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To quote an oft-cited line in the recent history of the Chargers search for a new stadium: The Chargers are a regional asset.
Starting this week, we’ll begin to see how much other governments in the San Diego region value that asset.
On Tuesday, San Diego’s City Council is scheduled to discuss a study that could lead to an increase in the amount of tax money the city’s downtown redevelopment agency can collect. These discussions are so crucial to the Chargers that the team has said it wouldn’t be in serious negotiations about a new stadium downtown without them.
And even though Tuesday’s discussion is occurring at City Hall, the real negotiations involve other local governments with a stake in the deal, especially San Diego County, the government with the most combative history with the city on redevelopment matters.
State law caps the amount of money the city’s downtown redevelopment agency — the Centre City Development Corp. — can collect in its lifespan. Unless the cap is lifted, the agency will run out of money before it can pay for all the projects it wants to build. The agency expects to be tapped out by 2024, except for outstanding bond debt.
But lifting the cap comes at a cost to other governments.
When a municipality creates a redevelopment area like the one in downtown San Diego, it captures a greater share of the tax money in that area. That allows it to reinvest the tax money in such things as development subsidies and beautification projects, but it means that other government agencies get less of their share.
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If the life of the downtown redevelopment agency is extended, those other governments could miss out on millions in tax revenues that otherwise would flow into their coffers. Millions that instead would subsidize an estimated $800 million football stadium.
“Obviously we have a great desire to do what we can to keep the Chargers in San Diego,” San Diego County Chief Administrator Walt Ekard said. “We have to weigh how much we can help in that effort with our ongoing need to provide critical services to the public at a time when state and local revenue sources are drying up.”
To raise the cap, the city needs the approval of two state departments and at least tacit support of local governments entitled to a share of downtown’s tax dollars. Those governments include the county, the San Diego Unified School District, the San Diego Community College District and the County Office of Education. Other governments could challenge the cap’s increase through a lawsuit, like the county did when the city designated its Grantville neighborhood a redevelopment area five years ago. The city ultimately settled that suit for $31.6 million.
Over the past few months, city and redevelopment officials have been negotiating with the other local governments. The message is that increasing money available for the downtown agency doesn’t mean other governments would lose out.
“The other tax sharing entities, including the county, are critical to whether this approach could succeed,” said Phil Rath, Mayor Jerry Sanders’ deputy director of policy who is handling this issue.
The big dog in the room appears to be the county. Sanders and his staffers have met with county officials, including Supervisors Ron Roberts and Dianne Jacob, more than any other government since negotiations over the downtown stadium restarted last fall, Rath said. Roberts, for one, has been in seven meetings, his staff said. More recent discussions, Roberts said, have focused on the implications of lifting the cap.
Both the county’s money and its reputation are at stake. County officials are looking at preliminary numbers for how much revenue they could expect to receive if the downtown redevelopment agency’s cap stays put compared to how much they would get if the cap is lifted, said Juan Perez, the county’s manager of property tax services.
Perez added he expects to have some details early this week. Final numbers would be contingent on the study and the results of negotiations.
Last year, if the downtown redevelopment agency hadn’t taken a slice of downtown’s tax revenue, the county would have received $12.2 million more than it did.
But Roberts said he’s pleased with negotiations so far. He didn’t think lifting the cap would mean the county ultimately would lose money.
“There isn’t a reason why you couldn’t receive the same money,” Roberts said.
Politically, the county faces a different kind of pressure.
Unless the cap is lifted, it’s unlikely the city could help pay for a stadium. That means the county could face blame if a new stadium doesn’t get built or if the Chargers leave to play in another city.
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If it agrees to lift the cap, the county faces an even larger dilemma: the prospect of no stadium. City and redevelopment officials have been interested in lifting the downtown agency’s cap for more than a year, long before current stadium discussions began. The downtown redevelopment agency expects to have $386 million left in tax revenues now to build new projects downtown, including parks, fire stations, sidewalks and streets. The agency’s plans for that money don’t include a new football stadium.
Even if the cap is lifted, a new stadium is far from guaranteed. Aside from major financial and environmental issues that would remain, the Chargers consistently are at the top of the list of teams that could move to possible new facilities in Los Angeles. Further, Sanders has pledged a public vote on a new stadium as soon as 2012.
It could play out like this: The county agrees to lift the downtown redevelopment cap without a guarantee that a stadium would follow.
This issue, Roberts said, was a concern and a subject of the county’s negotiations with the city. The negotiations haven’t gone far enough to force a decision, but Roberts said he was interested in trying to link the county’s support for lifting the cap with a new stadium.
“We haven’t brought the two together as a prerequisite at this point,” Roberts said. “I think at the end of the day there will be something that will tie these efforts together.”
For now, Roberts said, he hoped City Council would approve the study needed for cap discussions to move forward. The study is expected to cost $500,000 and take at least a year to complete. That would leave plenty of time for more talk.
Please contact Liam Dillon directly at email@example.com and follow him on Twitter: twitter.com/dillonliam.