Some Wary of Advisers for Stadium : Sports: Consultants worked on a disappointing ballpark in Lake Elsinore. Backers of local project stand by them.

The city leaders in tiny Lake Elsinore dreamed of a ballpark that would draw tourists and merchants and revive their sleepy town. They got that when the Lake Elsinore Diamond opened this year to sellout crowds eager to see minor league baseball.

But City Council members never expected they would receive only about $350,000 a year on an annual investment of nearly $1.9 million. Or that the stadium would end up costing three times what their consultants had predicted, draining the city coffers and prompting a grand jury investigation.

Now three cities in Ventura County are considering a similar project and using the same consultants, former Santa Ana Mayor Daniel H. Young and his partner, Brian J. Myers.

The stadium’s backers in Camarillo, Oxnard and Ventura say they are fully aware of the ballooning costs that plagued the Lake Elsinore Diamond in Riverside County, but express confidence the same problems will not arise here.

Yet some city staffers are concerned that the consultants, the Spectrum Group, have a vested interest in making a proposed $15.6-million stadium become reality, since they may profit from the ballpark here--as they now do in Lake Elsinore.

In an October memo, the finance directors of Camarillo, Oxnard and Ventura advised their city managers to hire an independent adviser to review the consultant’s study.

Their reason: The consultant has offered to run the proposed 5,500-seat ballpark if it is built--similar to its arrangement with Lake Elsinore--and therefore has a clear motive in seeing the project move forward.

“We felt that it was a good idea to have someone else come in and look at it,” said Camarillo finance director Anita Bingham. “They would have no vested interest in it, and the Spectrum Group did.”

Even so, the cities have no plans to commission an independent study on the stadium proposal. “Until someone says they’re wrong, I don’t think we need to do any studies to verify what they have told us,” Camarillo City Manager Bill Little said.

In their only previous experience with a stadium project, the consultants advised Lake Elsinore that the ballpark would cost the city only $8.5 million.

The Lake Elsinore Diamond ended up costing more than $24 million, forcing the city of 22,000 to dip into its reserve fund, transfer money from ongoing projects, and postpone needed improvements--such as cleaning Lake Elsinore itself.

In return for its $24-million investment, the city receives just $50,000 annually in rent from the team, the Class A Lake Elsinore Storm, and a small percentage of revenues from box seat and reserve ticket sales, parking, concessions and baseball souvenirs.

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For this year, its honeymoon season, the Storm is expected to pay Lake Elsinore only about $350,000 despite record-setting attendance--far short of the estimated $1 million the city spent just to run the ballpark and maintain its surroundings, city officials said.

That does not include the $900,000 the city must pay annually for 25 years to retire the bonds for construction.

A large chunk of the city’s money goes to the Spectrum Group, which receives $600,000 a year to manage the stadium.

The ballpark could enhance plans Young and Myers had previously advanced for a massive, $2-billion resort community next to the stadium that would include 9,000 homes, golf courses, hotels and shopping centers.

Young defended his firm’s handling of the stadium project, blaming cost overruns on failed promises by the city.

“Basically, the price went up because the infrastructure off site was not there,” Young said in a recent interview. “Sewers, roads, things the city said would be there. That had everything to do with it.”

Some of Lake Elsinore’s council members now admit they made a mistake by using public money to pay for their stadium--not expected to make a profit for at least 10 years, if ever--and they are advising the Ventura County communities to beware of baseball hype.

“It’s a shame when a team can sell out a project and we’re still losing money,” said Lake Elsinore Councilman George Alongi, an early proponent of the city’s stadium who opposed it once costs began escalating.

Camarillo’s Little, a member of the tri-cities committee working on the ballpark plan, said he sees no reason to double-check the Spectrum Group’s estimates for the stadium proposed in Ventura.

The consultant hired a variety of local firms to perform its study, and the subcontractors understood the costs of building in Ventura County, he said.

Further, the cities do not have to hire the Spectrum Group to run their stadium, he added.

“I’m sure they have an interest in having the project move forward,” Little said. “But we have never agreed to engage them in anything other than what we have to. . . . We’re not going to hand this off to anybody just because they are there. I’m sure there will be other bidders.”

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The Spectrum Group has not submitted a formal, written offer to operate the proposed Ventura stadium and may opt not to do so despite repeated oral offers, Young said.

In Lake Elsinore, however, the only bidders to run the ballpark were the city, the Spectrum Group and the construction firm that built the ballpark, Alongi said.

The drive to build a stadium in Ventura County began in January, when representatives from Camarillo, Oxnard and Ventura met to discuss luring a minor league baseball franchise.

Council members and city managers from the three cities visited several minor league ballparks, concluding that the facilities were becoming a major draw.

At a meeting in the spring, Joe Gagliardi, president of the Class A California League of Professional Baseball, assured them that if they built a stadium, they would receive a team. At the same meeting, Young made an elaborate presentation, including slides and graphics detailing what Lake Elsinore and other communities had done.

Months later, the cities chose Young’s Spectrum Group to guide their plans. One of three bidders, the group was picked for its experience with projects in Lake Elsinore and Rancho Cucamonga, city officials have said.

In fact, the consultant’s principal members, Young and Myers, had nothing to do with the Rancho Cucamonga stadium: A subcontractor they hired helped build the facility; hence their connection to the project, Young said.

To date, the cities have paid the Spectrum Group $85,000 to determine if the ballpark is worth building, to find a possible site and to help create a funding plan.

The next step of the plan, which would require the cities to pay the consultant $435,000, remains on hold while members of the tri-cities baseball committee look for private contributions to the project.

Their fund-raising campaign, which includes Jim Colburn, a former major league pitcher and a Santa Paula native, is still under way. Its results have not been made public.

The amount of private funding collected may decide the fate of the plan: The Camarillo City Council has vowed not to spend another dime on the project and, without private support, the city may drop out of the stadium drive altogether, officials said.

In its study, the Spectrum Group concluded that Ventura County was an ideal place for a minor league stadium and helped select the proposed site, a barren field near the Ventura Auto Center. The cities then agreed to accept Ventura as the ballpark’s location.

The consultant has also suggested that the cities pay for the stadium by forming a joint powers authority and issuing bonds--a plan that has been embraced by the committee pushing the facility but has yet to be approved by the cities.

What’s more, the Spectrum Group has determined that a Ventura County stadium would probably not recoup its operating costs for six years, and like the Lake Elsinore Diamond might never pay for itself.

But as it did in Lake Elsinore, the consultant argues that the cities would receive indirect economic benefits that would far outweigh their costs.

Constructing the stadium alone would generate $10.1 million and 115 jobs in Ventura County, according to the Spectrum Group’s study. And once it opened, the ballpark would generate $19.7 million in economic activity every year, along with 357 jobs.

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However, Tere Cherveny, a former Lake Elsinore councilwoman who stepped down this summer, said that Young made the same claims in her city and they failed to materialize.

“They hired a bunch of kids for $4.25 an hour” to help with construction, said Cherveny, who also was city treasurer before being elected to the council. “Those are not real jobs.”

Moreover, Alongi said Lake Elsinore has not seen the influx of economic activity after the stadium was built that Young had predicted.

“What do (businesses) do when the minor league is not in town?” Alongi said. “The team is only here five months a year.”

But Lake Elsinore City Atty. John Harper said the city has received a substantial economic boost from the stadium. Companies like Red Lion Hotels and Inns Inc., which wants to build a major hotel and conference center by the lake, are now expressing interest in the once-sleepy town, he said.

“It’s really changed the attitude of the community,” Harper said. “One point that people seem to overlook is that 350,000 people went through Lake Elsinore (to the games), and that helped our local businesses get out of what has been a tough time.”

Nevertheless, the Riverside County grand jury released a scathing report this month on its probe into the financing and construction of the Lake Elsinore Diamond. It calls for an independent audit of the activities of the Lake Elsinore Redevelopment Agency, which funded the project.

The interim report concludes that the project’s construction was accelerated so the stadium could open in time for the 1994 season--an unnecessary restriction that contributed to the rising costs, as crews had to work around the clock to meet the deadline.

The Spectrum Group has placed a similar timeline on the Ventura County stadium, insisting that it must open by the 1996 season.

The Riverside grand jury also found that change orders to the original plan led to cost overruns of as high as $10 million. Young said that the city, not the consultant, was to blame for the escalating costs.

Young said he had not seen the grand jury report. “All I know is that the City Council, the city manager and the city attorney said the report was ridiculous and riddled with inaccuracies,” Young said.

Lake Elsinore officials would not comment on the report, other than to say it is factually incorrect.

Ventura Mayor Tom Buford said he had not heard about a grand jury investigation of the financing of the Lake Elsinore Diamond, but had learned of the cost overruns from residents there.

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Still he said the Spectrum Group has always been forthright about its economic interests and the fact that a Ventura stadium would never break even.

“My general impression is that no one was trying to pull the wool over the councils,” Buford said. “I think the purpose of the (Spectrum Group study) was on as reasonable a budget as possible to examine these plans, and I think we received a lot of information.”

Buford said Ventura residents have expressed strong support for a stadium in the city, and he will continue to study the idea.

Meanwhile, Alongi said he had a word of advice for the Ventura County cities, as they continue to pursue plans for a ballpark:

“I’m not saying that minor league is bad,” he said. Minor league is good, and it’s good family entertainment.

“But no matter what happens, the ball team will never make the money” to pay for the stadium, he said, adding:

“The public can get stuck paying for this for 25 to 30 years.”