LA has tentative stadium agreement
LOS ANGELES -- On the same day the NFL ended its 4½-month lockout, Los Angeles took a big step toward bringing the NFL back to the city after a 16½-year absence.
Los Angeles officials on Monday unveiled a draft of a "Memorandum of Understanding," which basically outlines the framework of an agreement between AEG 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 city council plans to vote on the proposal after a series of hearings this week and is expected to have a decision before going on a two-week recess Aug. 20. The non-binding agreement would need only a simple majority to pass, which is expected, and keep the project on track.
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 agreement states construction on the project cannot proceed until an NFL team has signed a contract to play at Farmers Field. That means an NFL team could be playing in Los Angeles as early as next season if AEG begins construction on the project this summer. A team would likely play in the Coliseum or Rose Bowl until Farmers Field is built.
Chief legislative analyst Gerry Miller and city administrative officer Miguel Santana negotiated the basic term sheet with AEG and recommended the council approve the memorandum, concluding "the project is financially viable and would improve the LACC facilities, expand the city's economic base and draw an NFL team to Los Angeles."
The biggest difference between the original deal AEG proposed in January and the current proposal is the cost of the Convention Center expansion and the bonds needed to build it. 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 them with revenue from the stadium. 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.
"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 has yet to secure an NFL team but believes they will be able to do so now that the league has ended its work stoppage.
"With the NFL season primed and ready to go, we are excited to re-engage with the NFL on how and when to move a team back to our region," John Semcken, vice president of Majestic Realty, said in a statement. "Majestic's stadium proposal is shovel-ready and we are experiencing a great deal of support from owners and team representatives around the league and leaders in our area who believe our deal is best suited for long-term success."
The team most commonly linked to moving to Los Angeles is the San Diego Chargers, which began as the Los Angeles Chargers at the Coliseum in 1960 and have tried unsuccessfully for nearly a decade to get a new stadium to replace 45-year-old Qualcomm Stadium. The Chargers can announce their intentions to leave San Diego between Feb. 1 and April 30 of each year through 2020 if they pay off the bonds, which currently would be about $26 million, used to expand Qualcomm in 1997.
"There remains much work to be done -- including completion of a thorough and complex (environment impact report), processing of project entitlements and negotiation of definitive agreements -- but approval of this (memorandum of understanding) will represent a critical milestone in our efforts to break ground on this project within the next year," Leiweke said in a statement. "We look forward to continuing to work with the city to take this project to the next step at the same time that we also increase our focus on other key objectives, including progressing design of the project and securing the commitments necessary to bring the NFL back to Los Angeles."
Councilwoman Jan Perry, the committee chair on the proposed stadium and events center, said she will go over the memorandum of understanding with the committee before the full City Council, which will meet on Friday and vote on the deal next month.
"This is a good sign," she said. "I consider today's announcement a very positive and strong step and it should communicate to all those who are watching and listening that we are serious about engaging in this process."
Arash Markazi is a columnist and reporter for ESPNLosAngeles.com.