Sports Arena Plan Approved by City Panel

A taxpayer-assisted, privately owned and operated professional sports arena project for downtown Los Angeles won approval from a key panel on Monday, clearing the way for a City Council vote as early as Wednesday.

The 4-0 vote of the council’s Ad Hoc Committee on the L.A. Arena Proposal moved the proposal forward after months of behind-the-scenes negotiations over the deal that dragged on past a mid-October due date and led to speculation about the controversial project’s prospects.

“It’s a positive step, an important step,” said John Semcken, a representative for the arena developers, Kings hockey team owners Edward P. Roski and Philip Anschutz, who have proposed building a 20,000-seat arena at the Los Angeles Convention Center to house the Kings and the National Basketball Assn.’s Lakers for at least 25 years.

As currently structured, the proposal calls for the city to spend at least $70.5 million to provide the land. The officials who headed the city’s negotiating team--and who recommended the deal to lawmakers--said they expect arena revenues, including a special ticket fee, to cover taxpayers’ costs--$6.8 million a year for 25 years. But they conceded that they could not get the revenue guarantees the council had sought.

The taxpayers’ tab would be higher if city-caused hazardous wastes are found on the site. The city would be on the hook for the first $1 million in cleanup costs and would split anything over that amount 50-50 with developers.

But arena advocates, including downtown business groups and a broad spectrum of political leaders, believe the risks are far outweighed by the opportunity to bring a significant development to a long-stagnant corner of downtown; city negotiators agreed.

“We believe that the transaction as it currently stands would provide significant benefit to the city,” City Administrative Officer Keith Comrie and Chief Legislative Analyst Ronald Deaton wrote in their report recommending the deal. The project would provide “even greater benefits” if developers add a large hotel, shops and restaurants within a few years, the officials said.

Two council opponents of the project--Nate Holden and Joel Wachs--said they still plan to vote no. Some committee members voiced complaints despite their yes votes.

Councilman Mike Hernandez, for example, echoed Wachs’ earlier contention that developers ought to offer money from another pot--advertising revenues, for example--if other sources fall short of covering city costs.

Councilwoman and committee chairwoman Rita Walters, whose 9th District would be home to the sports arena, qualified her yes vote in two ways. She said she wanted the developers to offer more than the 25% of jobs they promised would go to women and minorities in surrounding communities. And she wanted to further tighten restrictions on the use of alcohol, tobacco and firearms companies’ names on signs at the site.

She and Hernandez also urged city officials to provide replacement housing within the same area; 188 homes would be lost to the project, many of them occupied by impoverished workers in the nearby garment district.

Council approval of the negotiators’ seven-page report would commit the city to the terms to be spelled out in a “memorandum of understanding,” but several other steps, including an environmental impact report, still would lie ahead. Developers are continuing to consider building in Inglewood instead.

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Arena Deal at a Glance

City officials are considering a plan to bring a professional sports arena to the Los Angeles Convention Center area. Here are key elements of the deal set for City Council consideration Wednesday.

* THE PROJECT: The venture is headed by Los Angeles Kings owners Edward P. Roski and Philip Anschutz. They would build a privately owned and operated 20,000-seat sports and entertainment arena as home to the hockey team and the NBA Lakers for at least 25 years.

* LOCATION: The arena complex would be built on the site of the Convention Center’s North Hall exhibition building; adjacent properties along Figueroa Street and Olympic Boulevard would be used initially for parking, with the expectation that developers would add shops, restaurants and a hotel. If this second phase did not begin within seven years, the properties would revert to the city.

* COST: The minimum cost to taxpayers would be $70.5 million--$63 million to acquire and prepare the site and $7.5 million to move residents, relocate a school and cover administrative costs. Possible additional costs could develop if hazardous wastes were found on the site and the city was found responsible for them.

* FUNDING: The city would issue securities to pay for its role in the project, costing $6.8 million a year for 25 years; repayment would be expected--but not guaranteed--from arena revenues, including property taxes, parking and a ticket fee.

* TERMS: The city could receive the property back if arena owners failed to operate the complex as promised; developers’ contracts with the teams would be reviewed by the city before closure of the deal, but the city would have no means of compelling the teams to play at the new arena.

* HIRING: Developers have promised to come up with a city-approved program by which at least 25% of jobs in the arena’s financing, design, development and future operations would go to women and minorities in the neighboring communities.