Hand it to Tim Leiweke and AEG: They know how to whip up support for a project.
Last week, Leiweke, the company's president, turned on the afterburners of his campaign to build a downtown football stadium and lure an NFL team back to Los Angeles. He announced that Farmers Insurance has agreed to pay $700 million for naming rights to the proposed 64,000-seat, retractable-roof stadium, and he surrounded himself with political and sports luminaries lending support. Ed Roski Jr., the billionaire developer who has long labored on a separate proposal to build a football stadium in the City of Industry, was left to wonder where his project must stand.
Leiweke has made a success of Staples Center and the surrounding developments, and that, along with generous AEG campaign contributions, have won him plenty of friends in Los Angeles and Sacramento. Moreover, AEG has produced a novel and exciting stadium proposal. City leaders have a right to be enthusiastic, at least in theory — we'd love to bring a team back to this city too. But for city and state lawmakers, this is a moment to perform their duty, not to be so swept up by the glamour of this proposal that they give away the store.
Here, then, are a few reminders: First, pro football is all well and good, but Los Angeles hasn't had much trouble living without it since the Raiders decamped back to Oakland in the mid-1990s. Second, a stadium, combined with a reconstruction of the ailing Convention Center next door, has the potential to create jobs and boost tax revenue, but the city should not forgo all interest in making money from a deal that, after all, depends on public land and some degree of public money. And third, California's environmental laws exist for all, not just those who can't afford to buy their way out of them. Any modification of those laws to accommodate this project must be drawn narrowly, with the public interest in mind.
There is much to like in the proposal for a downtown football stadium, and one of the most attractive aspects is that it could bring in convention business that presently passes Los Angeles by. AEG has proposed not only building the stadium but simultaneously reconstructing the city-owned Convention Center; in order to finance that portion of the project, the company wants the city to issue $350 million in bonds that would be paid off, in part, by revenue from the stadium. But to make the deal pencil out, the company is asking the city also to divert much if not all of the tax revenue generated by the project to pay off the bonds. If that isn't enough, the company pledges to make up the difference. The result is that the public will assume very little risk, but it also stands to gain very little in direct revenues — taxes on seats, on purchases made inside the new facility and on the property itself would all be used to finance the new convention space.
Some use of this money, known as tax increment, is appropriate in order to make the project work. And the public would gain even without that money: The new stadium and Convention Center would generate jobs, new hotels drawn to downtown to service the center would generate additional jobs and revenue, and visitors who come for conventions or games would spend money outside the facility. But city officials should not give up the entire tax increment just because they like Leiweke and football. The public's representatives should bargain carefully — a task they may find more difficult now that they've pre-endorsed the deal.
While the city fights for its share of the tax revenue, the state should guard against granting any exemption from California's environmental protection laws so broad that it would insulate AEG from legitimate accountability or so sweeping as to set a troubling precedent.
It's natural that AEG would want protection from what Leiweke refers to as "unwarranted lawsuits" that could hold up the project. But what's "unwarranted"? This is a project that will generate significant traffic in a city already weary of battling gridlock. If commuters file suit to challenge the impact on traffic, Leiweke may see their effort as obstructionist and unwarranted, while others may regard it as a valuable check on the developer. Parking, too, raises questions with environmental and quality-of-life implications. Although there are many open spaces downtown on a Sunday afternoon, AEG envisions this facility as a host to dozens of events a year, some on weekdays and evenings. Some of those who attend would use public transportation, but others would have cars and need places to put them. If AEG's parking plan creates problems for nearby neighborhoods, surely those affected should have the right to challenge the project — including in the courts, if necessary.