Pocket Change: New stadium, new problems

After months of San Diego Chargers fans waiting anxiously for some sign that their team would not forsake them, last week the city’s redevelopment group, Centre City Development Corporation, voted to pay a consultant $160,000 to study ways in which the city could pay for a downtown football stadium.

The new stadium would sit just east of Petco Park, seat 64,000 fans — with up to 70,000 for Super Bowl expansion — and, according to NFL officials, would be built on the smallest piece of land of any NFL stadium.

The Chargers aren’t paying a dime for the report, which should come out in three to four months.

According to CCDC spokesman Derek Danziger, the $160,000 will come from the agency’s administrative budget, and not the general fund, which is only a small piece of San Diego’s fiscal pie.

Chargers special counsel Mark Fabiani estimates that the project would cost $750 million to $1 billion.

According to a recent KPBS report, CCDC’s Chief Financial Officer Frank Alessi said CCDC has roughly $386 million to spend on redevelopment projects for the next 10 years. That comes to about $38 million a year, which has to cover parks and any unforeseen projects.

It seems unlikely that very much CCDC money could be allocated to the costs of building a new stadium. But, according to the San Diego Union Tribune, CCDC boardmember Jennifer LeSar said she doesn’t believe a new stadium could be built without assistance from the CCDC.

Related: Chargers eye downtown for possible new stadium | Sorting out the Chargers stadium search | Pocket Change: Costs of SD Chargers Qualcomm Stadium

Rumors that the Chargers might pitch in some stadium money have been floating around, but, as with most things related to the new stadium, no solid facts have been determined.

PC commentators will fill you in on how other cities have recently handled new football stadiums, and the affect it could have on San Diego:

Erik Bruvold, founding president of the National University System Institute for Policy Research:

In for a dime, in for a dollar – sometimes I wonder if it is the unofficial motto for the city of San Diego.  While $160,000 is a minimal amount of CCDC’s annual budget (approximately a tenth of 1 percent) one hopes that policymakers at least consider the following before they start chasing another field of dreams in the East Village.

First, the balance of power in debates about building new stadiums is rapidly shifting.  The days of the public footing the bill for NFL stadiums have come to an end.  The proposed San Francisco 49ers deal with the city of Santa Clara involves an indirect public subsidy of less than 10 percent of the project’s cost and is regarded by one of the foremost experts on sports economics as a fantastic deal.

The City of Industry is essentially creating a deal that is 100 percent privately financed with taxpayers largely off the hook and with almost no risk in its attempt to lure an NFL team.  Even with decades of rich history and tradition and the ability to sell out stadiums/domes in minus 30 degrees weather, Minnesotans are resisting the temptation to cave to the Viking’s demands.  San Diego should shoot for no less and limit the direct and indirect taxpayer contributions to no more than 10 percent of the project’s cost.

Second, policymakers need to grapple with what this proposed project could mean in respect to further gentrification of East Village and the question of what that, in turn, means for the various social service agencies that make the East Village home.   How compatible are those existing uses with the hope for a Super Bowl quality stadium positioned to attract much higher per seat revenue from luxury boxes and club seating?  If the stadium does ultimately put untenable pressure on these uses, then what?  Where would these social service agencies go?

The consensus that has emerged in the economic literature on sports stadiums is pretty uniform.  Their economic contributions are not large.  Except for special events, they largely shift existing consumption patterns by local residents.   Money spent on football is discretionary spending that would be spent on other forms of entertainment.  What positive impact they may have on long-term property values would be difficult to “capture” in California given Proposition 13 and the revenue caps that exist under California Redevelopment Law.  While some sports facilities catalyze development in the surrounding neighborhoods the results are mixed and football stadiums, in particular, do not have a good track record.

And yet football is highly popular, the NFL operates as a classic supply-constraining cartel and politicians feel compelled to do what they can to “save the team” when threats of relocation emerge.

Thus emerge three challenges for policymakers moving forward — damping emotion, ensuring the final deal is a great one for taxpayers, and the ability to back away from the table, perhaps after investing several millions of dollars in consultants and studies, if the price to play is too high and the risk to the public purse is too great.

Murtaza Baxamusa, Ph.D., AICP, director of Research and Policy, Center on Policy Initiatives:

It is the best of times or the worst of times, depending on the bet on taxpayer dime.

First of all, it is no surprise that CCDC is footing the bill. The agency has been a cash-cow for the city and developers in the last decade since the construction boom catalyzed by Petco Park.

Another stadium is therefore very alluring in terms of revenues from tourism, sales and property taxes for the general fund, as well as construction jobs. The lingering reminiscence of the golden days of the previous construction boom continues to mesmerize the agency and developers. However, the gamble for CCDC in terms of additional tax increments with the funding of a new stadium is risky.

The odds that a new stadium could mean for the next decade, what Petco Park was for downtown in the past decade, are improbable, because the agency was riding a speculative bubble that has burst.

Secondly, developers have come to expect windfalls, which creates a bullish environment for building that in-turn creates a self-sustaining market demand.

What better (for developers) than a public agency voicing its confidence in the future of downtown investment by promoting a mega-project? The exploratory venture using taxpayer dollars does not put any private party (like the Chargers) at risk of losing a dime. And the development frenzy is an all-expense paid indulgence, since development impacts on traffic, parks and libraries are mostly mitigated by the CCDC. After all, $160,000 is a thousandth of the downtown agency’s $160 million budget.

Steven Bartholow is SDNN’s multimedia editor and political reporter.

Tags: Chargers, consultant, downtown, Football, NFL, SDNN, Sports, Stadium, Uncategorized

This entry was posted on Monday, November 23rd, 2009 at 8:05 pm and is filed under Pocket Change, Sports . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.