The Morning Report
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There are few things that we enjoy as much as picking apart big proposals. We’ve unearthed two more issues in the mayoral task force’s Chargers stadium plan – one that’s bad news and one that’s good news.
The Bad News
The task force says the city should sell 75 acres of the Qualcomm site to a developer for $225 million. It’s the single largest item in the many public subsidies offered up in the plan. But there’s a problem with that – aside from the whole zoning issue: The city doesn’t own all the land. The city’s Water Department has claim to half of it.
The Water Department supports itself through water rates and it isn’t allowed to subsidize the city budget. So, as NBC 7 first reported in March, it would be illegal for the department just to give the land to the city for a stadium. The department has to get paid back for its portion of the property.
Still, Adam Day, the task force’s chairman, says this won’t be an issue. The city could trade other land it owns to the Water Department in exchange for the deed to the entire Qualcomm site. (City Attorney Jan Goldsmith has made similar comments.) Day said city-owned land in Liberty Station could do the trick for little, if any, additional cost.
“It’s certainly not a deal-breaker,” Day said.
The Good News
Friday afternoon, I got a call from Darrel Cohen, an economist and lecturer at UC San Diego. He had paged through the task force proposal and found a big math mistake. The task force said the Chargers should pay $10 million in rent in the stadium’s first year and the rent should increase by 3 percent each year for the next three decades. The task force said that would result in $173 million in today’s dollars to help build the stadium.
That’s not right, Cohen said. The task force forgot to count the 3 percent annual rent increases in its calculations. So the rent will produce $80 million more than the task force had said it would, Cohen said.
“To me, that’s not pennies,” Cohen said.
Cohen also was gracious enough to share his math so all you nerds can go at it.
Day acknowledged the mistake. He said it’s just another example of how the task force was conservative in its revenue estimates.
“We purposely low-balled it,” Day said.
This $80 million could help reduce the taxpayer contribution to the stadium project – which could approach $1 billion. Or it could be another bargaining chip to give the Chargers.