Political Divisions Emerge on Eve of Arena Vote

On the eve of today’s initial City Council vote on a downtown Los Angeles sports arena complex for the Kings and Lakers, some cracks were developing in the political consensus that team owners have said they consider crucial to continuing with the project.

Councilmen Joel Wachs and Nate Holden on Tuesday vigorously attacked the plan, which would require at least $60.5 million in taxpayer funds to provide land for the $200-million privately financed, owned and operated arena.

A third councilman, Rudy Svorinich Jr., said he continues to have “serious concerns” about the project’s financial underpinnings but said he had not yet decided how he will vote today. If the council approves the nonbinding proposal today, negotiators on both sides would draft details for a memorandum of understanding by Oct. 15. Once that document was approved, the agreement would be binding pending environmental and other required reviews.

Under the proposal submitted by the Kings’ owners last month, the city would not share in the profits from the sports arena complex but could expect at least $1.5 million a year in increased tax revenues from the arena, city fiscal officials estimate. However, it would cost taxpayers about $7 million a year for 25 years to pay off the bonds that would finance the city share of the project, leaving a gap of up to $5.5 million to be covered either by a tax increase or cuts in city services.

“Something is terribly wrong in taking money that is desperately needed for police, fire, parks, libraries and youth activities and using it to line the pockets of wealthy owners and players,” Wachs said in issuing his own financial analysis that put taxpayers’ cost much higher.

Holden, at a news conference in front of the Convention Center’s aging North Hall, which would be torn down to make way for the arena, was no less harsh.

“They are asking for trouble with this. . . . The people will rise up. . . . There is no way [arena backers] will clear the legal hurdles” that Holden said he and others will put in the way of the project.

A representative for Kings co-owner Edward P. Roski Jr. downplayed the significance of the dissent expressed to date.

“Just because we don’t have unanimity doesn’t mean that the political will isn’t there,” said John Semcken, vice president for Roski’s Majestic Realty firm. “We’re completely happy with the deal we’ve structured, and we believe it is a win-win situation for both sides.”

And Holden acknowledged the proposal will probably continue to draw wide City Council support.

“It’s pretty hard to stop a snowball once it’s started rolling down the hill, and the mayor’s office had this all signed, sealed and delivered before we even knew about it,” Holden said.

Wachs and Holden’s criticisms did not go over well with the broad coalition of business and political leaders--spearheaded by Mayor Richard Riordan--who see the complex as a rare and badly needed opportunity to revitalize a long-sagging part of downtown.

They believe the sports palace and the adjacent shops, restaurants and hotel that the team owners plan to add within a few years will spark more than enough revenue to offset the costs, especially if the project helps attract more business to the underbooked--and heavily city-subsidized--Convention Center. Many on the council also see the project as a catalyst for bringing an NFL football team to town, in the Coliseum or elsewhere along a central corridor along Figueroa Street, stretching from Exposition Park on the south through Dodger Stadium to the north.

“Anyone who votes against this is voting for a perpetual . . . loss at the Convention Center,” said Steven Soboroff, a policy advisor to Riordan who led city negotiations on the project. He referred to the center’s drain on the city’s general fund--$19 million this budget year, with the mayor’s budget office projecting even larger subsidies will in the future.

Soboroff also noted that the opposition could have the effect of keeping the teams in Inglewood, which has proposed a replacement facility for the Forum, currently home to both teams.

“This is just what Inglewood predicted would happen,” Soboroff said. He alluded to leaders of that city saying that Los Angeles could not muster the political unity or expedite its cumbersome development permitting process in time for the team owners’ Sept. 1, 1997 deadline for breaking ground.

Inglewood is offering to lease land worth $40 million for $1 a year and contribute up to $30 million in cash as well.

Wachs issued a detailed critique in which he said he had found hidden costs that would put the public’s price tag at $280.5 million over the life of the project.

Here’s how he added it up: $60.5 million for 27 years at a net cost of $7 million (higher than the city-estimated $5.5 million) equals $189 million; an additional $10 million the city could be liable for in case of cost overruns pencils out at $31.5 million over the same period; Wachs added an additional $36.5 million in bond issuance costs, $9.5 million in loss of North Hall revenues and another $13.5 million he says the city would lose by allowing the arena owners to put advertising and a sponsor’s name on the convention center.

He also said the city could run into several other unanticipated higher costs, including the expense of relocating those whose homes or businesses are cleared for the arena.

“That’s absurd, it’s not even Math 101,” Soboroff said, noting that the city has a cap on its cost overruns. “He’s double-counted lots of these costs and undercounted the revenues,” Soboroff compared some of Wachs’ cost figures to buying a $300,000 house. Over the years, the mortgage payments would add up to $1 million “but that doesn’t make it a million-dollar house,” Soboroff said.