Why should Los Angeles borrow $350 million to tear down a perfectly good convention center building and rebuild it on another expensive downtown location?
Because if the arrangement is approved by the City Council and mayor it’s a terrific deal for Anschutz Entertainment Group, the developer and owner of Staples Center and L.A. Live, which wants to build a football stadium in the downtown complex. That would permit AEG to land a National Football League franchise and make many more millions.
It’s definitely a case of misplaced priorities. We taxpayers would be going further into debt for a stadium when the city is so broke it slashed library hours. Library supporters are pushing Measure L on the March 8 city ballot, which would provide neighborhood libraries with enough money from current city revenues to help restore library service hours to at least six days a week, purchase books and support literacy and afterschool programs.
I don’t like ballot box budgeting but Measure L seems worthwhile. At least people can vote on it, which is more than I can say for the stadium deal.
Nobody knows how the stadium deal would work since Tim Leiweke, who runs AEG here on behalf of its billionaire owner, Philip Anschutz, offered the city council little more than a salesman’s smile when he explained things to a friendly council committee. But from talking to city officials, I have a general idea.
Several years ago, the city’s Convention Center and Exhibition Authority borrowed $450 million through the sale of tax- exempt revenue bonds to build an addition to the convention center, West Hall. It’s the green building you pass on the Harbor Freeway. The city leased the convention center from the authority and is paying off the bonds with city funds. In the current budget, $48.8 million is set aside for the yearly payment of this debt, which is now down to $445 million. It will take 30 more years to repay it, city officials said.
Under the NFL stadium proposals that have been aired in the press, the $350 million bond issue for the football facility would probably be added to the convention center authority’s existing $445 million debt, bringing total indebtedness to $795 million. This would boost debt repayment, or service, payments by $25 million or possibly $30 million a year, officials said. In other words, more than $70 million a year would come from the city treasury to repay the combined debt of the convention center and the football stadium.
That would buy a lot of library books.
AEG boss Leiweke said revenue from the football stadium will repay the $350 million he wants to borrow from the city.
I talked to Controller Wendy Greuel and Councilman Paul Koretz, who is chairman of the council’s Governmental Efficiency Committee. Both said it would be great to have an NFL team back in LA but they had questions.
Greuel, the city’s fiscal watchdog, said she wanted to make sure city funds aren’t used for the stadium. She also wanted to know details of the stadium financing and where the replacement for the demolished West Hall will be built. “And what about the bond?” she said. “I have said I will continue to look at it to see that it is the best deal for L.A.”
Koretz said he is concerned about the borrowing in view of the city’s bad financial outlook. He said he was also “concerned how much bonding capacity the city actually has and how the market responds to the $350 million in bonds.”
As Koretz told me, “There are a lot of questions, not a lot of clear answers.”