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The city of Oceanside’s flirtation with a professional football stadium is over.
The City Council and Chargers agreed today to cease stadium deliberations after a new report found that high-end office space couldn’t alone be used as the accompanying development to help finance a football stadium in Oceanside.
The report by consultants from CGI Advisors Inc., which was commissioned in partnership with the Chargers and the city of Oceanside, studied whether the construction of class-A office space with a development partner could be the financing tool the Chargers are searching for to help build a new stadium.
This is from the report’s conclusion:
The site that the City of Oceanside has proposed for the Chargers to consider has a number of attractive qualities, including its location and proximity to both freeways and rail transportation. However, the preliminary financial analysis clearly shows that a development plan devoted entirely or predominantly to class “A” office space, with no form of public finance, offers little in the way of potential revenue to offset the Chargers’ stadium construction costs. In fact, the necessary rent assumptions are so aggressive and the margins so thin that it is more than conceivable that the office project will not be able to attract private investment as a stand alone opportunity on its own merits. Two significant contributing factors to this economic outcome are the cost of parking and the site’s infrastructure requirements, both of which are fully borne by the office complex. Even assuming a developer could be found, the revenue available to the Chargers would likely only materialize at stabilization, providing little or no relief during the period they are constructing the stadium.
The news is not all bad. The analysis assumes that all of the costs for infrastructure and site development, as well as the cost of 10,000 parking spaces, are borne by the private developer building the office park. These costs confer some considerable benefit to the
Chargers in their quest to build a stadium, even if it is only to hold the stadium’s construction budget at $850 million, rather than reduce it. Furthermore, if the site were expanded to include additional City (and possibly private) land adjacent to the golf course, the significant infrastructure costs would be amortized over a larger land base and, possibly, a wider range of land uses.
Ultimately, while the class “A” office park concept has certain enticing attributes (chiefly, its complementary demand for parking when compared to the stadium) and should be considered as part of a development plan for the site, the Chargers should only continue to pursue this opportunity in the context of a larger site (including, at minimum, all developable City land) with a wider range of land uses.
The Oceanside City Council heard the report tonight.
That leaves Chula Vista as the only local city actively pursuing stadium talks with the football squad. It released a land-use study last month that found two sites there suitable for a stadium. However, unlike Oceanside, Chula Vista hasn’t yet analyzed how the stadium would be financed.
The Chargers hope to use an accompanying development project to help offset the costs of the new stadium rather than rely on direct public subsidies of taxes or bonds as teams have in the past, however, one or more public agencies will still likely be asked to contribute in other ways, such as offering the team public land.