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Sacramento's Delay In Selling Kings Arena Bonds Could Cost City Millions

Sacramento's Delay In Selling Kings Arena Bonds Could Cost City Millions

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The city of Sacramento "can’t issue the bonds needed to finance its promised" $255M contribution toward the NBA Kings' new downtown arena, according to Kasler & Lillis of the SACRAMENTO BEE. City officials said that the delay "could cost taxpayers millions of dollars because interest rates are almost certain to go up soon." The holdup "is a two-year-old lawsuit by a trio of citizens challenging the public subsidy." City officials said that they are "nervous that interest rates will jump before the case is resolved and they’re able to issue the bonds, which would be repaid with revenue from the arena and city parking meters and garages." Kasler & Lillis cited a Friday report on the economy as making it "even clearer that interest rates will likely rise," perhaps by 1% later this year. City Treasurer Russ Fehr said that the debt burden "could increase" by around $2.5M a year if the increase occurs before Sacramento can sell its arena bonds. That works out to roughly $80M "over the three decades it will take to pay off the notes." Assistant City Manager John Dangberg said, "We’d like to get this litigation resolved so that risk can be removed." Kasler & Lillis noted construction on the arena "is well underway," with the Kings "paying the bills so far." The team said that it is "confident the city will be able to deliver on its end of the bargain." Kings President Chris Granger in an e-mail wrote, "We believe the lawsuit is frivolous. We trust the courts will agree in short order, and we have no doubt the city will fulfill its obligation and fund on time" (SACRAMENTO BEE, 3/7).

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