Council OKs Accords for Downtown Arena

After months of tough negotiations and bitter wrangling over public disclosure of the deal’s terms, the City Council on Tuesday approved financial and environmental agreements with developers of a proposed basketball and hockey arena downtown.

The council’s action essentially clears the way for developers to secure funding for the $300-million project, expected to open for the Los Angeles Lakers and Kings in October 1999.

“I think this is a monumental step for the two teams,” said Kings President Tim Leiweke, who attended the lengthy council session. “This was probably the most important hurdle.” (The council, as it does with most ordinances, will take a final vote on the agreements next week.)

Council members said that the proposed sports complex will spur more development downtown and that they were pleased to finally have the deal approved despite a lone holdout--Nate Holden. Holden was the only council member to object to all six votes involved in approving the project, including the financial and environmental agreements.

But council President John Ferraro said, “I would ask all of you to consider the source of the opposition. . . . If all of us were against this, Nate would be speaking in favor of it.”

On a more serious note, several council members said the arena agreements are stronger and more financially sound than they were 18 months ago, when developers began negotiating in earnest with the city. At that time, Councilman Joel Wachs raised serious concerns about what he called “the public subsidy” of the deal.

Wachs threatened to launch an initiative drive to allow voters to decide whether the city should subsidize professional sports facilities. The developers--Denver billionaire Phillip Anshutz and local real estate developer Edward Roski, who own the Kings--said they would be forced to abandon the downtown project if the issue was set before voters.

But after a series of private meetings over the last month between Wachs and the developers, new financial terms were drafted, and the San Fernando Valley councilman agreed to exempt the proposed arena from his initiative effort.

“I think this is a great victory for the taxpayers of this city,” Wachs said. “I said at the outset that the people would drive a tougher bargain than City Hall.”

John Semcken, vice president of the L.A. Arena Co., said the negotiations with the city have been challenging but that “we don’t want to harp on those issues. We think we’re past that now.”

Under the agreements, the developers will guarantee repayment of $58 million in municipal bonds and will ensure that such compensation does not come from sales, property or utility taxes generated by the sports complex.

Wachs had pushed hard for those conditions because developers initially intended to repay the city with those taxes. In addition, the developers have agreed to buy two acres that the city initially said it would donate to the project, and to pay about $3.2 million for the use of the arena site for 55 years.

The Community Redevelopment Agency has agreed to give developers $12 million to acquire land, most of which will be used for parking lots. That allocation, however, came under attack by Wachs and several speakers, who opposed disbursement of redevelopment money to wealthy developers.

But under state law, those funds can be used for the project because it is in the central business district, which is identified as a redevelopment project area. And Wachs said he could not include that $12 million in his initiative because the CRA was created under state guidelines and is not affected by citywide ballot measures.

“It’s time to start booking conventions,” said Steven Soboroff, a senior advisor to Mayor Richard Riordan. “It’s a better political deal than it was before.”

But developers said they have two lawsuits to deal with before groundbreaking begins. A group of Pico-Union area residents has sued the developers over traffic concerns, and a Japanese firm that owns some of the property to be condemned for parking has filed a suit.

“This is a bad deal,” said Lawrence Teeter, who represents the Coalition for Community Rights, the Pico-Union group. “And arguably a disastrous deal. My advice to the developers is: Don’t count your chickens before they’re hatched.”

But council members said they don’t foresee any more obstacles to the complex. “I have always felt an arena project for the city of Los Angeles was something that had great benefits for the entire city,” Councilwoman Laura Chick said.

The council members praised Wachs for his determination to win a better financial deal, and several also commended Times writer Bill Boyarsky for a series of columns bringing the secrecy of the financial negotiations to public attention.

Holden said within the past several days that he was still exploring launching an initiative drive to let voters cast ballots on the arena project. But he did not raise the issue at Tuesday’s council meeting.