Basketball Arena to Fund 0.4% of Sacramento Streetcar

According to a recent Sac Bee news report, the Sacramento Kings stadium developers are planning to fund $500,000 of the total cost of a planned 3-mile, ~$130M rail line through downtown Sacramento. The legal justification for the payment is a mitigation for the proposed development's transportation impacts on roadways near the proposed arena (a remedy for negative externalities). There is no stated nexus between the value that the streetcar will generate for the property and the payments made to fund the streetcar (classic value capture). However, "but for" the streetcar, it would appear that the property owners would not be allowed by the City of Sacramento to use the property for the proposed land use, potentially reducing the value of the asset if an arena is the highest and best use for the land at this time. It will be interesting to see if property assessment districts help fund the streetcar (as has happened elsewhere). That way, the stadium operators might contribute significant funds to the project through another value capture mechanism.