Feet ? Retail – 300,000 Square Feet ? Multi-Family Residential – 600 Units ? Hotel – 250 Rooms The Investor Group acknowledges the strategic and economic importance of this ancillary real estate development plan and shall use commercially reasonable efforts to develop the plan as generally described above as promptly as practicable after the ESC opening date, taking into account resources necessary to develop and operate the ESC. The City and the Investor Group shall work to develop a comprehensive signage program for the area, including the ESC and Downtown Plaza (Signage Program). The City acknowledges the strategic and economic importance of the Signage Program and will work to implement a program that is acceptable to the parties. The specifics of the proposed program shall be outlined in the definitive legal documents. City staff shall present to the City Council for consideration the proposed program and required amendments (if any) to the City's sign code at the appropriate time. Any rights shall exist throughout the term of the lease agreement (and any extensions). SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 6 of 19 CEQA As required by law, the City retains the sole and independent discretion as the lead agency to, among other things, balance the benefits of the ESC project against any significant environmental impacts prior to taking final action if such significant impacts cannot otherwise be avoided, and determine not to proceed with the ESC project. No legal obligations to approve the project, the permits for the project, or the transaction will exist unless and until the parties have negotiated, executed, and delivered definitive agreements based upon information produced during the CEQA environmental review process and on other public review and hearing processes, subject to all applicable governmental approvals. The City shall assist the Investor Group during the CEQA process, including working with the State of California (State) to qualify the project under AB900; however, the City shall not be required to incur costs in doing so. Non-Compete – Sleep Train Arena The Investor Group shall not operate, or allow others to operate, Sleep Train Arena in competition with the ESC. Non-Relocation – Kings Kings TeamCo shall enter into a binding and enforceable non-relocation agreement with the City that includes specific performance and injunctive relief provisions, pursuant to which the Kings will irrevocably and unconditionally commit and guarantee to play all its home pre-season, regular season, and post- season games at the ESC for a term of 35 years (subject to a limited number of league-approved neutral site games and other customary exceptions). The non- relocation agreement shall contain further customary terms that prohibit the Kings from relocating from the City and require the Kings to maintain its NBA Membership during such term. The Kings shall not relocate from the City, shall not apply to the NBA to transfer to another location outside of the City, shall not enter into or participate in any negotiations or discussions with, or apply for, or seek approval from, third parties with respect to any agreement, legislation, or financing that contemplates or would be reasonably likely to result in, any breach of the non-relocation agreement, and shall have no right to terminate the non- relocation agreement during the term of the lease agreement, in each case except as provided in the definitive non-relocation agreement. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 7 of 19 ESC Management Kings ESCCo shall manage and operate the ESC on behalf of the City pursuant to the terms of a separate management agreement. The management agreement shall have a minimum term of 35 years, with two five-year options exercisable by Kings ESCCo to extend the term. Kings ESCCo may elect to hire a private management company experienced in the management of comparable facilities to manage the ESC, subject to the reasonable approval of the City. The ESC shall be operated in a first-class manner, similar to and consistent with that of other comparable facilities that serve as the homes of NBA teams. Kings ESCCo shall be solely responsible for all aspects of the ESC operation (including the booking of non-Kings events). City oversight roles, responsibilities, and use of the ESC shall be determined in the definitive legal documents. Except for collateral assignments to lenders, Kings ESCCo shall not assign any of its rights under the management agreement without the approval of the City, to be granted or withheld in its reasonable discretion. Capital Contribution – Timing The parties shall determine the timing of the capital contributions for ESC development and construction in the definitive legal documents. Capital Contribution – City Equity/Other The City shall provide, or cause other public and private entities to provide, a total of $220,020,000 toward the development of the ESC. The City may approach other regional partners to identify alternative funding sources to support the City’s investment outlined herein. The preliminary sources and uses of funds for the ESC are summarized in Exhibit 3. Capital Contribution – City Land The City shall transfer and convey the following City-owned parcels of land to the Investor Group, free and clear of any liens. ? Natomas – City Parcel ? 3 rd Street and Capitol Mall (Lot X) ? 2 nd Street and O Street (Lot Y) ? Haggin Oaks/Business 80 ? 800 K Street ? 1121 8 th Street ? 4 th and J Street The value of the above-referenced City-owned land is $37,980,000 (estimated Natomas land value assumes flood moratorium lifted prior to sale). The Investor Group may elect to retain ownership of such parcels for development or sell the parcels and invest the proceeds in the planning, design, development and construction of the ESC. The Investor Group shall be responsible for providing the cash equivalent of the land value toward the development of the ESC. To the extent permitted by law, the City agrees to reimburse the Investor Group for the City’s net share of transfer taxes imposed in connection with the sale or other transfer of any of the above parcels by the Investor Group to any other person or entity. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 8 of 19 Capital Contribution – Investor Group The Investor Group shall pay the remaining balance toward the development of the ESC, currently estimated at approximately $189,700,000. The Investor Group shall have the right, but not the obligation, to obtain private financing for its capital contribution. The Investor Group may utilize ESC revenue streams that it is entitled to receive as security for its private financing or other obligations, to the extent not otherwise committed as Security for the new bonds issued to retire the 1997 Lease Revenue Bonds. The City shall reasonably cooperate with the Investor Group to facilitate the private financing of its Capital Contribution, including consideration of customary lender protection and rights; however, the City shall not be required to incur any out-of-pocket costs or provide any form of credit enhancement to facilitate such private financing. Use and Occupancy The ESC shall serve as the home of the Kings (and potentially a WNBA franchise) and will also host family shows, concerts, sporting events, community- oriented events, and numerous other events. The parties shall use commercially reasonably efforts to market the ESC aggressively to promote activity and economic development in the area. Kings TeamCo shall have priority in scheduling NBA games at the ESC. Subject to ESC availability, the Kings may use the ESC for practices and other Team- related activities or events (collectively with Team games, Kings Events), the scheduling of which shall be provided for in the definitive legal documents. There shall be no restriction on the ability of the Kings at any time to use the practice and training facility built into the ESC. The City shall be permitted to use the ESC to host up to 9 civic-oriented events per year that do not conflict with other previously scheduled events (City Events). The City shall not contract this right to third parties that would customarily contract directly with the venue operator in publicly owned facilities. Kings ESCCo and the City shall work together to provide the Sacramento Convention and Visitors Bureau (SCVB), the Sacramento Convention Center, and similar entities access to the ESC, subject to the limitations above. The City shall have the right to schedule City Events in advance based on ESC availability. For City Events, the City shall: 1) pay no rent or use fee; 2) retain all event-related revenues; and 3) only be required to pay the incremental out-of- pocket costs incurred by the ESC in hosting the event. The City shall also have the right to utilize the ESC for small meetings, banquets, etc. (City Minor Events) if the events do not conflict with other previously scheduled events, subject to ESC availability and on terms agreed by the parties. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 9 of 19 Ticket Surcharge – ESC All events held at the ESC shall be subject to a 5.0% ticket surcharge. The ticket surcharge shall be applied to all paid tickets sold, including tickets to club seats (including loge boxes) but excluding tickets to suites (except as provided below), and shall be paid by the respective event. In the case of suites, the ticket surcharge shall only apply to non-Kings Events that have an established ticket price separate from the annual suite license fee. All ticket surcharge revenue collected from ESC events shall be disbursed to the City monthly. The City shall retain all revenue generated by the ticket surcharge. Ticket Surcharge – Sleep Train Arena Effective June 1, 2013, all events held at Sleep Train Arena shall be subject to a 5.0% ticket surcharge. The ticket surcharge shall be applied to all paid tickets sold, and shall be paid by the respective event. All ticket surcharge revenue collected from Sleep Train Arena events shall be disbursed to the City monthly and shall be held in a trust account until the parties retire the 1997 Lease Revenue Bonds. The revenue generated by the ticket surcharge shall be used to retire a portion of the 1997 Lease Revenue Bonds, and potentially to reduce the principal amount of the new bonds to be issued. Kings Lease Kings TeamCo, Kings ESCCo, and the City shall enter into a lease agreement for the ESC, containing the following principal terms and other terms to be negotiated: 1. Kings TeamCo shall enter into a 35-year non-relocation agreement, as described above. 2. The lease shall be for a term of 35 years and provide Kings TeamCo with two five-year options exercisable by Kings TeamCo to extend the term. 3. Except as otherwise provided herein, Kings TeamCo shall control and retain all revenues relating to Kings Events and the Team’s operations, including revenues from the sale of tickets, broadcast and other media rights, Team game day inventory, such as rotating and other customary temporary signage (including a reasonable allocation of LED signage to be agreed upon), on-court promotions, seat backs, pole pads etc., and other revenues typically retained 100% by an NBA team. 4. With respect to sales of suites and other premium seating, Kings TeamCo shall receive the value of tickets (to be agreed upon) to Kings Events; additional revenues from such sales, net of expenses (to be agreed upon), shall be divided 50% to Kings TeamCo and 50% to Kings ESCCo. 5. Kings ESCCo shall have the exclusive rights to sell arena signage and naming rights. The parties shall agree on the number of exclusive categories. The Team shall contribute an agreed upon level of game day team inventory to such sales SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 10 of 19 and the revenues from such sales, net of direct expenses, shall be divided 50% to Kings TeamCo and 50% to Kings ESCCo. 6. Kings TeamCo shall retain 100% of net food, beverage, and merchandise revenues generated by Kings Events. 7. Kings TeamCo shall be responsible for game-day operating expenses for Kings Events. 8. Kings ESCCo shall be responsible for Annual Operating Expenses of the ESC, as described below. 9. Kings ESCCo shall retain all fees related to the distribution of tickets in the primary market (i.e., any Ticketmaster convenience fees/rebates). Naming Rights Any name proposed to be associated with the ESC shall be tasteful and not to be a cause for embarrassment to the City and shall not include any companies primarily known for tobacco products, guns, etc. Digital Signage Plan The City and the Investor Group shall work to develop a comprehensive digital signage program. The City acknowledges the strategic and economic importance of the digital signage program and will work to implement a program that is acceptable to the parties. The specifics of the proposed program shall be outlined in the definitive legal documents. City staff shall present to City Council for consideration the proposed program and required amendments (if any) to the City's sign code at the appropriate time. Any rights shall exist throughout the term of the lease agreement (and any extensions). The parties shall work together to seek approval for up to six (6) digital signs. City staff shall present a recommendation to City Council for approval of any required amendments to the City code to allow the Investor Group to develop and operate three (3) digital signs on City property, with location and availability to be determined as detailed in the definitive legal documents and an additional three (3) sites on properties outside of the City. To the extent that the parties are not able to secure the additional signs on properties outside the City, the parties shall identify up to three (3) additional signs on City property. The Investor Group shall be responsible for the development and any operating and maintenance costs relating to such signage. ESC Parking During the term of the management agreement (and any extensions), Kings ESCCo shall, through a parking management agreement with the City, operate, maintain, and repair the Downtown Plaza parking facilities commonly referred to as Downtown Plaza Parking East, Downtown Plaza Parking Central, and Downtown Plaza Parking West (collectively, Downtown Plaza Parking). Kings ESCCo shall provide at least 1,000 parking spaces for premium seat holders at the Downtown Plaza Parking (DT Premium Seating Parking). Kings TeamCo shall retain 100% of net parking revenue generated during Kings Events by the SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 11 of 19 remaining parking spaces that are not considered DT Premium Seating Parking spaces at the Downtown Plaza Parking (DT General Parking). Kings ESCCo shall retain 100% of net parking revenue generated during non-Kings Events and non-ESC Events by the DT General Parking. The operating, maintenance, and repair standards shall be determined in the definitive legal documents. The City shall not be required to construct any new parking structures for the ESC. Except as noted above, the City shall retain net parking revenues from all other City-owned or controlled parking garages and lots. Other Event Revenues Except for City Events and Kings Events, Kings ESCCo shall receive all revenues from all other events. Property Taxes The Investor Group and related entities shall pay any and all property taxes (including taxes on possessory interests) associated with all real property interests in the ESC. The Investor Group and related entities shall be responsible for its own personal property and any other taxes related to its operations and income. Targeted Taxes The City shall not impose, and shall cooperate with any efforts of the Investor Group to prevent any other public entities from imposing, on all or any portion of the ESC or the Team any targeted or special taxes, assessments or surcharges (including ticket or amusement taxes or surcharges that are in addition to those set forth herein), including special district taxes, assessments or surcharges. Kings ESCCo, Kings TeamCo, and its users shall be subject to all City taxes or assessments of general applicability. Annual Operating Expenses Kings ESCCo shall be responsible for all annual operating expenses and routine maintenance and repairs (Annual Operating Expenses) of the ESC. By way of illustration and not limitation, Annual Operating Expenses include: ? Salaries, wages and benefits ? Routine maintenance ? Routine repairs ? Insurance ? Utilities ? Supplies and equipment ? Human resources ? Training ? Contract labor ? Setup/tear down ? ESC marketing/promotion ? Premium seating marketing/promotion ? Non-event security ? Non-event cleaning SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 12 of 19 ? Telephone ? Professional services (e.g., legal, accounting, etc.) ? Travel/lodging ? Equipment rental ? Taxes/permits/fees/licenses ? Dues and subscriptions ? Public relations ? Common area maintenance/landscaping ? Unreimbursed event expenses ? Unfunded pre-opening expenses (Year 1) ? Others The City shall have no responsibility for any operating expenses of the ESC (except for incremental, out-of-pocket expenses associated with City Events). Capital Repairs Kings ESCCo shall be responsible for all ESC capital repairs, replacements, and improvements (Capital Repairs). Identification of ESC capital repairs, replacements, and improvements shall be determined by Kings ESCCo, subject to the reasonable approval of the City. However, Kings ESCCo shall maintain the ESC in a first class manner so as to cause it to remain in a condition comparable to that of other NBA facilities of similar size, design, and age, ordinary wear and tear excepted. City oversight roles and responsibilities shall be determined in the definitive legal documents. Capital Repairs shall be paid out of the Capital Repairs Reserve Fund (see below). To the extent that the Capital Repairs Reserve Fund balance is insufficient to pay for required Capital Repairs, Kings ESCCo shall fund any shortfalls. Capital Repairs Fee All events at the ESC shall be subject to a charge of $1.00 per ticket Capital Repair Fee on paid tickets for all events to pay for Capital Repairs during the term of the management agreement. The Capital Repair Fee shall be subject to annual escalation in an amount to be determined in the definitive legal documents. Capital Repairs Reserve Fund Kings ESCCo shall deposit all Capital Repair Fees into a segregated and dedicated Capital Repairs Reserve Fund. Any surplus in the Capital Repairs Reserve Fund upon termination of the ESCCo management agreement (including any extensions) shall be disbursed as determined in the definitive legal documents. Any surplus from the construction of the ESC shall be deposited into the Capital Repairs Reserve Fund upon completion of the ESC. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 13 of 19 Municipal Services Customary police, traffic control, and other similar City-based services (Municipal Services) for ESC events shall be provided by the City at a general level and manner appropriate for ESC events and, with respect to Kings events, in compliance with NBA rules and standards. Kings TeamCo shall be responsible for any and all costs incurred by the City for Municipal Services provided for all Kings Events on terms to be set forth in the definitive legal documents. Kings TeamCo and the City shall cooperatively evaluate appropriate public and private staffing levels for police/security, traffic control, fire prevention, emergency medical, street cleaning/trash removal and other similar services based upon anticipated attendance for ESC Events; however, the City shall have final approval over appropriate staffing and service levels. The City shall use a "reasonableness standard” in determining appropriate staffing and service levels. In the event that the parties cannot agree on appropriate staffing and service levels, the Kings shall have the right to submit such dispute to a mutually agreed upon mediator or to arbitration for accelerated dispute resolution. Notwithstanding the foregoing, if the City determines that an emergency public safety issue exists with respect to a particular ESC Event, the City shall have the right to determine and impose the staffing level for that event. Kings ESCCo shall insure that events other than Kings Events shall be responsible for any and all costs incurred by the City for Municipal Services provided. Kings ESCCo shall be granted similar rights as Kings TeamCo as outlined above with respect to events other than Kings Events. The terms and costs of these Municipal Services for events other than Kings Events shall be provided on terms that are no less favorable than those provided for Kings Events, taking into consideration the expected attendance and nature of the event. Team Name The Kings shall include “Sacramento” as the first part of the Team’s name. For example, the Team must be named the “Sacramento _____.” The Kings may not include any other geographic, city, county, or state reference in the Team name. The Kings shall reasonably reference Sacramento in public statements (whether marketing, advertising, or otherwise). Corporate Headquarters The Kings shall maintain their corporate headquarters within City limits during the lease term (and any extensions). Team Transfer Upon any sale or other transfer of all or substantially all of the assets or equity of the Team (including the Kings NBA membership) prior to execution of definitive legal documents (and the City shall not have any consent right with respect to such transfer), the new owner must assume any and all obligations of this Term Sheet. Except as provided above, any assignment of any party’s rights under this Term Sheet is subject to the other parties’ consent in their sole discretion. Affordable Programs The Kings shall make reasonable efforts to provide attractive and meaningful programs to keep the NBA affordable for families in the Sacramento region. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 14 of 19 Vendor Rights Kings ESCCo shall be solely responsible for identifying and entering into third- party vendor contracts for the ESC. Third-party vendor agreements shall: reflect market rate terms, be generally consistent with agreements in comparable facilities, and, subject to parameters to be defined in the definitive legal documents. Agreements with Affiliates Any agreements between Kings ESCCo and any of its affiliates, shall: reflect market rate terms, be generally consistent with agreements in comparable facilities, and, subject to parameters to be defined in the definitive legal documents. NBA All Star Game The Kings shall request that the NBA host the NBA All-Star Game at the ESC within three years after opening. The roles and responsibilities of the City and Investor Group shall be determined in the definitive legal documents. Internet Kings ESCCo shall provide the City with a banner on the ESC website. The banner shall serve as a link to the City’s internet home page. Kings TeamCo shall provide the ESC with a banner on the Team’s website. The banner shall serve as a link to the ESC’s internet home page. Public Sector Suite The City shall have an option to use one complimentary, furnished luxury suite at the ESC (location to be determined by Kings ESCCo in good faith), including tickets and preferred parking to all ESC events included as part of a typical license agreement (but the City shall pay for all food and beverage associated with such suite), for any official City purpose during the term of the management agreement. Kings TeamCo shall provide suite tickets for Kings Events in the Public Sector Suite at no cost to the City. Distribution of tickets to the City suite will be subject to the City’s ticket distribution policy. Public Sector Tickets Kings TeamCo shall provide the City ten (10) complimentary tickets per Kings Event (location to be agreed upon) for any official City purpose during the term of its lease agreement. Distribution of tickets will be subject to the City’s ticket distribution policy. Operating Profit Definition Operating Profit shall be the difference between: (a) all revenues retained by Kings ESCCo relating to the operation of the ESC (as described above), including but not limited to: rent, concessions revenue, merchandise revenue, premium seating revenue, naming rights revenue, sponsorship revenue, Downtown Plaza ESC event parking revenue, ticketing handling fees and rebates, facility fees (except those earmarked for Capital Repairs Reserve Fund), interest income, handling fees, etc.; and: (b) all unreimbursed event expenses and Annual Operating Expenses paid by Kings ESCCo relating to the operation of the ESC (as described above). SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 15 of 19 Operating Profit Allocation (Waterfall) Operating Profits shall be allocated by the Kings ESCCo on an annual basis as follows: ? First $10,000,000 (escalated annually by CPI) to be allocated 85% to Kings ESCCo and 15% to City. ? Next $5,000,000 (escalated annually by CPI) to be allocated 70% to Kings ESCCo and 30% to City. ? Remainder to be allocated 50% to Kings ESCCo and 50% to the City. The minimum annual payment to the City shall be no less than $1,000,000 (escalated annually by CPI). Natomas Land Use Entitlements As described above, the City shall transfer and convey to the Investor Group the City-owned approximately 100 acres of land in North Natomas (City Land). The City will work cooperatively with the Investor Group to remove the existing mutual land-use restrictions affecting approximately 85 acres of land at the site in North Natomas (Kings Land) and the City Land. The City agrees to expedite the process for obtaining "highest and best use" land-use entitlements (including but not limited to General Plan amendment, Community Plan amendment, rezone, master parcel map, and infrastructure financing plan) consistent with City land- use policies and the goals of the North Natomas Community Plan in anticipation of a sale or development of the land by the Investor Group. The City shall work with the appropriate public agencies to lift the flood plain moratorium as soon as reasonably possible. The Investor Group will be responsible for the payment of any outstanding unpaid fees, penalties, or other liabilities on the Natomas land. The Investor Group shall plan, entitle, and, at its election, sell its property (including the land transferred to it by the City) and pay any costs and expenses incurred in obtaining such entitlements. The Investor Group shall be responsible for any site specific costs, including: demolition of Sleep Train Arena and other associated structures; demolition of baseball stadium foundation; cost of removing reciprocal easements; costs of all entitlements and an EIR, including all pre-planning, engineering, CEQA consultants, and litigation defense (if any); community outreach costs; mitigation costs required under the EIR; and, marketing costs/commissions. Notwithstanding the foregoing, the City shall indemnify the Investor Group for any costs and expenses incurred by the Investor Group or its affiliates in connection with any environmental contamination, remediation, or disposal of contaminated soils related to the City Land. Non-Discrimination The Investor Group agrees to comply with the City’s non-discrimination code requirements. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 16 of 19 Confidentiality The City agrees not to disclose, and to cause its affiliates and representatives not to disclose, to any third party any financial information or other confidential information provided to it pursuant to this Term Sheet or the definitive legal documents, to the extent permitted by law. NBA Approvals The parties acknowledge that the definitive transaction documents will be subject to the approval of the NBA. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 17 of 19 EXHIBIT 1 DOWNTOWN PLAZA LOCATION SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 18 of 19 EXHIBIT 2 PRELIMINARY PROGRAM DESCRIPTION Basketball Capacity (Minimum) 18,500 Suites (Standard/Super/Mini/Other) 50 to 70 Party Suites 4 Loge Seats 192 Ledge Seats 80 Club Seats 1,430 Courtside Club Seats 330 Space Type Gross Square Feet Classification 1: Spectator & Arena Bowl Facilities 145,916 Classification 2: Premium Facilities 58,110 Classification 3: Circulation 188,322 Classification 4: Food, Retail, & Spectator Facilities 104,250 Classification 5: Team Facilities & Practice Facility 49,879 Classification 6: Administration 25,463 Classification 7: Media Facilities 13,977 Classification 8: Event Facilitates & Operations Support 88,083 Classification 9: Parking TBD Estimate of Gross Building Square Footage (G.S.F.) 674,000 Source: Investor Group. SACRAMENTO ENTERTAINMENT AND SPORTS CENTER TERM SHEET March 23, 2013 Page 19 of 19 EXHIBIT 3 SOURCES AND USES OF FUNDS – ESC Sources of Funds Capital Contribution - City/Other $258,000,000 Capital Contribution - City Equity $220,020,000 Public Parking Financing/Other $217,520,000 Parking Infrastructure Fund $1,500,000 Sales Tax Construction Rebate $1,000,000 Capital Contribution - City Land Contribution - (1), (2) $37,980,000 Natomas - City Parcel (100 Acres) - (3) $19,990,000 3rd Street and Capitol Mall (Lot X) $9,970,000 2nd Street and O Street (Lot Y) $470,000 Haggin Oaks/Business 80 $3,920,000 800 K Street $750,000 1121 8th Street $850,000 4th and J Street $2,030,000 Capital Contribution - Sacramento Kings $189,705,000 Sources of Funds - Total $447,705,000 Uses of Funds Start-Up Expenses $3,667,000 Sales and Marketing $1,247,000 Design and Professional Services $26,148,000 Legal and Governmental Services $1,614,000 Project Administration $20,675,000 Construction/Systems/Equipment $311,250,000 Demolition $7,500,000 Permits, Testing, Fees, Taxes, and Special Assessments $23,669,000 Insurance, Financing, and Transaction Costs $13,935,000 Land Acquisition $26,000,000 Owner Contingency $12,000,000 Uses of Funds - Total $447,705,000 Surplus/(Deficit) $0 (1) - Broker opinion of value study prepared by CBRE. (2) - Investor group responsible for providing providing the cash equivalent land value toward the development of the ESC. (3) - Assumed value once flood plain moratorium lifted. 2013-00266 Council Agenda Item 3/26/2013 12:00:00 AM

RESOLUTION NO. 2010-002 Adopted by the Financing Authority September 7, 2010 RATIFYING AMENDMENTS TO AGREEMENTS THAT RELATE TO 1997 LEASE REVENUE BONDS (ARCO ARENA) BACKGROUND A. On April 15, 1997, the Sacramento City Financing Authority ("the Authority") adopted Resolution No. 97-001, thereby authorizing the issuance, sale, and delivery of bonds in an amount not to exceed $75 million for the purpose of financing the acquisition of certain real property and the facilities thereon constituting a sports arena known as ARCO Arena ("the Acquisition Bonds"). B. By approving Resolution No. 97-001, the Authority authorized and directed its officers and agents, jointly and severally, to do any and all thing sand to execute and deliver any and all documents they deemed necessary or advisable to in order to carry out, give effect to, and comply with the resolution. C. In May 2003, relying on the above-stated provision of Resolution No. 97-001, staff executed the following documents: 1. A letter agreement dated April 10, 2003, between the City, Sacramento Kings Limited Partnership ("the Kings partnership"); the National Basketball Association ("the NBA"); and U.S. Bank National Association ("U.S. Bank"), successor to First Trust of California, N.A. ("First Trustee") as trustee for the Acquisition Bonds. This letter agreement amended a letter agreement dated July 30, 1997, between the City, the Kings Partnership, the NBA, and First Trust, by which the NBA approved a Team Owner's Relocation Assurance Agreement dated July 1, 1997, between the City and the Kings Partnership. The Team Owner's Relocation Assurance Agreement obligates the Kings Partnership to pay the City an amount equal to the outstanding principal and interest on the Acquisition Bonds if the Sacramento Kings NBA franchise relocates to another city before the Acquisition Bonds have been retired. To secure the performance of this obligation, the Kings Partnership and First Trust entered into a Security Agreement that granted First Trust, as trustee for the Acquisition Bonds, a security interest of $20 million in the Sacramento Kings franchise. With the amended letter agreement, the NBA approved an increase in the security interest from $20 million to $25 million. The Security Agreement was also amended to reflect this increase. 2. A revised Subordination Agreement, dated May 5, 2003, between the Authority and U.S Bank successor to First Trust as trustee of the Acquisition Bonds. Under the original subordination Agreement, the Authority and the trustee of the Acquisition Resolution 2010-002 September 7, 2010 1 Bonds, which by assignment is the holder of the City's right under the Team Owner's Relocation Assurance Agreement, agreed to subordinate the security interest created by the Security Agreement to a senior lien of $30 million. The revised Subordination Agreement increased that amount of the senior lien (which secures the NBA's loans to the Kings Partnership under the credit facility) to $75 million. D. In 2010, during a review of the legal documents associated with the ARCO Arena bonds, staff determined that Resolution No. 97-001 did not clearly grant administrative authority to amend terms and documents once the bonds had been issued. E. Because it has been determined that Resolution No. 97-001 does not clearly reflect an intent by the Authority to grant staff on-going administrative authority to amend the documents after the bonds have been issued, and because all involved parties have relied upon the 2003 amendments, the Authority desires to ratify the letter agreement dated April 10, 2003, and the revised Subordination Agreement dated May 5, 2003. BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE FINANCING AUTHORITY RESOLVES AS FOLLOWS: Section 1 The Authority hereby ratifies (a) the revised Subordination Agreement dated May 5, 2003, describes in paragraph C (1) above; and (b) the letter agreement dated April 10, 2003 Section 2 In accordance with California law, the Authority intends that this ratification relate back to the 2003 date of each document. Resolution 2010-002 September 7, 2010 2 hair Kevin Johnson Adopted by the Financing Authority on September 7, 2010 by the following vote: Ayes: Councilmembers, Cohn, Hammond, McCarty, Pannell, and Mayor Johnson. Noes: None. Abstain: None. Absent: Councilmembers Fong, Sheedy, and Waters. Attest: Shirley Condolino, Secretary Resolution 2010-002 September 7, 2010 3 2010-0002 Finance Authority 9/7/2010 12:00:00 AM 1997 Lease Revenue Bonds (Arco Arena)