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.

The Trib is uneasy

Reflecting some fans' growing sense of unease about the Wolff's stadium efforts, the Oakland Tribune printed a new op-ed piece wondering if Wolff is really serious about keeping the A's in Oakland.

There is a question of whether this "paranoia" (their term, not mine) is grounded in reality. Frankly, a little "skepticism" (my term, not theirs) is healthy, since it tends to lead to a more realistic view of the situation. Unfortunately, there are some issues that can't be avoided, and they are contributing to this unease:

  • Oakland is running out of sites. Counting Wolff's dismissal of the Coliseum south lot, there are now only two sites left from the original seven in the HOK study. Those are the Oak-to-9th site (issues detailed in last night's post), and perhaps Fremont (which has had no public discussion recently).
  • Sites along BART corridors are disappearing quickly, as large mixed-use transit village developments are being constructed and planned near existing BART stations.
  • The sites that have been discussed have high acquisition and remediation (cleanup) costs associated with them, which can drive up the cost of a ballpark tens of millions of dollars.
  • There has been little discussion of the financing issue, which promises to be the most divisive and difficult of all.
  • There has been no effort to raise awareness among the voting public. The closed manner in which Wolff and his development team is proceeding is partly to blame for this.
  • Mayoral support is non-existent.

Wolff still has several months left to complete his local search, after which he'll make some sort of announcement. I personally feel that it is still possible to get some sort of plan moving forward, but the A's really need to involve the public more - and that doesn't just mean politicians, I'm talking citizens and fans.

There are, of course, the inevitable questions that I get daily about the A's moving to Vegas. Las Vegas has plenty of issues of its own, with the small TV market, the casino industry's influence (they aren't willing to take MLB games off the wagering boards, and they are opposed to a publicly-financed ballpark), and the lack of a good tentative ballpark situation (Cashman Field only holds 9,300 people and is not a good expansion candidate). Portland? Maybe, if they can get the financing details right (I have doubts about Portland's ability to contain costs, and the mayor is anti-ballpark).