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$1.4B Chargers Stadium Plan Unveiled; No New Taxes Proposed

A rendering of the proposed Chargers stadium in Mission Valley. It was created by MEIS, a New York-based stadium architecture and design firm.
MEIS
A rendering of the proposed Chargers stadium in Mission Valley. It was created by MEIS, a New York-based stadium architecture and design firm.
$1.4B Chargers Stadium Plan Unveiled; No New Taxes Proposed
$1.4B Chargers Stadium Plan Unveiled; No New Taxes Proposed
$1.4B Chargers Stadium Plan Unveiled; No New Taxes Proposed GUEST:Adam Day, chairman, Citizens' Stadium Advisory Group

Our top story a Midday Edition, a $1.1 billion construction project with the proposed financing plan that does not require a tax increase. The members of the Citizens' Stadium Advisory Group have released a carefully structured financial plan for a new Chargers Stadium. While it proposes no tax increase, the plan does involve a lot of public money and a lot of moving pieces, all of of which have to move in precisely the right way to make the project visible. The Chargers say they are in the process of studying a plan, Mayor Faulconer says he is pleased with it and we may eventually see with the people think about it as a public vote is still planned. Joining me is Adam Day, chairman of the Citizens' Stadium Advisory Group. Welcome to the show. Thank you for having us. How difficult was it to put together this financing plan, considering that it was put on a fast track after the Chargers announced their alternate plans to build a stadium in Carson? We worked hard, nine members, dedicated volunteers, all experts in their own fields. We put something together in 180 days never been done in the history of San Diego, some and we are very proud of. We think the product speaks for itself it is a player -- a fair plan for the city, county, taxpayers and the team and we think he provides a clear path forward for the team to stay and study ago. We love the Chargers they've been here for over 50 years and we want them to stay. We think this plan gives them an opportunity to realize they have an opportunity to stay here reetmac in constructing this plan is in the group decided there was some financing options off the table like a tax increase which would require a public boat so was it that timing involved and a public vote for the two thirds approval requirement that made you abandon that option? We actually never considered it to begin with we just went through a significant wildfire here in San Diego and we couldn't pass a special tax for the two thirds vote to improve wildfire service at we know certain things just don't work in the San Diego environment, the political, legal and civic environment of San Diego so we had certain parameters, some constraints we put upon ourselves we were going to consider and that made our challenge a little heavier but at the end of the day we have a plan that is balanced in its approach, shares the costs between the team, the public the public and the fans and other tenants as well and it is something we think is a good starting point. This is the final plan, this is a recommendation to the mayor and the bear will sit with the team hopefully very quickly to start to negotiate the final deal. What with the other things you weren't going to consider? We had to understand the need to barman Diego is people assume we will recommend spell that will pay for the construction of that is not something in our plan is one example. Another condition we had to take into consideration of was the high natural competitiveness the Chargers. The state of the art stadiums need to be able to generate additional revenue for the team so they can continue to be competitive with other franchises and that is something we had to understand so you can't take all of the revenues from parking and concessions and merchandise that normally goes to the team and use that to pay for construction. Which we are not recommending. But the team stands to benefit in many, many ways with many millions of dollars on an annual basis with their plan and we think it is a good plan for them. Adam Day , let's first talk about the public money designated for the new stadium. The $121 million from the city's general fund is said to be about as much as the city pays them for QUALCOMM, is ever? It is actually a lot less in the city pays that the city currently pays around $10 million, $11 million per year sometimes more. Wondered 21 really does represent $7 million per your suite would be a reduction in the city's general fund contribution. City's general fund contribution. All told the identified over $1.4 billion in revenue dollars in revenue sources for construction costs and we estimate the cost of construction is $1.1 billion. In other words, we generated or identified over $300 were identified over $300 million in additional revenue above and beyond the cost of construction and some of that revenue can be used for operations and maintenance. Others provide the mayor leeway to negotiate a different deal with the team so it is a give-and-take scenario where the team says yes to something and no to something else and the city will do something else this is just a starting point for negotiations. When it comes to all these numbers I am going to say how long a financing plan of this? As far as how many pages report? How many years. We contemplate the team signing a 30 year lease. We recommend the city and county form a joint powers authority. We recommend the city provide the 60 acres of land to build the facility upon and we recommend a whole host of recommendations in the report good for the team, good for the city and County and taxpayers. Ultimately, the financing cost of $1.1 billion we have identified revenue of over $1.4 billion to do that and there are ways to do that with investment bankers and do that with investment bankers and bondholders. Speaking of bonds does the city also take on the obligation for that $173 million in construction bonds? Spirit runners or deny dosing construction was? Construction bonds for the stadium? The total construction cost is $1.1 billion. So we have identified all kinds of revenue to apply towards those costs. Winners and $3 million you might be referring to is the team's rent over the next 30 years and that would be applied towards the construction cost as well so that is one component. There is bonds you also want the city to approve that assumes the payment will be made by the Chargers, is that right? Ultimately, the total bonds the one $1 billion there's a number way she could break that down but we recommend taking the team's rent which is roughly we recommend roughly $1 million per game or $10 million per year you capture that over the next 30 years for an up in capitol contribution up $173 million and that is how you secure part of the construction cost. I see so this plan San Diego County also takes on $121 million in construction cost from its general fund. What assurances has the County given the group that they would be willing to kick in that money? We had a number of conversations with the board of supervisors subcommittee to his handling Chargers issues and they remain very interested and optimistic to be a partner with the city and have expressed interest in being an equal partner there is a number of opportunities available to them and they could take a different shape and form so we left that option open to them but we think the figure of hundred $21 million or $7 million per year is something they can contemplate and they have a number could've ideas in their mind too. So they can contemplate so they haven't given you any assurances that number would be okay with them? We've received indications they are comfortable with that number. Okay. There is also the sale of about 75 acres of city land around the stadium set to bring in $225 million. Is that land with its present zoning status worst -- with that amount? We believe so we've talked to the real estate experts we believe the fine details can be worked out between the city and the team remember all these recommendations are just an initial recommendation. We have knelt down all the options for the team in cities consider there will be a lot of fine points that have to be worked out but first and foremost we need to see if the team is even willing to come to the table and once I happens assuming that happens a host of things have to take place including the design. I'm in the design we unveiled yesterday was just a pro bono design that architects designed for us as one option but the ultimate cost of the project is of course driven by the ultimate design so that is one thing the sale of land if they were to contemplate that needs to be considered and the timing of that and how you realize the proceeds, a whole host of next steps the first we need to see if the team is willing to sit down. When it comes to zoning though, the changing that zoning status wouldn't that -- in a responsible developer way to buy the land until it is rezoned for development and doesn't that complicate the idea of the sort of urgency in getting this project underway? We've decoupled that so the future development of that property whatever that might look like and when am I come online could be five or 10 years. Any revenue from the future development is not relied upon for the construction cost of the stadium and as to the interest of the development community we believe there is a strong demand and a strong interest you have very limited available land especially in the heart of the city this is pretty much it. We think there is a very, very strong interest. Let me try again. Doesn't the value of the land, the valuation of this land coming in at $225 million doesn't that depend on a change in zoning? Not necessarily affect the number could go up a sign that zoning so there's a number of ways it could be worked between the city and the team is enter negotiations. The NFL will contribute $200 million to the project. The Chargers have always said they would kick in $200 million to the project this plan has been contributing $300 million. So do you have any reason to believe the Chargers will be willing to pay an additional $100 million in construction costs that they have never said they would pay? There are reports in the media a year ago were they offered to pay $400 million. Dollars. Ten years ago they offered half the construction cost of the state in which of the time was roughly 400. We think the costs have escalated over 300% so by increasing the charger share by 50% within that is a reasonable way to share that increasing costs. The cost increase of over 300% in 10 years for stadium is not due to inflation, rather it is due to the new business model the NFL and their franchise has utilized so we think it is a reasonable car sharing burden between the city, county, taxpayers and the team. Again this is an initial proposal I don't know the team's reaction we haven't seen any detailed responses from them but we think it is a good starting point. We were just talking a few minutes ago about the expected rent revenues that are incorporated in this financing plan. You have any reason to believe the Chargers will agree to paying $10 million a year in rent for a new stadium? And all that depends on the final negotiations what we did is conduct a thorough research and comparative analysis across the country and all the recent stadiums and what we found is the minimum rent is $8.5 million of the Vikings stadium up to $24 million for San Francisco. So when you consider parking, merchandise and concessions going to the team as well as increased revenues from the new premium seats and luxury boxes etc., we believe $10 million per year or $1 million per game is right there in the middle is not below the average. So you have gotten no input from the Chargers at this time as to whether or not any of these plans that relate to their particular costs will be acceptable to them? No that was not our role that is the city Escobar we are not here to negotiate a deal we met with the Chargers up front we received a lot of information from them as we did from a lot of other individuals and tenants but our plan, our objective was to take all the information, put into one plan and make that a starting point. Really just yesterday handed off to the mayor and they are seeing it for the first time yesterday. I am imagining the road the things they like and perhaps things they don't like but we think this is a good starting point and it is something that is ever been done in the history history. I like to go little right now on the line with us is Rafael all the rows he helped lead the young group both pride and save our bolts rightfield thanks for joining us. Thank you for having us. Part of this plan from the citizens stadium Advisory Group calls for $100 million in revenue from the sale of personal seat licenses. Do you think Chargers fans will support the new stadium to the tune of $100 million? I don't know any one charger that is paying $100 million but I will tell you this I think we commend the Advisory Group or their thorough effort and I know a lot of that is data driven and I think we look at the construction and the new stadium personal seat licenses have been part of the equation for a while so having said that, I think that there perhaps is the tipping point in there but as fans I think that is understood and as mentioned it as a starting point in terms of the plan back can be used forward for negotiations. Do you see any kind of fun to drive is being conducted the fans or any kind of push to get people to buy these PSL's? I think , I am glad you mentioned the fans. I think that is a key stakeholder in this discussion and I think that involving the fans in the dialogue and having fans contribute to what ever this might be I think the bottom line is it is not only keeping the San Diego Chargers but also construction, development of a new stadium for San Diego to be enjoyed by many generations of future San Diegans as we have enjoyed QUALCOMM for so many years. What you make of the fact there that a day after the stadium financing plan was announced the Chargers say they have hired the former 49ers president to spearhead their push to build a stadium in Carson. We get a newsflash that the land deal for the stadium in Carson has closed. What you think about that? I think there is a number of factors involved and variables involved. I think from a business standpoint there are those who would say the Chargers are smart in doing that keeping options open. I think is a Chargers fan again commending , complementing the Advisory Group for their effort to this point I think the ball is now in the Chargers court and we are supportive of our civic leaders both city and county to meet at the table with the Chargers and hold those negotiations. I think in terms of Carson, that is something for Carson to worry about at this time I think moving forward as Chargers fans we want to see where this plan moves forward, how this plan moves forward in negotiations between the Chargers, the city and the county and I think when we have more information there as fans we will be able to support whatever direction we need to go and. Of have been speaking with Rafael Alvarez he leaves the fan groups both pride and save our bolts. Thanks Rafael. Thank you are a much have a great day. Your once again is Adam Day chairman of the citizens stadium Advisory Group I want to mention this financing plan basically doubles the rent for use up to $1.25 million a year again do you have any idea what STS you's reaction is to the proposal will they be onboard with that? I don't know again this is a starting point, an opportunity for the Mayor to sit down with the University as well as the ball in association part of her condition the Mayor negotiate new market releases with SDSU and the ballgame Association because currently they are not able to enjoy parking, concession, advertising revenue in the facility so we believe with a new, modern and efficient stadium with all these new opportunities generate revenue that the university would be interested in new least because in those opportunities like the Chargers will enjoy through our recommendations as well. Of SDSU pace that about that is more taxpayer money going to the stadium. How much public money including the general fund contributions, sale of public lands, to you estimate is actually going to be going into this project as it now stands with the financing plan? The question can be answered definitively today because will be provided as a menu to the mayor with multiple different parts of revenue that can be capped and you can decide to take only some parts of revenue and is all that or you can check on them and use a little bit from each. So the ultimate combination of public versus private investment in this new facility is yet to be determined and answered because that will come out of the negotiations between the team, the city and the county. As it stands now is it fair to say at least $500 million of public land. Depends on how you look at if you look at our recommendations and add up all of the teams investments and NFL investment that totals over $100 million of that is more than 60% could be 70% I haven't done the math lately so depends on how you at those numbers up to two away all the revenues with estimated for the team and the NFL and the other tenants to pay that far exceeds 50% for the facility I don't expect that will be the ultimate ratio so it is really depended upon those negotiations. Your task with coming up with the financing plan not looking at the larger issue of a stadium in San Diego. I understand that. That with this enormous amount of public money on the table now, for the stadium many people as said if we have all that money we can do an awful lot with it we can fix our infrastructure, we can do an awful lot of stuff for San Diego. I want to ask you something that is more in your venue and that is what does San Diego cat for that outlay of public funds? Ultimately that is a question for the policymakers, elected policymakers, mayor, City Council, County Board of points -- supervises that the legitimate question there's all kinds of policy decisions they make through budget every year with his police, fire, fire, parks, transit services, trolley construction. We think that this is a valuable amenity for all San Diego runs as well as tourists to enjoy we think we put together a plan that balances the cost sharing so the facility is paid for by all of the users, a moderate degree by the public as well as tenets advance. But ultimately if you're an individual who doesn't believe there should be any public investment and a professional football team this plan is not for you. We believe that the region we fought hard to save the Opera as an example. We think it is important for the civic fabric to have a national the ball league franchise as well so those are good questions. Ultimately they are for our elected leaders to decide. Are tough was simply put together a plan that is workable and fair and can actually be financed. Last question to now, now the negotiations will be starting between city and county officials and the Chargers, does the citizens Advisory Group for any further role in this? I work is done as of yesterday we concluded the report, handed off the mayor handed off the baton so to speak we are certainly available to answer questions and be a resource to the mayor and the county and the team and happy to help. We are on the sidelines now watching these ago she patients and hope they come to a successful conclusion. So you are out of the? We are out of it. Okay a full breakdown of the citizens stadium Advisory Group's financial plan on our website at KPBS.org. I've been speaking with Adam Day , chairman still right now the citizen state is in Advisory Group thank you very much. Thank you very much.

CSAG Site Selection And Financing Plan For New Chargers Stadium
Citizens' Stadium Advisory Group Site Selection And Financing Plan For New Chargers Stadium
To view PDF files, download Acrobat Reader.

Construction of a 65,000-seat football stadium for San Diego should be financed with a mix of financial contributions from the city and county of San Diego, the Chargers and the NFL, plus bond and land sales, a nine-member advisory group appointed by Mayor Kevin Faulconer recommended Monday.

A report released by the group two days before its deadline said no new taxes would be included, so that a two-thirds vote of the public would not be required. Funding sources would exceed $1.4 billion for a facility estimated to cost around $1.1 billion, according to the report.

"We have overstated costs just a bit, and understated revenue just a bit, making for a very prudent, fiscally conservative recommendation," said Adam Day, chairman of the Citizens' Stadium Advisory Group. "It overcomes all the hurdles that were thrown in our path — both real and imagined — and it is a good deal for the taxpayers."

He said the task force conducted extensive research and analysis of NFL stadiums that have been constructed in recent years. Another consideration was to make sure the Chargers and other tenants would enjoy the financial benefits of a new playing facility, rather than designating all the new revenue streams toward construction costs.

"We developed a financing plan that would actually succeed in this unique San Diego environment, ensuring that it is fair for the Chargers and other tenants, fair for the city and county, and fair for taxpayers," Day said.

"Our plan is the first of its kind, and it should jump-star negotiations between the Chargers, the city and the county," Day said, adding that the recommendations provide "a fair and workable path to a new stadium in San Diego."

Mark Fabiani, the Chargers' general counsel on stadium issues, issued a statement saying that he's grateful for the CSAG members who volunteered their time.

"We will now ask our stadium development team — including our financing, legal and land-use experts — to thoroughly review the CSAG results," Fabiani said.

Faulconer said the plan is "tangible" and "achievable."

"Earlier today I communicated to Chargers owner Dean Spanos that the city/county team and City Attorney Jan Goldsmith are ready to sit down and negotiate," Faulconer said. "I'd like to start by June 1. San Diegans deserve a good and fair deal, and I will not accept or support anything less."

Supervisor Ron Roberts, who has served as the public face for the county on stadiums, said the report shows a path forward for the project.

"While there is much to be done in the coming months, this is a time for optimism," Roberts said.

The task force has already recommended that the facility be built adjacent to Qualcomm Stadium, which would be razed to make way for development, including a massive parking structure, a 500-room hotel and a park alongside the San Diego River.

Day said he envisions a pedestrian-friendly, transit oriented mixed-use project, but not a high-density development that would draw opposition from Mission Valley residents.

The next step will be for a team of financial and legal experts to take the recommendations and mold them into an actual plan that can be taken to the Chargers and voters. The city and county of San Diego jointly hired Nixon Peabody, which has consulted on 25 stadium projects, and Citigroup, which has been involved in raising money to build stadiums recently in Atlanta, New York and Orlando.

The Chargers have been pushing for a new playing facility for more than a dozen years, and have recently taken steps to build a joint $1.7 billion stadium with the rival Oakland Raiders in the Los Angeles suburb of Carson. The proposed 72,000-seat facility off the San Diego (405) Freeway is considered to be a backup plan for both teams in case they aren't able to forge agreements in their current cities.

Also, the owner of the St. Louis Rams is planning to build an 80,000-seat stadium in Inglewood, another Los Angeles suburb.

The funding breaks down to:

— $300 million from the Chargers.

— $200 million from the National Football League.

— $225 million from the sale of 75 acres of Qualcomm Stadium land to a developer.

— $173 million of bondable construction capital from the team's rent.

— $121 from the city of San Diego.

— $121 from the county of San Diego.

— More than $100 million from fans in the form of personal seat licenses, and surcharges on parking and tickets.

— $21.6 million rent from San Diego State University and the organizers of the Holiday and Poinsettia bowls, with $1.25 million paid by both annually.

SDSU released a statement that said the development of its athletic program was a critical part of its goal of becoming a Top 50 public university, and it would channel the support of its 350,000 students, faculty, staff and alumni toward the development. University officials have long eyed the Qualcomm property for potential expansion.

The report said another $50 million could be raised with naming rights, sales of bricks, and capital contributions from concessionaires and telecommunications firms.

Faulconer said that while a two-thirds public vote won't be required, he still would like a final deal with the Chargers to go before voters. He said that San Diegans want a plan that makes sense, is fair and is fiscally responsible.

"That's one of the things we're going to spend most of our time on here as we move forward with negotiations with the Chargers, which is to make sure that it is a plan that's fiscally responsible," Faulconer told City News Service. "To have our City Attorney's Office working together with outside experts, we have a team that is together, that is ready to go, and I'm confident that we'll come up with a solution that makes sense."

City Attorney Jan Goldsmith said the report shows that a stadium project is doable.

"These people put a lot of time and effort into this, and I'm really impressed with their volunteer work," Goldsmith said. He said he doesn't believe any legal issues exist that would be insurmountable.

At the state level, Assembly Speaker Toni Atkins, D-San Diego, promised state legislative support for keeping the Chargers in San Diego, if the team and city reach an agreement to build a new stadium.

"I look forward to continuing to be part of the discussion with the mayor, the City Council and the community to see if the right agreement can be reached," Atkins said. "As I have stated previously, if an agreement can be reached, I am committed to making sure San Diego can benefit from state legislation that is consistent with what other cities have received for their sports facilities."

The advisory group released renderings of what a new stadium might look like by Dan Meis, who is responsible for designing NFL facilities in Cincinnati and Philadelphia, as well as the Staples Center in Los Angeles and Safeco Field in Seattle.

The full report, which includes the renderings in the appendix, are available online at sandiego.gov/mayor.