Dream of Sports Palace Is a Long Way From Reality

When he unveiled his dream of building a sports palace in San Diego several months ago, La Jolla millionaire Harry Cooper summarized the blend of gung-ho enthusiasm and sober business acumen with which he approached the project by saying, “This is not an easy thing we’re talking of doing.”

The intervening weeks have done nothing to dissuade Cooper of that notion. Indeed, despite making progress on a number of fronts since he announced in February that he planned to take over the San Diego Sports Arena lease, the obstacles that confront Cooper appear just as formidable--and, from some perspectives, perhaps more daunting--as they did at the outset.

Today, Cooper finds himself facing a City Council that has grown skeptical of his commitment to build the arena downtown, where the price tag could be $20 million more than the estimated $120 million it would cost to construct it on his Sorrento Valley property. Moreover, even if Cooper and the city agree on a downtown site, his expectation that the city will cover that price differential could be an additional stumbling block.

Mayor Lukewarm

More significantly, Mayor Maureen O’Connor, who could play a pivotal role in those negotiations, has, at best, a lukewarm attitude toward Cooper’s proposal to build a palatial 22,900-seat sports complex to replace the 23-year-old, much-maligned Sports Arena.

“As far as I’m concerned, all Mr. Cooper is doing is buying a lease to operate a sports arena as is, where is, with no commitments from the city on anything else,” O’Connor said in a recent interview. “Later, if you’re going to take a look at building a sports arena downtown, that may be a possibility. But we’re nowhere near that.”

Even as Cooper goes about the difficult task of trying to secure development rights for an eight-square-block downtown parcel, city planners and others have expressed reservations about, as Horton Plaza developer Ernest Hahn put it, “simply dropping a sports arena complex” into downtown. Doing so, some warn, could seriously undermine plans for future downtown housing.

In addition, the major purpose behind building a new arena--attracting a professional basketball or hockey franchise to San Diego--still faces tough odds. Though Cooper has lined up an unidentified potential basketball owner, the prospect of luring a National Basketball Assn. or National Hockey League team here is hardly a slam-dunk.

“We’re aggressively pursuing those possibilities,” Cooper said. “But so are a number of other cities.”

The NBA has awarded two new franchises to Orlando and Minneapolis for next year, but neither that league nor the NHL has any current plans for further expansion.

A Changing Project

Over the past two months, the arena project itself has also undergone dramatic transformation. For economic and aesthetic reasons, the project has been expanded to include a 400-room hotel, a 13-story office building and 150 condominiums, with the surrounding development intended to provide a buffer between the arena and its immediate environs.

When, or if, the overall project is completed, Cooper and his partner, Richard Esquinas, may own only a small percentage of it, with most of the equity having been sold to other investors.

Yet, when asked whether that array

of obstacles and changes in direction bothers him, Cooper simply smiled and said, “I end each day feeling a little more positive than the day before.”

The problems that have been encountered are typical of any project of equal scope, Cooper said. While admitting to occasional frustration “over things not falling into place as quickly as I’d like,” the 56-year-old computer technology innovator said he keeps things in perspective by reminding himself of both the magnitude of his undertaking and the incremental progress that has been made.

“This isn’t a one-week or one-month or even one-year deal,” he said. “This is a very big project, and we’ve got to overcome a lot of odds. We never deceived ourselves about this being quick and simple. But I think even people at City Hall would admit that probably more has happened in the past two months on this than any other project its size.”

Memories of Past Plans

Within City Hall, enthusiasm over Cooper’s proposal is tempered as much by recognition of the thorny problems remaining as by memories of similar past plans that never got off the drawing boards.

Reflecting that cautious attitude, O’Connor clearly remains to be sold on the proposal. Her ultimate decision will be crucial, because, as mayor, she could expedite the project by championing it or delaying--and perhaps even scuttling--it with her doubts.

“In terms of priorities, I certainly don’t see this being near the top of the city’s list,” O’Connor said. “When I need $55 million for two police officers per 1,000 (population) and things like the ($2-billion-plus) sewage issue are coming up, . . . there’s no reason to turn City Hall upside down for this thing.

“I’ve said all along: Buy the lease and run the Sports Arena if you want to. But what we, the council, may do in the future about a new arena should not be contingent upon that deal. We don’t have to do anything but leave the Sports Arena where it is right now. That’s the cheapest and easiest option. Then, in 20 years, we’ll figure out what we’re going to do from there.”

Though Cooper realizes the importance of gaining the mayor’s enthusiastic backing, he professes to be unperturbed by O’Connor’s wait-and-see attitude.

“I don’t blame her for feeling that way,” he said. “We’ve still got a lot to do, and it’s natural to have some questions. When our package is complete, I think those doubts will be gone.”

Package Would Be ‘Ideal’

The Cooper-Esquinas purchase of the existing arena lease from the Canadian company that now holds it probably will not be final until June, Cooper said. Although he said the lease sale “is not contingent on any guarantees for a new arena,” he added: “It is all kind of tied together. It would be ideal if the whole package came together at the same time.”

O’Connor’s position notwithstanding, other city officials are enthused by the possibility of a new arena--particularly one built entirely or at least largely with private funds. They differ, however, on key questions such as possible sites or whether any public dollars should be involved.

Councilman Ron Roberts, whose district includes the current Sports Arena and who promoted the idea of a downtown replacement in his 1987 campaign, says flatly that downtown is the only location he is willing to support for this or any other arena proposal.

“I feel strongly that a sports arena is the kind of civic facility that belongs downtown,” Roberts said. “If this group can’t make that happen, I’d rather wait five years for one that could.”

In contrast, Councilman Bob Filner, who represents downtown, said he has not yet decided whether a site there or in a suburban area would be preferable. Similarly, City Architect Mike Stepner noted that the council “won’t know what the complete balance sheet on that question looks like” until economic and design studies now under way are finished later this spring.

A Clearer Picture

Cooper, who has spent more than $150,000 over the past two months researching possible sites, hopes to have that question resolved by mid-June, when an accounting firm’s comparison of downtown and Sorrento Valley construction costs will be completed. With preliminary architectural work already in progress, Cooper said that his “absolute drop-dead deadline” for a site decision is Sept. 1.

“By then, the architect just can’t dance anymore,” said Cooper, who hopes to break ground on the project by June, 1990. “Now, we’re doing interior design work common to either site. But by September, we’d have to start getting into more precise exterior things related to a specific site.”

Based on a tentative analysis, Cooper estimates a downtown arena would cost at least $20 million more as a result of higher costs for land, underground parking and construction logistics.

Advocates of a downtown arena argue that it would be a catalyst for development in the so-called Centre City East area, would be a major boon for downtown’s night life and could be used in conjunction with the bayfront convention center for “video conferences” too large for the center alone.

Potential traffic problems would be eased by the multiple freeways, San Diego trolley lines and numerous bus routes that feed into downtown, as well as by the fact that downtown workers could simply walk or take shuttles to the arena. The arena’s proposed 5,800-car parking garage, they add, also would provide badly needed daytime parking for downtown workers.

Lining Up the Land

Other than cost, the chief disadvantage to a downtown site stems from possible land-acquisition difficulties that could delay construction. Even a single recalcitrant landowner could force Cooper to rely upon the city’s condemnation powers, a potentially lengthy process that could jeopardize his 1992 target opening date.

Cooper’s first choice for a downtown site--the San Diego Gas & Electric Co.’s maintenance yard at 10th and Imperial avenues--appears unobtainable, given the utility executives’ insistence that the 11.3-acre site is not for sale. But Cooper is still interested in that area and has begun signing development option contracts on the eight blocks to the north, east and west of the SDG&E; property.

Not wanting to give remaining property owners bargaining leverage, Cooper declined to specify the number of blocks he has acquired options on or the cost. However, he ruefully conceded that publicity over the arena proposal has dramatically driven up those prices.

“I wish I had quietly bought up that land a year ago,” he said. “I probably could have gotten it for a half or third what it’s going to cost now.”

Housing or an Arena?

While many city officials view a downtown arena as having the potential to spur the next major wave of redevelopment, others are worried that it could disrupt other key facets of long-range downtown planning--especially the residential development envisioned for the areas being studied as possible arena locations.

“At some point, you have to ask whether housing or an arena is more important to the future of downtown,” Filner said. “It may not be an either-or situation. But if it turns out that building an arena there would mean putting aside our plans for more downtown housing, I’m not sure we’d want to do that.”

Underlining that point, architect Stepner noted in a recent memo that an arena, combined with a planned new civic center on downtown’s eastern fringe, could “polarize Centre City East,” resulting in “a blighted, difficult-to-develop area in between the two projects.”

Nevertheless, that memo--as well as a letter to O’Connor from developer Hahn that raises many of the same concerns--concludes that, with proper planning, an arena could complement residential and commercial development in adjacent areas.

Because Cooper originally proposed building the arena on his 38-acre parcel in Sorrento Valley’s Golden Triangle region, some city leaders question whether he still has an emotional attachment to that idea that could color the feasibility studies’ conclusions. That skepticism stems in part from Cooper’s frequent suggestions that use of his own land--which he bought for $400,000 and that now is valued at more than $23 million--likely would cut the arena’s costs and expedite its construction.

“I’m concerned that their interest in downtown may not be sufficient to get the job done,” Roberts said. “I haven’t seen a real aggressive push in that direction.”

Another top city official added: “The only reason they’re looking downtown is because we told them to. I think they’d be happy to find all kinds of reasons not to do it downtown.”

No ‘Strong Preference’

Cooper, however, insists that he will not make up his mind on a site--a decision that requires the council’s approval--until he sees the analysis of the costs and other factors associated with either a downtown or Sorrento Valley locale.

“I really don’t have a strong preference now,” he said. “I did in the beginning, but now I just want the best site, wherever that is. I’ll start talking about downtown and get sold on it, then the next day I’ll think about Sorrento Hills and get excited about it all over again. I’ve told the people doing the report not to slant it based on how they think I’m leaning. I just want to let the chips fall as they may.”

Far from needing the arena project to develop his Sorrento Valley property, Cooper confidently noted: “That land will be developed, with or without the arena. In fact, it’s probably to my advantage not to build the arena there, because that would be riskier than other kinds of developments. I can reduce my risks by keeping my land separate from the arena project.”

When the site feasibility report is completed, Cooper said, he hopes it will show that one site has a decisive advantage over the other--partly to eliminate any second-guessing on his part, but more importantly to speed the council’s decision.

“I hope the final numbers and other factors make the choice so obvious that there’s no real question. The worst thing would be for it to be a close call. But I don’t think it will be.”

The projected price tags--in particular, whether public financing would be required under either option--obviously will figure prominently in that decision.

If, despite higher costs, the city insists on a downtown site, Cooper has indicated he would expect the city to pay for the difference. Although Cooper stressed that point from the very beginning, the growing perception that public financing would be a necessity for any downtown arena disturbs some city leaders.

“The thing that was so attractive at the beginning was that this was going to be an entirely private project,” said one council member, who asked not to be identified. “But now there’s all this talk of public funds maybe being needed. . . . I don’t think it’s so much a question of bait-and-switch as it is an attempt to deliberately lead us away from downtown.”

Financing Options

Any public financing sought by Cooper likely would take the form of redevelopment bonds, which he characterizes as “not exactly public money”--an arguable semantic distinction. Under that option, the additional tax revenue generated by the arena in future years would be used to reimburse the city for any public money spent now.

“It’s not like we’d be asking the city to just give us $20 million,” Cooper argued. “This would come out of the new additional taxes and other revenue that wouldn’t be there without the arena. If this is going to be a good deal for the city, I see no reason why it shouldn’t be willing to put up some money. So long as it doesn’t cost taxpayers or take money away from sewers, police or other programs, I don’t see that as a problem.”

Under the current Sports Arena lease, the city receives about $250,000 annually, according to Deputy City Manager Maureen Stapleton. Cooper estimates that a new arena would raise the city’s annual lease and property tax revenue to at least $3.5 million, as well as generate additional revenue stemming from increased consumer spending of up to $50 million a year.

Well aware of a new arena’s potential for fattening the city’s treasury--thereby offsetting any initial public investment--most council members say they have not ruled out the possible use of redevelopment funds for the project.

However, in order for that option to even be possible, the jurisdiction of the city’s redevelopment agency would have to be expanded to include eastern downtown, according to Pam Hamilton, executive vice president of the Centre City Development Corp. For Cooper, that necessary legal change is only one of the many “ifs” on which possible city aid hinges.

If the city ultimately opts to invest in the arena, it likely will find itself in partnership with far more parties than Cooper and Esquinas.

Previously, Cooper revealed that the financial linchpin of his plan involves convincing a company to spend up to $40 million--roughly one-third of the estimated construction cost--to have the arena named after it. In addition, Cooper hopes to attract other major investors, including firms that would do business at the arena, such as concessionaires and service companies--even if that relegates him to a small minority ownership role.

“We never claimed we had enough money to do this all by ourselves,” Cooper said. “But we do have enough to get it started and make it happen. My feeling is that anyone with a chance to benefit from the upside of the arena also should be willing to take the risk for the downside.

“By the time this is over, I may only own 5% of the deal. I don’t want it to sound like I’m that flippant about possibly giving away ownership. But if that’s what it takes to make this reality, my ego can live with that.”