The Los Angeles City Council has spent months batting around a proposal for a $1.2-billion football stadium to be built downtown. Skeptics have questioned the project's impact on the surrounding neighborhoods, its ability to revive the city's struggling Convention Center and its power to generate significant new tax revenue. The process has not always been pretty — and the city's public officials have not always inspired confidence — but the most important questions now have been asked and answered as well as they can be in such an early stage of such a complex project. When the council meets Tuesday, it should approve the memorandum of understanding with the developer, Anschutz Entertainment Group, and allow the project to go forward.
The proposal is not without risk or downside. The city government would issue $195 million of lease revenue bonds to help pay for the project, and it would contribute some tax revenue generated by the facility to pay those off. Traffic and parking, already unpleasant aspects of life downtown, will probably be worse when events are held at the new stadium. Even after it is modernized, the Convention Center might fail to draw the big events that would make this project a success. Nor is it clear that the city has squeezed every dollar from the deal; for example, the city arguably deserves a share of signage and advertising revenue that the stadium might spin off.
Those are real concerns, but this proposal goes far toward addressing them. Regarding the city's exposure on the bonds, both city and AEG estimates predict that lease payments and tax revenues will cover the expense; in the event that they fall short, AEG has agreed to make up the difference. The city and AEG are exploring public transportation options that should limit the number of cars in the area, and football itself will not add much burden since games are played mostly on Sundays. Yes, the Convention Center might continue to disappoint even after a retrofit, but renovation is its only chance, and no one other than AEG is proposing to take that on at its own expense. Under this deal, AEG would invest $80 million in the form of a separate bond to rebuild that facility. AEG, not the city, would be on the hook for that debt.
One persistent question raised by critics of this proposal — and by this page — is an obvious one given Los Angeles' rocky history with the NFL: What happens if AEG moves ahead with the project and then fails to secure a team? The memorandum before the council answers that as conclusively as possible. The project, it says, "would not proceed until an NFL team has signed a contract" to play at the stadium. That's a welcome commitment and should reassure lawmakers.
As for whether the city has gotten every dollar it can, that's hard to know, but the deal today is far more protective of taxpayers than it was when negotiations began. The city's projected bond debt has fallen from $350 million to $195 million, which even the proposal's harshest critics concede is a tribute to the government negotiating team.
Moreover, although there are risks in any project of this size, there also is the prospect of considerable rewards. A rebuilt and newly attractive Convention Center could stimulate hotel construction in the neighborhood. The city projects that the new stadium and revamped Convention Center would produce 2,600 temporary jobs and 6,320 permanent ones. The stadium could be the home to one or even two football teams, not to mention the occasional Final Four and other major events.
And even after lease payments and parking and construction taxes are cycled back into paying for the facility, the city estimates that it would receive $210 million in net new tax revenue over the next 30 years. That money would pay for police officers and firefighters and the full range of city services — benefits that one does not need to be a football fan to appreciate.
Signing the memorandum of understanding does not bind the city entirely. AEG still would be responsible for completing an environmental impact report before it could commence construction. The city should continue to insist that AEG complete that work without shortcuts or special exemptions.
But approving this document would be an important step in this long process. By voting for it, the council would allow AEG to arrange financing for the project and keep it on pace to open in time for the 2016 football season. Just as important, it would demonstrate to the National Football League that Los Angeles, which has steadfastly and appropriately refused to cut any deal that devoted general fund money to a stadium, has at last found terms it can live with. The council should approve the memorandum, and AEG should get to work.