Saturday, October 15, 2005 | The Chargers are expected to tell a City Council panel Wednesday that the high up-front costs associated with the stadium plan being pitched to voters next year have warded off potential development partners they say are needed to proceed with their plan.
The reported stumbling block could jeopardize the team’s plans to ask San Diego city voters in November 2006 whether they will transfer 60 acres of public land on the Mission Valley site to the Chargers to ensure that the team builds a new stadium without using city funds, Chargers spokesman Mark Fabiani said Friday.
Fabiani’s recent comments regarding the lack of a business partner have attracted the attention of City Attorney Mike Aguirre, who said he thinks that the Chargers are trying to milk the city’s problems in order to obtain a better deal with the city.
If the Chargers put an initiative on next November’s ballot, they are supposed to have the proposition’s wording ready by Feb. 8. The City Council committee overseeing land use will receive a presentation Wednesday, but will not make any decisions.
Fabiani said that firms have been lukewarm to share the estimated $800 million risk associated with the football franchise’s plans to build a new facility next to the existing Qualcomm Stadium.
Because the proposed plan won’t be profitable until after the first condos are built – a milestone occurring after the construction of a new stadium and the demolition of the old one – a partnering firm will have to endure a few years without any returns on their investment with the risk of fronting enormous costs while the idea of bankruptcy looms over the city, and their contracts, he said.
If the city filed for Chapter Nine municipal bankruptcy after the Chargers and their partner built a new $450 million stadium but before land was transferred to the developers, a judge would not have to honor that contract, Fabiani said.
Aguirre, who sued the city over its dealings with the Chargers prior to taking office, said the city’s woes should not affect the Chargers’ ability to receive land. Sixty acres is 60 acres, he said.
“If the only component that the Chargers are asking the city to provide, as part of their overall plan, is the transfer of the 60 acres at the Qualcomm site, than it is a mystery to me why that proposition can’t be put forward to the people of San Diego on schedule,” he said. “Our only role would be to transfer the land.”
The city attorney hinted that Fabiani’s allusion to the city’s woes showed that the team could be pitching a hypothetical deal to possible partners where the city sells bonds for the $175 million in traffic improvement infrastructure instead of the cost being picked up by the developers. Aguirre said that the city has already given the team a great deal at a time when the city is in “dire financial straits.”
Fabiani said that the contractual relationship between the city and the Chargers would not go away once the land was handed over, but that the city would have to wait for its end of the bargain too: a completed stadium, new roads, parkland construction near the San Diego River, paying off existing bond debts incurred during improvements to Qualcomm and a 25-year lease in the new stadium.
The many facets to the deal expose the developers to plenty of risk and the city’s myriad problems could prematurely unravel the agreement, Fabiani said.
The city is currently mired in several investigations into its pension dealings and financial disclosure practices, is governed by a shorthanded council and no elected mayor until Nov. 8, and has had to scale back its day-to-day budget to pay down its $1.37 billion-plus pension deficit.
Aguirre said that now is no time for the Chargers to look for sympathy from a struggling city.
“At a time when we are flat on our financial backs, the Chargers are coming to us and saying ‘give us more,’” Aguirre said. “My response is fine … go ask the people of San Diego if they want to give away 60 acres of prime real estate instead of using that for something else.”
The controversy surrounding the Chargers-city relationship is highlighted by a seven-year ticket guarantee where the city purchased unsold game tickets over that span for $36.4 million, according to city documents. What’s unresolved is whether the subsidy continues past the deal’s expiration in 2003. Aguirre argues that it does, but city officials and Fabiani deny it.
Aguirre said that it’s the football team’s responsibility to find a business partner, not the city’s, and that the voters should be entitled to vote on the Chargers’ best deal before the team shops other cities for possible relocation.
“Whether or not they get a partner or not, that’s called the economic risk of the free-market system,” he said. “That’s their problem, that’s not the city’s problem.”
Aguirre said he was also suspicious of a business group’s reported plan to shop other cities in San Diego County on behalf of the team when the Chargers are contractually barred from speaking with other cities about relocation until January 2007, after the supposed stadium vote in the city of San Diego.
Fabiani has submitted to the city several letters from the Chargers telling individuals interested in moving the team to other cities that they are not permitted to engage in such talks until 2007.
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