Public Money Becomes Key for Chargers Stadium

Public Money Becomes Key for Chargers Stadium

Sam Hodgson

The second floor of the Wonder Bread building looks out over Petco Park, as well as part of the site where the Chargers are mulling a stadium development.

For years, the San Diego Chargers have insisted that public money wouldn’t be used to pay for a new stadium for the team. Now, as the team looks to downtown San Diego, the amount of public money available for the project appears to the centerpiece.

In fact, it’s so important that the city’s downtown redevelopment agency, which would potentially help finance the project, needs more money than it can get. A stadium cannot happen, a Chargers official said, without a complex and politically challenging effort to increase the amount of money the agency can collect.

“It’s an issue that must be resolved before a stadium could move forward,” said Mark Fabiani, the Chargers special counsel leading the stadium search.

State law caps the amount of money that redevelopment agencies can accumulate before they expire. The Centre City Development Corp., the city-run downtown redevelopment agency, expects to have $386 million left in available tax revenues to build new projects downtown, including parks, fire stations, sidewalks and streets. And it already has plans for that money.

A stadium, which could cost between $750 million to $1 billion, is unlikely to fit into downtown redevelopment plans unless the agency can increase the amount of money it can collect. CCDC Chairman Fred Maas, who is also the mayor’s point man for the stadium effort, said a new stadium wouldn’t jump ahead of other plans the agency has downtown. Maas said it is too soon to address specific stadium financing plans, but that the city must look at increasing the cap — with or without the Chargers.

“The cap discussion needs to happen irrespective of the stadium,” Maas said.

That will pose a challenge. To raise the cap — the amount of money CCDC can collect in its lifespan — the city needs the approval of two state departments and tacit support of five local governments, all of which would receive less tax revenue if the deal went through.

One of those local governments is San Diego County. And cooperation on redevelopment matters has not been a hallmark of recent city and county history. Four years ago, the county sued after the city declared the Grantville neighborhood near Interstate 8 and Mission Gorge a redevelopment zone. The city ultimately settled for $31.6 million.

But officials from the two governments have met at least once to talk about the potential downtown stadium. County Supervisor Dianne Jacob met with Sanders and fellow supervisor Ron Roberts last week. No one has revealed details of the talk.

“I’m energized by the mayor’s interest in a new stadium and I committed to him that I would work with him,” Jacob said in a statement Monday. “Anything beyond that is speculation and I just don’t feel comfortable speculating on something so preliminary.”

The city and the team have talked about cobbling together support for the raising CCDC’s cap since the spring, Fabiani said. Without the city’s commitment to pursuing a higher cap, the team wouldn’t have spent the time and money evaluating the site with stadium drawings and geological surveys, he added.

“This has been an issue from day one,” Fabiani said. “They’ve been very up front about it.”

Sanders’ office has discussed increasing CCDC’s cap to accommodate the stadium, Darren Pudgil, a mayoral spokesman, said in a text message Monday. He could not be reached for further comment. Last month, CCDC hired a sports finance consultant to evaluate the feasibility of a stadium at the proposed site.

To be sure, city leaders have talked about altering the cap before stadium discussions became public in October. In the past year, Councilmen Kevin Faulconer and Carl DeMaio both asked about cap changes. Last month, Maas sent a letter to Sanders asking the mayor to evaluate the cap’s restrictions, citing the state’s targeting of redevelopment money for education funding.

To change the cap, the city would need to demonstrate that areas downtown remain underutilized and deteriorated, or “blighted,” and in need of redevelopment investments. The stadium site would have to be reaffirmed as blighted before new tax revenues could be used there. The state’s Department of Finance and Department of Housing and Community Development need to approve the plan.

Perhaps more difficult than getting state approval could be buy in from all the local governments that rely on downtown taxes. The governments don’t have veto power over the decision, but can block the process through lawsuits or other legal means.

A look at the numbers show how thorny satisfying other governments might be.

CCDC and other government entities divide downtown property taxes according to revenue sharing agreements between CCDC and each entity. The other agencies get far less than they would if CCDC wasn’t in place. If CCDC hadn’t taken a slice of downtown’s tax revenue last year, the county would have received $20.9 million instead of the $8.7 million it did.

The logic goes that all governments benefit in the long run because property tax revenues accumulate more than they would have if redevelopment never happened.

As talks advance downtown, Fabiani said the shift in the team’s stance toward public money comes from the nature of the location. Because of the site’s small size, he added, other financing mechanisms that could support the stadium’s construction aren’t available, as when the team planned years ago to redevelop its current Qualcomm Stadium home in Mission Valley.

The public will have to decide if everyone is better off with the city freeing up the Qualcomm site for possible sale or another use and building a stadium downtown, Fabiani said.

“We have no interest whatsoever in hiding the ball on this,” he said. “If there’s a commitment we want people to know what it is. If they don’t like it we want them to tell us they don’t like it because then we can move on back to Escondido, if they’ll have us, and start working there.”

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org and follow him on Twitter: twitter.com/dillonliam.

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