Council Expected to Be Given Plan for Arena Ticket Levy
When the City Council meets today for a controversial closed-door update on negotiations for a sports arena complex in downtown Los Angeles, it will hear about plans to levy a fee on tickets to help cover taxpayers’ costs and will be asked for direction on a couple of remaining sticking points in the deal, sources close to the talks said Tuesday.
City negotiators and those for the arena developers--Kings hockey team owners Edward P. Roski and Philip Anschutz--have designed a mechanism by which the city would levy a special charge on each ticket sold. The proceeds would be used to make payments on the $60.5 million in bonds the city plans to issue for its part in the arena project: acquiring and clearing land at, and adjacent to, the Los Angeles Convention Center.
Negotiators expect the special charge to raise about $3.5 million annually, which, added to the increased tax revenues the new arena will generate, should be enough to cover the bond payments of $7 million a year over the 25-year life of the bonds. Sources said details such as the per-ticket charge have not yet been decided.
The mechanism, which city negotiators and legal advisors believe is not subject to the municipal taxing constraints California voters approved as Proposition 218 last month, was aimed at addressing criticism that taxpayers were not getting enough return on their investment.
Under terms of the preliminary proposal the council approved in concept in September, the city would provide and clear the land for the arena and for a hoped-for adjacent development of theaters, shops, restaurants and a hotel; the developers would shoulder the $200-million to $240-million cost of building the arena to house the Kings and the Lakers basketball team for 25 years, but they also would keep all the profits.
Arena supporters, including a broad coalition of political and business leaders, said the city would benefit greatly from the anticipated renaissance of the long-languishing downtown area, including the new jobs and tax revenues an economic rebirth would generate. Critics, including Councilmen Joel Wachs and Nate Holden, said taxpayers should get some guaranteed return up front and should not be left holding the bag if the hoped-for rebirth does not materialize.
The new facilities fee on tickets “takes an A-minus deal and turns it into an A-plus,” said Steven Soboroff, who, as a senior policy advisor to Mayor Richard Riordan, spearheaded early talks on the arena proposal and remains one of its most ardent supporters.
“There used to be a subsidy,” Soboroff said of the way the deal was structured when it first went to the council. “Now the negative is gone” because the ticket fee is expected to bridge the gap between what the arena itself would bring to city coffers and the cost of repaying the bonds.
John Semcken, who has been closely involved in the project on behalf of the arena developers, said Tuesday he could not comment on the facilities charge or on the issues that remain on the table.
Today’s session--the first one involving the full council since negotiators began work on a binding business deal in mid-September, with instructions to finish in time for a mid-October council vote--has generated plenty of controversy.
While officials set a public hearing to collect comments on the arena project before they head into closed session, they said they will not release details of that meeting because they are still negotiating. It was unclear what, if any, new information will be provided.
“The fact that the City Council would even attempt to discuss this behind closed doors is appalling,” Patricia Bell Hearst, leader of a large coalition of homeowner groups, wrote in a letter she delivered to council members Tuesday.
Council President John Ferraro and Councilwoman Rita Walters issued a joint statement late Tuesday aimed at calming accusations by Wachs and others that the deal was being railroaded through without sufficient public scrutiny.
“Under no circumstances should [today’s session] be viewed as any final action,” the statement read. They promised that the documents would be released in public hearings held after negotiations have ended.
Meanwhile, another issue surfaced, with community advocates insisting that alternate housing be found nearby for the nearly 200 impoverished families who would lose their homes to the arena complex.
In a letter to council members, community leaders asked that replacement housing be built within the South Park neighborhood encompassing the Convention Center and stretching north to 8th Street.
The Rev. DarEll Weist, senior pastor of the First United Methodist Church, said he and other area community leaders believe adding new housing to the mix would help not only the residents--many of whom work in the garment industry nearby--but also the city by improving safety and spurring a bustling neighborhood environment.
The Community Redevelopment Agency has replacement housing on the drawing board but cannot guarantee that enough homes could be provided in the same neighborhood.