Mission Valley — As an army of bulldozers, pile drivers, and concrete cutting machines massed outside the gates of San Diego Jack Murphy Stadium a week ago Monday night, the city attorney, city manager, and a few lucky members of the city council were preparing to celebrate. As soon as the Holiday Bowl was over that night, the wrecking crew was poised to begin tearing down crucial parts of the 32-year-old stadium in preparation for the council's controversial $80 million--plus expansion plan.

Although the ostensible occasion was the Holiday Bowl, at least one of the city officials eating cake and sipping champagne inside the city's stadium press-level luxury skybox acknowledged that the real reason for their merriment was the impending start of the expansion project.

"They're having a great time of it in there," said one city council aide who scurried from the box just as the cake and bubbly were being wheeled through the box's closely guarded door from an adjoining hallway. "No one is going to stop them from taking down this stadium now. And once it's down, the taxpayers will be forced to pay to put it back together again, referendum or no referendum."

A jubilant councilman Byron Wear, who exited the box with his wife during the second quarter, echoed the theme. Asked what the council was going to do about the referendum petition, which backers say contains more than 50,000 signatures gathered in a little more than two weeks and seeks a vote on stadium financing and expansion issues, Wear replied: "Nothing. Everything's going forward in terms of the expansion, per our previous decisions."

If the referendum effort is certified as having the sufficient 28,000 valid signatures, the council is faced with the choice of putting the expansion ordinance on the ballot or rescinding it. Asked whether the council would place the issue before voters if the referendum qualifies, Wear replied: "No. No. We are going to proceed as we had planned. Right now the city attorney is looking at that as an option. We're not going back to council until the 14th of January so see what happens then."

As Wear left the box for the movies with his wife, City Manager Jack McGrory, widely viewed as the chief architect of the stadium expansion deal, arrived with his spouse to join the closed-door celebration. A lusty cheer could be heard as he entered the box. Others spotted sitting in the front rows of the box included councilmembers Harry Mathis and Barbara Warden, as well as city attorney Casey Gwinn. All have been big backers of the stadium expansion without a vote, and McGrory and Gwinn are two of the three directors of a so-called joint powers authority, which technically owns the stadium and leases it back to city taxpayers.

During the evening, the party in the city box hosted a succession of visitors, including Union-Tribune editor in chief Herb Klein, the ex-Nixon staffer and self-professed sports aficionado whose paper has supported expanding the stadium without a public vote. Other guests included the county's new chief administrative officer, Larry Prior, and his wife.

The presence of a reporter and photographer outside the city box so unnerved two members of the Holiday Bowl staff that they alerted security and threatened arrests. Cooler heads on the bowl committee intervened, and the guards warned the photographer not to "touch that big cake or those champagne bottles." Bowl officials said cake and champagne for the council came courtesy of the taxpayer-subsidized bowl committee.

Ever since the stadium was opened 30 years ago, the city box has been controversial. Because the stadium was originally financed by a so-called joint powers authority made up of the city and the county, both county supervisors and city councilmembers were given free passes to all stadium events, ostensibly so that they could "supervise" activities there. Abuses of the box privileges -- such as selling the tickets to others and giving them away to campaign contributors -- have become so commonplace over the years that they no longer attract much attention, and an honor system has been adopted to limit outright sales of the seats.

Two years ago, when the city council decided to expand the stadium without a public vote, the city accepted full ownership of the stadium from the county and granted it to a paper "joint powers authority" controlled by McGrory, Gwinn, and City Auditor Ed Ryan. Under that arrangement, McGrory, the city attorney, and Ryan then voted to lease the stadium back to city taxpayers for enough in annual rent payments to allow them to sell bonds to finance the expansion. Although the deal was challenged in court by a group of San Diego taxpayers, the scheme was upheld in a series of lower court rulings, and the state Supreme Court, in a decision last September, refused to intervene.

Thus, in December, McGrory, Ryan, and a representative of Gwinn voted to sell $67 million of bonds for the expansion and authorized a contractor to proceed with work, even though a final contract between the city and the Chargers was being subjected to a public referendum. If the referendum is found to have qualified for the ballot, observers say, the joint powers authority may find itself hard up for more cash to continue its construction activities. McGrory has said that at least $18 million more is needed to finish the job, and skeptics say the tab may be much higher.