One of the big questions has been how will the Maloofs be able to pay off the existing loan on Power Balance Pavillion. The answer is: refinancing. The city will offer new bonds at a considerably lower interest rate. The money raised will pay off the new loan and the Maloofs will still owe the same principal.
Mayor Kevin Johnson's Chief of Staff, Kunal Merchant says part of the Maloof's collateral is their share of profits from a new arena.
MERCHANT: "If we do it that way, it's a win for the Kings because they're able to pay off the old loan but continue to operate and be economically viable and the city's at no additional risk than where it was before ."
Merchant says any parking deal will include payments to the
city's general fund during the construction of the new sports and
entertainment complex. Once construction is completed,
profits from the facility will replace parking's place in the
general fund.
The city will receive 15 percent of the first $10 million in
profits each year from the arena and an increasing percentage on
additional profits.
The new projected price for the arena is $391 million. A
five-percent ticket surcharge will be among the miscellaneous
revenue generators employed in the financing. $3 million
is projected to be raised by the "Brick-to-Brick" capital
campaign.
The City Council could also vote to
sell any city properties depending on
the results of the bidding process for the operation of the
city's parking operations.
All told, the City is expected to put in $255.53 million,
the Kings $73.25 million, and Anschutz Entertainment Group $58.75
million.
Natomas will have another three years to find a replacement
for the Kings once they leave Power Balance Pavillion. The
Maloofs could sell the land or keep it and be part of the
revitalization of the property.
