The Mayor Hates the Downtown Chargers Stadium Plan

Chargers Stadium UNVEILING THE UNSEEN

The Downtown Stadium Plan the Mayor Hates

We got a hold of a price tag for the Chargers' vision of a joint stadium and convention center annex downtown. A well-known stadium finance guru who had previously worked for the city put it together and gave it to the mayor's office but the mayor's staff disregarded it. The chief of staff now tells us that it would be impossible to pass and would require support of two thirds of voters. Thus, it is a nonstarter.

It is the only plan so far, however, for a downtown stadium and the Chargers could pursue it still but without the mayor's support.

Making it more complicated, the mayor still may put a tax hike on the June ballot that would require two-thirds support of voters but for a different plan to expand the Convention Center on its current site. The mayor and City Council have until March 10 to put that on the ballot. And the Chargers have until the end of March to outline their own plans for a November ballot initiative.

It looks like there is one route to a football stadium in downtown San Diego and Mayor Kevin Faulconer doesn’t want any part of it.

That could end any push for a downtown facility unless the Chargers insist on twisting the mayor’s arm or seeing it through on their own.

The downtown effort began in earnest last summer when, JMI Realty, the company founded by former Padres owner John Moores, hired a well-known NFL stadium guru to put together a financial framework for a combined Chargers stadium and Convention Center expansion near Petco Park.

But when JMI shipped off the plan to the lead consultant working on a Chargers stadium for Faulconer, the mayor’s people disregarded it.

Stephen Puetz, the mayor’s chief of staff, maintains JMI’s proposal was no different than the numerous unsolicited third-party plans Faulconer received last summer. And now, even though the Chargers have decided to search for a new stadium in San Diego and an attorney backed by Moores is pushing a ballot measure that could make it easier to build a downtown facility, Puetz says JMI’s proposal remains irrelevant.

The result seems clear: If the Chargers want a stadium downtown, they may have to pursue it over the mayor’s opposition. That might happen. The team’s owner says downtown is still on the table and JMI’s plan is the only one that has been floated for many years.

The Chargers’ Mark Fabiani said the team worked closely with JMI in 2013 when together they tried to stop the city from expanding the Convention Center on its current footprint along the bay.

“We have continued to stay in close touch with JMI and are well aware of their financing concepts for downtown,” Fabiani said.

He declined to comment further.

The JMI Proposal

JMI’s interest in a downtown stadium/Convention Center is simple. The company is a hotelier and large property owner in East Village, and any new facility would go right next to a big parcel of land the company has near Petco Park and the Central Library. JMI has been pushing to put the stadium/Convention Center – the “convadium” – next to that land since Chargers stadium discussions heated up at the beginning of last year.

Over the summer, JMI hired NFL stadium consultant Mitchell Ziets to figure out if such a plan was financially feasible. Ziets was the consultant former Mayor Jerry Sanders hired in late 2009 to develop a stadium plan on behalf of the city. The city paid Ziets $160,000 over the next year and a half, but he produced no plan. Sanders’ staffers said there was just no deal to be done at the time.

Steve Peace, a JMI deputy, told me that what Ziets came up with for JMI was less a formal financing plan than a framework for how a downtown convadium might work. Peace said Ziets was given two main guiding principles. First, the Chargers should not be required to pay more than the Minnesota Vikings did in that team’s recent successful stadium proposal in Minneapolis. And the city’s hoteliers shouldn’t spend any more than what they were expected to pay as part of the failed Convention Center expansion financing plan along the bay.

“His instructions were: Don’t give sticker shock to the hoteliers and don’t give sticker shock to the NFL,” Peace said.

Ziets came up with a $1.7 billion proposal, a number Peace believes is cheaper than a standalone stadium in Mission Valley and a separate bayfront Convention Center expansion once you factor in all the costs for financing the projects and pay off the existing debt at Qualcomm Stadium.

Ziets’ plan includes either a hell of a lot of public money or less than what’s being offered the Chargers now, depending on how you count it. And there’s the rub.

Ziets uses the well-worn money pots always trotted out to justify spending public dollars on both a stadium and Convention Center expansion. He targets savings from the city’s current losses operating Qualcomm Stadium and increased hotel-room tax projections from an expanded Convention Center – including a new hotel JMI would build if an expansion happens next to its land. Those sources add up to a couple hundred million.

But, aside from the Chargers, Ziets’ real big number is more than a half-billion dollars from the city’s hotel industry. That’s where the mayor’s office has problems. Faulconer doesn’t believe the next part of JMI’s plan will work.

The Briggs Interlude

In July, Ziets sent his financing proposal to the city’s Chargers consultant, where it landed with a thud. Another shoe dropped in October, when activist attorney Cory Briggs launched a citizens initiative to do a laundry list of things that would make it easier to build a convadium downtown, such as allowing for a speedier and legally sound environmental review. Moores’ company and Moores personally threw almost $700,000 at Briggs’ initiative to make sure it would happen.

Under the Briggs plan, the city’s hotel-room tax would increase by 5 percent, but the hotel industry would be allowed to deduct part of their new tax bill if they funneled the money toward a Convention Center expansion.

That way, Briggs would consider cash that the hotel industry would put toward a Convention Center expansion private money.

Briggs’ initiative also bars any public money from going toward a new football stadium. But, crucially, Briggs says that prohibition only applies to the stadium portion of a convadium.

In other words, no public dollars would be allowed to pay for the stadium bowl, bleachers, locker rooms or uprights. But there would be no problem, Briggs said, if taxpayer money went toward the sewer pipes or property purchases the convadium would need to get built.

“Conceptually, I see nothing in the [Ziets proposal] that runs afoul of the provisions in the Citizens’ Plan that prohibit a public-money giveaway to build a stadium,” Briggs said.

The Mayor Says No

When I first asked the mayor’s office for the Ziets financing proposal in mid-January, staffers told me they had no idea what I was talking about. It was only after I kept pushing that Puetz, Faulconer’s chief of staff, sent over the document.

Puetz told me that he wasn’t attempting to hide anything. He hadn’t remembered that Ziets’ plan even existed.

“A lot of people were sending stadium plans around that time,” Puetz said.

Surely, I said, a financing proposal from Ziets, a consultant the city itself had hired a few years back, was more reputable than one the mayor might have received from other third parties.

“I actually don’t find it reputable,” Puetz said.

The hotelier portion of the financing plan, he said, would require a tax increase to raise the needed funds. In California, a tax increase for a specific project requires a two-thirds vote to pass.

And, Puetz said, the mayor opposes any stadium financing plan that would require a two-thirds vote.

“That will never pass,” he said.

Interestingly, the mayor himself has proposed a tax hike that would require a two-thirds vote to expand the Convention Center at its current location. In Faulconer’s State of the City speech, he pledged to put it on the ballot, but did not say when.

If Faulconer tries to put a standalone Convention Center expansion on the June ballot, it would crush any effort to build a convadium. If the mayor goes for November, the Convention Center expansion could compete directly with a Chargers-led downtown stadium proposal as well as the Briggs/Moores initiative.

Briggs believes that his plan only needs majority support to become law, not two-thirds. Puetz chuckled at that assertion and referred to Briggs’ penchant for suing the city over its complicated financing schemes, including a number of lawsuits related to tourism.

“I’m sure that will be litigated if the thing actually passes,” Puetz said. “The irony of that.”

Without the mayor’s support, the downtown convadium seems dead. But one big interest group still says it’s deciding between downtown and Mission Valley. The Chargers.

The Zombie Convadium

Chargers owner Dean Spanos has left open the possibility for a stadium either downtown or in Mission Valley. This week, the Chargers hired Fred Maas, an ex-downtown redevelopment official and former stadium adviser to Sanders to work with the city on a stadium plan. Maas has long eyed the proposed convadium site, which is now a large bus yard, so his shepherding a stadium there would make sense. If the team wants a stadium on the site, the pressure might force Faulconer to yield.

But JMI’s Peace told me that the hiring of Maas meant downtown was off the table because Maas had indicated a preference for the Qualcomm site already.

“Our read of this is they’re going to do Mission Valley,” Peace said.

The Chargers would not confirm that.

Either way, we’re headed toward an interesting climax. The Chargers must decide by the last week of March what kind of proposal they want to try and put on the ballot in November. Briggs and Moores must decide if they’ll keep spending money to get their proposal on the November ballot, too. And the mayor and City Council must decide by March 10 if they want to put a tax hike to expand the Convention Center along the bay before voters in June.

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