Wednesday, August 3, 2011
L.A. officials endorse deal for NFL venue
By Arash Markazi
LOS ANGELES -- Yet another hurdle to the NFL's potential return to Los Angeles has been cleared.
A Los Angeles council committee voted unanimously Wednesday to endorse the financial framework of an agreement between Anschutz Entertainment Group and the city to build a new $275 million wing of the Los Angeles Convention Center and the attached Farmers Field, a $1.2 billion football stadium and events center.
The full city council will vote on the proposal Tuesday morning. The nonbinding agreement would need only a simple majority to pass and the deal's biggest critic expects it to be passed unanimously.
Councilman Bill Rosendahl, who was the most vocal committee member when it came to raising concerns and questions about the project, said he finally endorsed it after his questions were answered Tuesday night ahead of Wednesday's meeting.
"I would be surprised if (the upcoming vote is) not unanimous," Rosendahl said. "Unless there are questions that I didn't come up with, I don't know. ... I played the critic and they answered my questions and the deal moved in the right direction. I played the bad cop and the tightwad on this."
An actual deal with the city is still about a year from becoming a reality, with the completion of an environmental impact report not expected until the spring. AEG is hoping to begin construction on the project in June 2012, with Farmers Field opening in September 2016.
The biggest concern early in the process for Rosendahl, who was one of the four committee members to endorse the deal Wednesday, was any potential risk to taxpayers and the city's general fund. After negotiations between the city and AEG as well as a handful of public hearings, his concerns were addressed.
"I was the one asking all the questions and playing the role of the skeptic through this whole process," Rosendahl said. "I was the one who put all my questions out there and the deal changed from what it was proposed way back when. I was pleased with the progress we'd made in the last four months. It's a less risky deal for the city."
In January, AEG president and CEO Tim Leiweke had hoped the city would float $350 million in bonds to help finance the reconstruction of the Convention Center, with AEG promising to repay the funds with revenue from the stadium. After negotiations with the city, the cost has now been whittled down to $275 million, which will be paid for by tax-exempt bonds. Approximately 73 percent of the bonds would be covered by AEG and the other 27 percent would be covered by new tax revenues generated by Farmers Field.
Chief legislative analyst Gerry Miller and city administrative officer Miguel Santana negotiated the basic term sheet with AEG and went to great lengths to make sure all the risks associated with the project are on AEG's end, rather than the city's.
The agreement requires AEG to extend a series of financial guarantees over the course of the project as a safeguard against shortfalls. It also calls for AEG to break $80 million of the $275 million into a special bond financed with tax on already-established AEG-owned properties Staples Center and LA Live instead of a stadium five years away from potentially opening.
"To be very clear, there is no public money in the stadium, none," Miller said. "We are not financing the stadium, we're not giving any land breaks on the stadium and they're going to pay a market-rate land lease. There's no public money in this stadium."
There is a competing stadium project spearheaded by real estate developer Ed Roski's Majestic Reality Co. to build a 75,000-seat stadium in the City of Industry, about 15 miles east of Los Angeles. The project has had permits in place to begin construction for nearly two years but the group, as is the case with AEG, has yet to secure an NFL team.
"This is a giant leap forward," said councilwoman Jan Perry, the committee chair on the proposed stadium and events center. "Today was a vote of confidence in this project to move forward and begin the negotiations in earnest. It shows a great recognition that we as a city are pulling ourselves out of a recession and that we're directing and designing on our new future. This project will take us light years (ahead) of where we are and most people recognize this is a once-in-a-lifetime opportunity."
Arash Markazi is a reporter and columnist for ESPNLosAngeles.com.