Memos Detail Unplanned Costs of Arena Project

Internal city memos released Monday by a vociferous opponent of the downtown sports arena plan show that Los Angeles Convention Center officials have raised questions about whether their facility could be harmed by construction of a privately owned sports complex next door.

City Councilman Joel Wachs, who released the documents, said they clearly point up the pitfalls of the proposed $200-million project that would house the Los Angeles Kings and Lakers. The council is expected to vote on a binding agreement as early as Friday.

Because the documents were distributed on the Columbus Day holiday, most city officials--including Convention Center managers--could not be reached for comment. But several officials familiar with the ongoing arena negotiations characterized the documents as outdated and said that most of the concerns are being addressed or have already been resolved.

Under a proposal presented to the city by Kings co-owner Edward P. Roski Jr., taxpayers would be required to provide $60.5 million from bonds to buy and clear land for the complex. If the preconstruction costs turn out to be higher, the city could be on the hook for up to an additional $10 million.

The plan calls for the arena developers to pay for building the facility and to keep all profits.

In the documents released Monday, Convention Center General Manager Dick Walsh and others express serious misgivings about the potential loss of exhibit and parking revenues and the potential of added competition spawned by the proposed arena.

The arena project calls for the demolition of the center’s North Hall--with 100,000 square feet of exhibit space--and the purchase of land on two adjacent private streets and a nearby open parking area west of the North Hall.

In an Aug. 21 memo to city Chief Legislative Analyst Ronald F. Deaton, Walsh wrote: “While we are supportive of the arena project, it will create major problems and concerns for the Convention Center, its future operation and growth.”

Convention Center officials also expressed concern about the loss of prime parking spaces, scheduling conflicts, potential problems with underground toxic waste caused by development, and signage that would “cheapen and denigrate the architectural impact” of the Convention Center.

In the same memo, Walsh also requested that a “noncompete” clause be inserted into any agreement. “Revenue projection documents prepared by [the developer’s] financial consultants indicate that the arena will be booking conventions, trade shows,” he wrote. “That should not be permitted.”

On the demolition of the North Hall, Walsh added: “The center will lose future business due to its inability to meet the growth requirements of current and future clients. The loss of those bookings, which bring in large numbers of out-of-town delegates into our city, will result in a decrease of local revenues.”

Convention Center officials, in other documents, estimate the annual revenue loss from the North Hall at $1,528,000. Wachs said that over a 25-year period, the total extra cost to taxpayers could amount to $38 million.

Deaton, however, disputed those figures and said his office sticks by its estimate that total convention revenue losses would top no more than $300,000 to $400,000 annually. He added that other concerns raised by Walsh are being addressed in ongoing talks with the developers.

Wachs said the public subsidy for the sports arena project could approach $300 million over the next 25 years--considering the city’s annual bond interest payments and the higher figure for North Hall revenue losses.

Los Angeles City Council President John Ferraro, a supporter of the arena project, called Wach’s comments unfair and premature. “Some very smart people are working on our behalf to figure all those things out,” said Ferraro.

Officials with the Los Angeles Visitors and Convention Bureau, the private group that books and markets the Convention Center, said a current expansion project expected to be completed next month will add 160,000 square feet, more than compensating for the North Hall demolition.

Convention and Visitors Bureau Senior Vice President Michael Collins said he did not expect to lose any bookings because of the demolition and said the potential addition of the arena has already piqued the interest of several major groups that are considering Los Angeles as a convention site.

“There are a considerable number of legitimate issues that have to be tackled,” Collins said. “Bringing a major arena into an urban area is a challenge, but I do think the closer you look at the prospect, the closer you can come to really understand this is one of those defining moments for a city.”

Steven Sugerman, an aide to Mayor Richard Riordan, said: “The facts show the arena has a huge potential to be a job creator, an economic stimulator, an image builder, a revenue generator . . . a far cry from today’s Convention Center, which is a budget buster.”

Times staff writers Larry Gordon and Richard Simon contributed to this story.