Sports Stadiums Are Poor Redevelopment Catalysts

With the arrival of well-paid consultants, it appears that a publicly financed football stadium for the Chargers is closer to becoming a reality than ever. Regardless of where you stand on the question of building a stadium, it is important for all San Diegans to realize that using downtown redevelopment money is the wrong way to do it.

Unlike regular taxes collected by the city from residents, which can be used at the discretion of local elected officials, redevelopment dollars are governed by state law. The law makes clear that the “fundamental purpose of redevelopment is to expand the supply of low- and moderate-income housing, to expand employment opportunities for jobless, underemployed, and low-income persons, and to provide an environment for the social, economic, and psychological growth and well-being of all citizens.”

One of the few things that pointy-headed academics agree on is that building sports stadiums is an incredibly ineffective way to achieve these redevelopment goals. One expert has written that “most academic studies measuring economic impact of sports facilities (not teams or sporting events) fail to find enough net gain to a community to justify the often large public outlays.” A book on the subject, titled appropriately Major League Losers, begins:

Too many community leaders do not understand — or they choose to ignore — the reams of information describing the minuscule impact of teams on local economics and the ways in which the four major leagues control the number of teams and manipulate revenue-sharing programs to victimize taxpayers and sports fans.

Proponents of a new football stadium point to the gentrification that followed Petco Park as evidence for the redevelopment potential of sports facilities. Yet we should remember that what transformed downtown wasn’t Petco Park — it was $1 billion in ancillary development that Padres owner John Moores agreed to invest in the East Village as a condition for getting public money for his stadium. Given the small area available for a football stadium, city officials and Chargers executives have ruled out a similar deal this time around.

Mayor Jerry Sanders has endorsed the use of redevelopment dollars to build a stadium because, he has claimed, doing so would spare the city’s General Fund, the account that pays for police, firefighters, parks and libraries. The mayor is wrong.

Funding a stadium would require the city to extend the life of its downtown redevelopment project areas, allowing downtown property taxes — known as tax increment — to go into a separate account reserved for large capital projects. If the project areas were allowed to expire, 22 cents of every tax increment dollar would go straight into the city’s general fund, totaling hundreds of millions of dollars over the life of the extension.

A similar amount would go to the county, to pay for important social programs, the Sheriff’s Department, and other public services. The rest of the money would be shared by other local governments and the state, to help fund education and public safety, among many other important programs.

Unless you think a football stadium is a worthier use of taxpayer money than the services funded by the city, county, and the state, redevelopment money is the wrong financing route.

So what would be a better way to pay for a new stadium? If San Diego voters believe that the Chargers are an important city asset, one that deserves public investment, they could pass a general obligation bond to fund stadium construction, in the same way that they pass bonds to pay for new school facilities.

Because bonds are repaid through separate property taxes, this is the only route that both protects the city’s General Fund and preserves existing redevelopment dollars for use on what the state law has intended.

Vladimir Kogan is a Ph.D. candidate at UCSD’s Department of Political Science and a research fellow at Stanford University’s Bill Lane Center for the American West. He can be reached at vkogan@ucsd.edu.