Politics & Government

Local Neighborhood Councils Skeptical of AEG's Downtown Stadium Plans

While union leaders applauded AEG's plans to upgrade the convention center and build a new football stadium, local residents expressed concern that if the deal goes south, the city could be left holding the bag.

Neighborhood council representatives, members of the public and union leaders gathered Monday night at the  to hear Anschutz Entertainment Group CEO Tim Leiweke discuss his company’s plans to build an expanded convention center that will include an NFL football stadium in downtown Los Angeles.

Councilman Bill Rosendahl set up the town hall meeting to allow representatives from each of the eight neighborhood councils in his 11th district to ask questions directly to Leiweke and his team about the proposed billion dollar project.

“This is a great moment for us,” Rosendahl told the 150-plus crowd. “It’s about transparency, openness and due diligence, and an opportunity for people to make comments and ask questions. The goal is to understand absolutely every aspect of what could be a great deal for this city.”

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Leiweke was in full salesman mode, gushing about the possibility of bringing an NFL team back to Los Angeles and assuring attendees, “We can build a project long term to help turn the economy back around. [AEG] knows how to do projects without getting in harm's way or hurting taxpayers.”

AEG, which is owned by billionaire Philip Anschutz, has held previous meetings with various neighborhood councils. However, at this meeting Leiweke stated that the company had listened to the city's wishes and reduced its request for $350 million in bonds for the project to bonds in the “high 200 millions.”

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Leiweke said AEG would achieve this by demolishing the West Hall at the current convention center along with the 3,000 space parking garage and replacing it with 4,000 spaces at lots on Bond and Cherry streets. AEG would control and operate those lots, thereby eliminating the need for the city to pay for them.

This, Leiweke argued, would save the city from having to pay for the upgrade of the current West Hall, which was built in 1971. The hall, he said, would require an investment of $80 million from the city’s general fund to upgrade the premises.

Leiweke also said that AEG would do a land lease deal for the terms of the bonds, and the property taxes would be assessed on the stadium.

The proposed stadium would be built on AEG’s dime, Leiweke said, and would be fully operational by September 2016. However, Leiweke said AEG requires a Memorandum of Understanding by July 31 in order to start on the plans for the new convention hall on June 1, 2012, and have the stadium built in time for the 2016 football season.

Leiweke also touted the 20,000-30,000 jobs in construction and hospitality that the new center would create. AEG Chief Financial Officer Dan Beckerman noted that these jobs would generate “in excess of  $40 million annually in revenue to the city, state and county.”

Leiweke added that this would bring in more hotels downtown and several major hoteliers had expressed interest in opening up in the area.

AEG is also fully invested in what Leiweke called a “rigorous EIR process,” to the tune of $10 million, and is undertaking a mobility study in conjunction with the various transportation organizations in the city to mitigate traffic issues that will inevitably arise with the advent of a downtown stadium and NFL games being held.

While Leiweke did talk about AEG’s environmental commitment to the project and its silver LEED status for its L.A. Live tower downtown housing the JW Marriott and Ritz-Carlton hotels, he said he is working closely with the state to “protect this project from a competing project or those who want a quick check by using CEQA [California Environmental Quality Act]. We’re making sure there is an arbitration in process and we are working to avoid unwarranted litigation.”

It was the only time Leiweke alluded to a possible challenge by rival Majestic Realty Co.—owned by billionaire Ed Roski—and that company’s plans to build a stadium in the City of Industry. Majestic Realty received a CEQA exemption and is not asking for any city bonds to build its stadium, nor will it have to mitigate the massive traffic problems inherent in downtown Los Angeles.

Fifth District Councilman Paul Koretz also attended Monday's meeting and noted that with the revised proposal and the drop in the bond request amount, “this plan is better than what was originally presented, but the devil is still in the details.”

Union attendees at the meeting were delighted with the plans. At least half a dozen enthusiastic union reps made their way to the microphone at the end of the evening to express their support, arguing that the creation of jobs in the city is paramount and AEG’s plans will put many people back to work.

However, local neighborhood council reps were not as enthusiastic. Pacific Palisades representative Jamie Schloss pushed Leiweke to expand on the land lease deal with the city and exactly who will own the new parking spaces.

Schloss also asked what would happen if Anschutz couldn’t find a team to purchase. Leiweke responded that Anschutz would be on the hook for a billion dollars in that case. He added that AEG is prepared to buy up to half a team and push for a long-term lease. He also said that he knows of at least two teams that are interested in moving to Los Angeles.

Former Del Rey Neighborhood Council board president Mark Reddick wanted to know what hotels have expressed interest in building downtown if AEG’s project is given the go-ahead. Leiweke said there was interest from Marriotts, Westins, Regents and Hiltons.

“We believe if we get an MOU done with the city you’ll hear of two to three new hotel deals in the next six months,” Leiweke said.

Brian Gordon, representing Brentwood, asked about whether when the city does its appraisal of the site, will it be based on the current center or on the new entitlement, which would alter the value of the land and the ground rent. Leiweke simply said, “I think that’s a decision the city will make.”

Ken Alpert of Mar Vista expressed concern about the transit issues.

“The city and county have ponied up $10 billion in light rail and subways and the downtown light rail connector, which would provide a direct route from Union Station and obviate the need for shuttle buses,” he said. He asked if AEG is working to expedite these projects and also about the possibility of remote parking.

Ted Tanner who oversees real estate development for AEG said the company is working closely with the various agencies for those projects.

Quentin Fleming of Pacific Palisades took issue with the bonds request, saying that by definition there is a subsidy if the city issues bonds.

“There is also a loss of revenue to some extent,” he said, noting that he had read several academic studies that showed professional football teams and stadiums do not generate revenue.

Leiweke shot back that academics never invest economically and one only needs to look at AEG’s track record to see how many jobs the company created with the establishment of L.A. Live and the Staples Center.

However, Fleming pressed on, saying that construction jobs created while building a stadium are a separate issue from the long-term impact of a stadium.

“The proof is overwhelming,” he said, “that it’s a zero sum game. Families have limited income and if it costs them $200 to go to a football game that’s $200 they’re not spending in their district.”

David Ewing of Venice said he was also concerned about the bonds.

“There’s a limit to the city’s level of indebtedness,” he said. “The money you generate here at the stadium is going to pay back bonds instead of paying taxes.”

However, it was Jay Handel of the West Los Angeles Neighborhood Council who succinctly summed up many residents’ fears.

“We’re having to watch over a $400 million budget deficit. This could be a great project. We want jobs and revenue but we’re afraid the deal will go wrong and we won’t be protected.

“I implore you all,” he continued, “and most importantly our elected officials, to make the right deal and to be transparent. I think what you see here tonight is a lack of confidence. We’re all a little afraid the developer will win again.”

AEG will present contracts to pay off the bonds to a meeting of the ad hoc committee on the proposed downtown stadium at Los Angeles City Hall on Thursday at 9:30 a.m.


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