AEG, L.A. Lay Groundwork For Farmers Field With Tentative Financing Plan
L.A. city officials yesterday "produced their financing plan" for a downtown NFL stadium and new $275M wing of the Convention Center, saying the plan "would protect taxpayers by requiring the developer to absorb a greater share of the costs and risks," according to David Zahniser of the L.A. TIMES. The proposed agreement to build Farmers Field states that "demolishing and rebuilding part of the Convention Center -- a move that is central to the stadium deal -- would require" issuing $195M in bonds. City officials said that the bonds "would be backed by the city's general fund and repaid with new revenue generated by the project, including lease income paid" by AEG, parking taxes, property taxes and a one-time construction tax on the project. A summary report on the proposed agreement states that a further $80M in city-issued bonds "would be the responsibility of AEG, which hopes to open its stadium" in '16. That debt "would be repaid via income from a special tax district covering two existing AEG developments next to the stadium site: Staples Center and the L.A. Live entertainment complex." L.A. Chief Legislative Analyst Gerry Miller said that if AEG "fails to pay the taxes required to cover those bond payments, the city could foreclose on L.A. Live." AEG reps said that the company agreed to the new tax district "in exchange for two key concessions," including an extension of a city ground lease at Staples Center to 2067. Zahniser notes the proposal "sets the stage for what is expected to be nearly a year of more detailed negotiations between the city and AEG," and also "represents a change in direction from the deal announced in January" by AEG President & CEO Tim Leiweke (L.A. TIMES, 7/26). ESPN L.A.'s Arash Markazi notes the L.A. 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 between AEG and the city is "still about a year from becoming a reality, with the completion of an environmental impact report not expected until the spring" (ESPNLA.com, 7/26).
THE TIME IS NOW: With the NFL lockout ending yesterday, Leiweke said, "For us, the timing is perfect because it's coming at the same time we're finishing what no one thought we could do, which is a deal with the city. It puts a whole new amount of momentum and pressure on us to get going." Likewise, the L.A. TIMES' Sam Farmer notes Majestic Realty VP John Semcken "sounds as if they're treating the labor deal like a second starter's pistol, a call to re-emphasize the merits of their plan" to build an NFL stadium in nearby Grand Crossing. Semcken: "We want to demonstrate why we think our project is the best for the league, the best for a team, and the best for our fans." Farmer writes at the moment, AEG "has the momentum." Assuming the "bonds are approved -- and there are strong indications they will be -- AEG's next step will be twofold: continuing the process of getting the land entitled and getting an agreement from a team" (L.A. TIMES, 7/26). Discussing the tentative deal with AEG, Miller said, "We are just starting the process. Overall, there is no public money to be used." L.A. City Administrative Officer Miguel Santana added, "Our concern was to make sure the money would be there and that it allows us to use new revenue to pay for our bonds" (CONTRA COSTA TIMES, 7/26). ESPN L.A.'s Ramona Shelburne wrote, "If the city doesn't stay behind the project, it's hard to envision another scenario, or another project, that'll get this far and look this good again" (ESPNLA.com, 7/25). But in L.A., Bill Dwyre writes with a new CBA, the "richest and most successful sports league in the world has its swagger back, not that it ever really lost much of it." The NFL "got fatter and happier," and subsequently "less needy for L.A." (L.A. TIMES, 7/26). Also in L.A., Ron Kaye: "You can take super-salesman Tim Leiweke's word for what the deal is for AEG's proposed downtown football stadium -- it just depends which day of the week he's talking and which side of his mouth he's talking from" (L.A. DAILY NEWS, 7/26).
HELP FROM THE NFL: In L.A., Vincent Bonsignore notes there is language in the new NFL CBA that "specifically addresses the financing and construction of a new stadium" in L.A., and the league is "as close as it's ever been to again calling Los Angeles home." An NFL exec said, "It is absolutely a high priority" (L.A. DAILY NEWS, 7/26). Chargers Counsel Mark Fabiani yesterday said that a new CBA "means the league may resume loaning $100 million or more to help individual teams build a new stadium, but he stressed the money won’t be limitless." Fabiani: “It’s a huge victory for new stadium efforts in San Diego and elsewhere that the players and owners agreed on a credit system and the next step will be the NFL discussing, and we hope instituting, a new loan program. That will give the Chargers at least as much as if not more than we would have been entitled to under the old program.” He added, “Like the old program, the new program won’t be funded with unlimited amounts of money, and it will be first-come, first-served" (SAN DIEGO UNION-TRIBUNE, 7/26).
BLAST FROM THE PAST: In K.C., Sam Mellinger wrote the city's hope to bring an NBA or NHL tenant to Sprint Center is "now all but dead, at least in part because AEG, the company that pushed it on us, has moved on to a bigger project" with Farmers Field. K.C. "was the warm-up act for AEG," and now the city is "yesterday's news to the company that did everything but promise us a team." Mellinger: "AEG either whiffed on predicting how many franchises would be available for relocation or overestimated its own power to influence those moves. ... Everything that AEG hasn't done in Kansas City is being executed brilliantly in southern California" (K.C. STAR, 7/23).