AEG Addresses Financial Concerns About Farmers Field
At a Friday meeting, AEG addressed concerns from local business owners, union members and a Blue Ribbon Commission committee, created by Mayor Antonio Villaraigosa to oversee the process of creating the proposed $1 billion Downtown Events Center, which will include a state-of-the art NFL stadium.
“In a city that’s teetering on bankruptcy, we should be concerned about who will be responsible for paying for a project like this,” Glenn Bailey, a San Fernando Valley-based activist, said. “There needs to be binding language that properly protects the city and the taxpayers.”
Bailey was concerned that should the stadium cost more than is currently estimated by AEG, Los Angeles and its taxpayers will be responsible for the financial burden.
AEG is doing everything possible to avoid that scenario, a spokesman for the company said at the meeting, which was held at Galpin Ford in North Hills. Galpin Ford is owned by one of the members of the Blue Ribbon Commission.
“We aren’t guessing at this,” Ted Fikre, chief legal operator for AEG said, citing the company’s success with the similarly ambitious Staples Center. “The developer will be responsible for covering a shortfall.”
The source of most worry for the citizens appears to be a $350 million bond AEG is requesting from the city. The bond will help cover the cost of tearing down the West Hall of the Los Angeles Convention Center to make room for the stadium, as well as the expense of creating two new parking structures to serve the expected influx of traffic. Why the city needs to front such a large sum when AEG has already committed $1 billion to fund the project has been a source of confusion for civic watchdogs.
Supporters of the project say the explanation lies in liability and other legal concerns.
Austin Beutner, first deputy mayor and chair of the Blue Ribbon Commission said legal issues make it necessary for the city to issue the bond. No further explanation was offered.
Fikre insisted that AEG will be able to entirely repay the bond using revenue from the site once it’s operational, and that the city will have sole ownership of the remodeled convention center and new parking structures.
Commission members seemed satisfied that AEG will put its money where its mouth is when it comes to the bond, but others were concerned about potential unforeseen costs to the city.
When Beutner asked who would fund additional expenses for special events at the stadium, such as increased police presence, Fikre responded that there’s a city ordinance requiring either the site or the hosts of the event to cover it.
Whether the stadium and the refurbished convention center will provide direct revenue to the city’s general fund remains a matter of contention. One attendee said AEG has provided no evidence that the city will benefit financially from the development.
“There are many sources of incremental revenue that will go directly to the general fund,” Dan Beckerman, chief financial officer of AEG said. He cited parking revenue from events, transient occupancy tax from nearby hotels and event-generated sales tax as potential sources of revenue.
An additional boon to the city, Beckerman said, will come not from the stadium but from the remodeled convention center. Currently, Los Angeles doesn’t make the top 20 list of most popular convention cities. AEG said four major conventions, including Microsoft and the Electronic Entertainment Expo, have committed to using Los Angeles long term should the development deal go through. The insurance company said several other conventions have also expressed interest in holding events at the remodeled L.A. Convention Center.
Once questions were answered, business owners and union leaders expressed their support for the project. Though no NFL team has committed to moving to Los Angeles, a perceptible excitement about having a professional football team in the city was evident at the meeting.
Staples Center and L.A. Live are proof that sports and entertainment projects are good for Los Angeles, said Carol Schatz, president of the Central City Association.
“You can’t define a great city by two theme parks, a beach and a sign," she said.
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