FROM THE NEWS-LEDGER — MAY 8, 2013 –
The City of West Sacramento is working on a plan to boost a local riverfront hotel project, and that plan involves some degree of risk to the city general fund. That fund is the pot of money that pays for things like police and fire protection.
The theory is that with some help from the public, a new hotel planned near Raley Field can become an upgraded version of what would happen if developers are left to private financing alone. The hotel would get a conference center and other amenities that consultants say won’t happen if the project has to relay only on private financing.
The city’s contribution won’t – if all goes well – touch your police and fire money. The city will stand behind $30 million in bonds, which will be repaid by indirect income from the future project. The bonds will be paid back with money from hotel room taxes and increased property taxes from the site – money that, without the project, might otherwise not come in at all.
If those future revenues fall short, then yes, your tax dollars are at risk.
Now, it’s not the first time that the City of West Sacramento has used public financing to help make a desirable project happen. The same kind of thing happened with the first office tower on the river (the “ziggurat” building, originally built for a lending company) and again with Raley Field, for example.
Those projects worked out. The truth is, that while West Sacramento has a public policy of stepping in with public financing mechanisms or other support to help make a desirable project come true – especially when that project is the “first of its kind” to take a gamble here – the city hasn’t gone hog wild with taxpayer money or taxpayer risk. City-backed bonds for Raley Field, for example, are being paid back on schedule as per the deal, without the need for West Sacramentans to reach into their pockets for cash and cover a shortfall. The stadium was a success, and it helped change the image of West Sacramento and its diamond-in-the-rough riverfront.
Now, the particular hotel currently planned for the Bridge District may never even come to fruition. But if it does – and if city participation nudges it to a higher quality project possessed of greater amenities – then the hotel will help raise the bar for the rest of the developing waterfront. The quality of some of the housing, businesses and restaurants going in nearby will go up alongside the business-class hotel, and so might future nearby property taxes, sales taxes and payrolls.
You can be philosophically opposed to public participation in private development, and that’s fine. But if so, you’ll have to recognize that it’s going to be hard to accomplish big projects in an urban area – or, at least, in your urban area. Competing cities may not be so ideologically pure, and they may become the places that get the edge for the ambitious projects.
Or, you can recognize that sometimes public involvement in development is a boondoggle. A city’s hopes can cause it to financially overextend itself, falling over backwards to make a dream project come true. Then it finds itself bushwhacked by its own overenthusiastic financial projects, or by the surprise of a crashing economy, or by the guile of tricky development partners.
But what if you think that it’s sometimes okay for a local government to take a modest amount of risk to make something good happen? Then this hotel project looks like a pretty good bet.
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Copyright News-Ledger 2013