The young son of a prominent government official boasted to his father that he had saved 25 cents by walking home instead of taking the bus. “Tomorrow, save $10 by not taking a taxi,” cracked his father.
Beware of such mathematical legerdemain as the Chargers try to make the case for a massive government subsidy for a downtown stadium. For years, the team had said a new stadium would be built with private funds, but that claim was never credible because it was always assumed that the land would be donated by some duped government entity that might also ante up property tax revenues for construction.
Now the team is looking into building a stadium on a bit more than 10 acres downtown — the tiniest footprint in the National Football League. (Qualcomm Stadium is 166 acres.) The park would take up the current Tailgate Park (once a major sales tool for nearby Petco Park), the Wonder Bread building, and the bus yard of the San Diego Metropolitan Transit System.
Mark Fabiani, Chargers mouthpiece, says that because there can be no ancillary development, there will have to be a government subsidy — or, realistically, much more corporate welfare than there would have been when the team was claiming the facility would be privately financed.
So let’s examine some of Fabiani’s juggling of numbers. In a speech in Rancho Bernardo, he said the facility would cost $700 million to $800 million. Others say it will be closer to $1 billion. Fabiani told me that “stadium construction would not begin until five years from now at the earliest” and the team counts on inflation being 3 percent — possibly a very optimistic estimate.
But there is an overwhelming factor: a huge plume of gasoline and oil that has sunk deep into the ground in the decades since the bus yard went into use in the 1920s. “The period for that plume to develop has been a long, long time — not anything like a filling station in use for only 40 years,” says Jim Mills, former president pro tem of the California Senate and an expert in San Diego transportation. There is also the question of relocation of the bus yard. How much would it cost? What San Diego neighborhood would want it? “There would have to be an environmental impact report for the new location, and can you imagine residents welcoming the bus yard with open arms?” says former councilmember Bruce Henderson.
In a December 12 op-ed in the Union-Tribune, Fabiani never mentioned the huge cleanup or who might pay for it and any relocation. Said Fabiani in an email, “While [fuel contamination] is an important issue, we don’t see it as a show stopper. That could change with more work, of course, but right now we are not deterred by this issue.” Even the U-T says, “The cleanup costs are potentially enormous.” Hmmm.
In his Union-Tribune op-ed, Fabiani said that the Chargers and the National Football League might put $250 million to $300 million into the project. But in a Rancho Bernardo speech, he said that “the league’s financial support is not assured because the fund it created for such purposes has been drained,” according to the Union-Tribune. The league desperately wants a team in Los Angeles because of television and other revenue in the nation’s second-largest market. Would it put money in L.A. or in San Diego? Need I ask?
So how much would the Chargers plunk into the pot — $200 million? That could make the government expense between $500 million and $750 million or more. No wonder a Channel 10 poll indicated that 71 percent of San Diegans oppose use of tax dollars for a new stadium and only 26 percent favor it. But wait until the entire establishment lines up in favor of it and pro-stadium spending swamps the opposition by 100 to 1 or more, as is common in such campaigns.
In his op-ed piece, Fabiani claimed that it will cost the City more than $300 million to keep Qualcomm Stadium going until 2020. I asked him where he got that number. It turned out that $32.7 million represented expenses that would come after 2020. And $200 million came from supposed deferred maintenance. “He appears to have pulled that $300 million out of his butt,” says Henderson. Fabiani seems to be arguing that since it will cost $300 million (his dubious figure) to keep Qualcomm going, why not just throw in several hundred million more? Huh? Henderson points to the opportunity cost: the hundreds of millions in additional funds that would be spent on the downtown stadium could do much to reduce the City’s chronic financial problems, repair the rotting infrastructure, restore services, and improve the quality of life.
Fabiani says the City could save much by turning Qualcomm to other uses. But who is going to build condos, lofts, apartments, retailing establishments, and office buildings anytime soon? There is a huge glut. Any hotel that was built or refinanced in the past five years is underwater, says La Jolla hotel guru Jerry Morrison. It will take years before the condo oversupply is worked down.
On that score, Fabiani mentions tax increment financing, or the use of future property tax revenues. But those nearly empty hotels and condos are causing the value of high-rise buildings to go down — along with future property tax receipts. Since construction won’t start for at least five years, Fabiani says, “Our expectation is that the current economic downturn will have ended by then.” Probably, but will property tax receipts have rebounded enough to use tax increment financing? Will the overbuilding be sufficiently worked off?
If the Qualcomm site is used for something else, “Who is going to pay to rip down the stadium?” asks Henderson. And there is a plume at that site too.
Fabiani says the Chargers “have proposed from the start that the team be allowed to operate and maintain the new City-owned facility.” I reminded him that the team also claimed that the stadium would be privately financed. This led to a snappy colloquy in which each of us challenged the other’s personal honesty. I kept thinking to myself: even if the Chargers pick up maintenance costs (and I will have to see that to believe it), who pays the servicing on the bond? The Chargers have already answered that one. It won’t be the team. “Since the total servicing costs for the $60 million bond issue of 1997 for Qualcomm improvements is $5.8 million a year, then servicing costs on a bond of over $600 million could logically amount to about $60 million a year,” says Henderson, who is including sinking fund costs. Maintenance expenses would be a fraction of annual bond costs.