Prop. 218 Forces Inglewood to Pull Arena Offer

Inglewood has pulled back its offer to help finance a sports arena, after the passage of Proposition 218 knocked out three City Council-passed taxes that would have financed the deal.

The withdrawal shoots a hole in Inglewood’s plan to keep the Lakers and Kings in the city and gives Los Angeles a leg up in getting a new sports facility at its downtown Convention Center.

In September, Inglewood passed a hotel tax, a parking lot tax and a ticket tax that would have paid for the city’s $35-million offer to help developers build a $200-million arena. Inglewood also volunteered to lease land for $2 million a year from Hollywood Park and turn it over to arena builders for $1 a year. This, the city hoped, would keep the basketball and hockey teams in town, where they have played at the Forum for years.

“We did withdraw our offers because it is clouded by Prop. 218,” Assistant City Manager Norman Cravens said Thursday. “But we plan, after reviewing Proposition 218 and its effect, to submit a new proposal if they are not under construction in Los Angeles yet.”

City officials are not sure where they will come up with the funds, but they plan to hammer out a new offer within two weeks.

They say the glitch in funding the proposal will not make the city’s chances for a new arena any worse; Inglewood has always thought that Los Angeles was the favored locale.

“We think we will have a proposal that will be equally as tempting as our previous proposal,” Cravens said. “How we will finance it, we can’t say yet.”

In a letter sent Wednesday, Inglewood informed developers that the taxes, scheduled to go into effect next summer, now would have to be put on the ballot and approved by voters. That could not happen before April.

Los Angeles and Inglewood have been in a heated bidding war, trying to convince arena developers Ed Roski Jr. and Philip Anschutz, owners of the Kings, that their cities are the best spots for a new sports venue.

Most Los Angeles officials declined to comment on whether Inglewood’s problems with its proposal would enhance Los Angeles’ chances of landing an arena. Developers have said repeatedly they prefer to build in Los Angeles but would switch to Inglewood if complications or a hostile political climate in the bigger city jeopardized their chances to open the arena.

Steven Soboroff, a senior advisor to Mayor Richard Riordan who spearheaded efforts to put together an arena proposal in Los Angeles, downplayed the significance of Inglewood’s tax-related setback.

“I have no doubt that Inglewood will be able to restructure their proposal,” Soboroff said, adding that Inglewood’s full-court press--and its political unanimity--would help keep the teams in town.

“I hope it is too late for them, but where there is a will, there is a way, and we should not get any false sense of security” from Inglewood’s setback, he said.

The deal under negotiation in Los Angeles is not affected by the state tax-limitation measure, officials said.

Earlier this fall, when arena representatives, in talks with Los Angeles officials, were preparing their offer, one possibility on the table was raising Los Angeles’ 14% hotel tax by another percentage point to help cover the repayment of $60.5 million in bonds the city would issue for its part of the bargain--acquiring and preparing land at and next to the Convention Center.

But negotiators soon set that proposal aside for two reasons--lack of political support for the increase from the city’s hoteliers and the anticipation that Proposition 218 would be approved by voters, thus clouding the prospects for a hotel tax hike.

“Nothing contained in 218 affected anything we are contemplating,” said chief legislative analyst Ron Deaton, a key negotiator for the city.

Inglewood insisted that its proposal be funded by taxes that did not burden residents. So the City Council voted to raise three separate taxes usually paid by visitors to bring in $1.5 million a year.

The taxes, scheduled to take effect July 1, would have increased the hotel occupancy tax to 15% from 12%, doubled the parking lot tax to 10%, and raised the sports ticket tax from its current 60 cents to 5% of the ticket price.

But Proposition 218, passed by voters this week, requires a majority of voters to approve any local taxes passed since January 1995.