Wednesday, January 19, 2011
No public funds needed for L.A. stadium
LOS ANGELES -- The chief executive of a company proposing a downtown pro football stadium told a City Council panel Wednesday the project would require no public funding.
AEG chief executive Tim Leiweke told members of the Trade, Commerce and Tourism Committee that AEG would pick up the estimated $1 billion cost of the planned venue near Staples Center and LA Live, two venues already owned and operated by the sports and entertainment firm.
Leiweke said AEG does need the city to issue $350 million in bonds to relocate a huge convention center hall and do other infrastructure work to make way for the planned 64,000-seat stadium.
New revenue from the site would be enough to service that debt, and AEG would pay any possible shortfalls, he said.
"There will be no public dollars invested in the stadium," Leiweke said.
His testimony came amid public concerns that the city could wind up paying for parts of the stadium, which would double as convention center exhibition and meeting space when NFL games and other sporting events were not being held.
John Semcken, vice president of Majestic Realty Co., which has a rival stadium proposal 15 miles east of Los Angeles in Industry, has claimed taxpayers would inevitably wind up paying for some of AEG's project.
"Saddling the city and the taxpayers with more debt to pay for AEG's Event Center should be a nonstarter for the City Council," Semcken said in a statement after the hearing.
Meanwhile, Greg Nelson, who served as chief of staff for former Los Angeles Councilman Joel Wachs, wrote in a Los Angeles Times opinion piece that AEG appeared to be underestimating the project's ultimate expense.
"Stadium proponents will overstate the project's economic benefits and understate its costs to the public," Nelson wrote.
Councilwoman Janice Hahn, who chairs the trade and commerce committee, said city officials need to keep a careful eye on the process to make sure those fears are not realized.
"We're going to have cheerleaders, but we're also going to have watchdogs on this proposal," she said.
The committee passed a series of motions asking the full City Council to approve the formation of a working group to hold discussions with AEG and to assign an independent accountant to monitor financial details.
The NFL hasn't had a team in Los Angeles since the Raiders and Rams left in 1995.
One potential sticking point could arise from the fact that the city hasn't finished paying back the loan it took out to build the existing West Hall, the convention facility that would be demolished and relocated under AEG's plan.
City accountants are working to calculate the debt, which must be paid off before the hall can be torn down, and to determine if that debt can be retired as part of a new bond issue, administrative analyst Jason Killee said.
Leiweke said at the hearing that AEG owner Philip Anschutz was willing to start building once permits and bonds are in place, even if the company has no commitment from a team.
"Mr. Anschutz has enough certainty now that a team will come if we build it," Leiweke said.
Majestic has said it wouldn't break ground on the rival plan in Industry until it had a team in place.
Leiweke said NFL officials told him they are committed to getting a team in the Los Angeles area, and downtown was the preferred location.
But in a statement after the hearing, NFL spokesman Brian McCarthy was not taking sides.
"There are two exciting and viable options in the Los Angeles area," he said.