Airing Arena Contract May Revolutionize Public-Private Deals

The era of trust, if ever it was such, is over at City Hall. That’s why the successive resolves of the City Council and the city attorney to make public “relevant facts” in the contract behind a new Los Angeles sports arena could give us more than an opportunity to peer into this deal’s inner works. They could herald a new attitude toward public-private partnership in which the public has a better view of what goes on.

Several factors feed the change. There’s the prevailing suspicion of government, in general, and, as Times polls show, the City Council, in particular.

Now there’s some doubt that wealthy private interests are more trustworthy than government. The sports industry has long been calling the shots in the staggeringly exorbitant deals between teams and cities, sticking fans with inflated ticket prices and sometimes sticking the public with an unpaid bill, such as part of the $198-million bond Oakland issued to bring back the Raiders who, since their return, have only filled their costly, rebuilt Oakland Coliseum once.

Is it any wonder there’s so little enthusiasm for the arena pact that would move the Lakers and Kings downtown from Inglewood? Perhaps having a professional team within city limits is no longer a goal beyond questioning, especially if it costs taxpayers as well as fans.

Sports management types still don’t get it. Responding to the council’s request for the terms of the lease, John Semcken, a member of the entrepreneurial team, took umbrage. “We would have hoped that the word of the owners of the teams would have been sufficient,” he said--as though all this were a private game of gentlemen’s poker.

But the city is investing $70 million to demolish the Los Angeles Convention Center’s North Hall to make way for the arena site and to buy land across the street for parking. If anticipated arena revenues don’t pan out, the $7-million-a-year interest on that money would cost the city the equivalent of salary and benefits for more than 70 police officers.

We’ve been told the arena could help “turn the lights on downtown,” and maybe it would. But the new mood means the public wants to know that, if things don’t work, there won’t be some hidden, further obligation, some fiscal deadfall. Can anyone blame them?

Until the complete arena contract is disclosed, no one but the inside-most insiders know if a long-discussed and crucial 25-year commitment--mentioned several times in the May 16 city memo that approved the deal in principle--exists. If the Lakers and Kings leave the L.A. Arena before then, the city will be stuck with leftover costs. The entourage of Denver entrepreneur Phil Anschutz keeps saying: Don’t worry, you’ll get to keep the $200-million arena if that happens. But if you want to know what a left-over arena is really worth, look at the Inglewood Forum.

They still hold political rallies in the 2,000-year-old Roman Colosseum. But right now, the useful economic life of a new American sports arena equals that of a well-maintained Honda. The last thing Los Angeles needs in its proximate future is the indebted ownership of the world’s most elegant swap-meet.

This is why the 25-year commitment is crucial, why the city can’t afford to take someone’s word for it. Desperate for any possible stopgap to save its declining downtown, the City Council was properly cautious about risking the deal by opening it unilaterally. But city government also has a higher obligation: keeping faith with the electorate.

Ironically, it took a complete non-player, Times columnist Bill Boyarsky, to get between the investors and the goal posts on this one. Boyarsky went after the key information legally, and the prospect of the contract showing up in the papers spurred the council to invoke their responsibilities and vote to open it.

Let’s just hope this newfound openness holds in months to come, as the council evaluates deals intended to lure the National Football League back to the city that has shed both the Rams and the Raiders. Meanwhile, whenever possible, the same contractual openness should prevail in other city dealings with potentially far-end fiscal obligations. For instance, take the Alameda Corridor’s 10-mile toll railroad link to the harbor area, a billion-dollar commitment based on projected increases in shipping traffic over 20 years. If this expansion doesn’t pencil out, what does the city owe whom?

The omens, of course, are for global prosperity. The corridor makes sense in that context. But so, 20 years ago, did the construction of the city’s Intermountain Power Project, the nine-figure, five-year scheme to bring a million kilovolts of coal-generated electricity all the way from Utah. The city blinked at just the moment the industry’s overcapacity pulled the plug on electric prices. It’s been the Department of Water and Power’s prime fiscal albatross ever since.

The city’s taken too many beatings on long-term projects to go on trusting “the word of the owners.” Or anyone’s. Maybe details could be embargoed if two entities were competing for a contract. In the arena’s case, where there’s no competition and little imaginable proprietary information (on what: the rules of hockey?) at stake, there’s no excuse to hide contracts and commitments. Particularly since, as far as entrepreneurs are concerned, Los Angeles is the near-center point of one of the largest concentrations of prosperity on Earth. We can well afford to demand a look at the fine print.

There’s more to this demand than the arena question. This quest for openness corresponds to a prevailing mood: the long-frustrated, popular sense that government is holding out on us. Locally, this frustration has fueled the formation of two parallel charter-reform commissions, the biggest such city effort in 72 years. The appointed commission’s head, Rafael J. Sonenshein, notes: “When you think of reform, openness is what you think of first.”

Excited fans, engaged politicians and cagey entrepreneurs may protest the contrary. But--like all dealings that cross the private-public line--the arena process should be as open as possible; it’s hard to remember a worthwhile city project that succumbed to too much scrutiny.