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21 June 2005

State-funded stadiums?

The Chronicle (thanks, Ballpark Digest) mentions a bill making its way through the California Legislature that would create a statewide governing body that would help fund, construct, and run various types of public entertainment venues, namely sports venues. The bill is CA SB 4, introduced by State Senator Kevin Murray of Culver City.

Unlike most other states, California has left funding for sports venue projects entirely in the hands of cities and counties. With the budget crunch seriously affecting city coffers, most cities have had little financial wherewithal or interest in publicly financing any new stadiums or arenas. The bill aims to create a governing body called the California Public Performance Facilities Authority, that would acquire land, issue bonds for construction, sell personal seat licenses and naming rights agreements, build and maintain the facilities. In other words, soup to nuts.

The question to pose here is, "Can this type of authority work in a state as large as California?" The NorCal/SoCal divide is alive and well, and it shows up when large projects have to be debated, such as the Bay Bridge Retrofit or water diversion. First, lets look at the projects that could be undertaken by the Authority:

  1. A's ballpark in Oakland/Alameda County
  2. San Francisco 49ers stadium
  3. San Diego Chargers stadium
  4. Sacramento Kings arena
  5. New LA football stadium to attract an NFL team
  6. San Jose Earthquakes stadium

That's over $2 billion in projects right there. But that's not all. The Authority would also fund infrastructure associated with these projects. It could also fund the construction of practice facilities, theaters and concert halls, race tracks, and just about anything else associated with live performances.

Some other notes:

  • The Authority would by administered by a nine-member Board of Directors. Five members would be appointed by the Governor (Schwarzenegger), two by the Senate President Pro Tem (Don Perata, Oakland), and two by the Assembly Speaker (Fabian Nunez, Los Angeles)
  • Bonds would be issued by the Authority, with revenue from each facility used to pay back the debt. (I'm not sure if this works under federal tax law.) As far as I can tell, no other input from the state would be required, which gives the Authority a significant amount of unfettered power.
  • The Authority could work directly with the California Infrastructure Development Bank instead of through the Legislature to obtain funds
  • One facility's revenues could not be used to pay back another's debt.
  • Debt incurred by the Authority would not be considered state debt (this is probably the federal tax loophole).
  • There would be a 40-year limit on the term of any issued bonds.
  • The bonds would be tax-exempt.
  • There's no description of any remedies that would be taken should revenue shortfalls make it difficult to repay debt.
  • The Authority would have eminent domain powers just like those of a city or county. Eminent domain is used at times for redevelopment purposes.
  • The bill is supported by Anschutz Entertainment Group, which owns the privately-owned Staples Center, LA Kings NHL franchise, the LA Galaxy and San Jose Earthquakes MLS teams, and the SF Examiner. AEG has stakes in the LA Lakers, Qwest Communications, and other wide-ranging ventures. Finally, AEG has been actively involved in the effort to attract an NFL franchise to LA.

The Sacramento Ballpark Authority, which built Raley Field, was cited as a successful example of this type of governing body. But how well does it scale? If this bill passes, we'll soon find out. Proponents will say this gives California teams the ability to bridge the gap in funding between them and out-of-state competitors. Opponents will say this looks like a huge, state-mandated pork project authority with no real public oversight. For each Sacramento Ballpark Authority, there's also an Oakland Football Marketing Association.

1 comments:

Rob Musselwhite said...

Super work performed.