SB Nation

Jeffrey Siniard | October 27, 2015

An Initiative to Get Behind?

Is the Citizens' Initiative a legitimate effort, or just another smokescreen?

Based on the way the Briggs Initiative is written, it leads to only one possible conclusion, and that is a 100% privately financed downtown stadium. Otherwise, this is just another smokescreen in a year filled with them.

Since my last post about the Initiative launched by lawyer Cory Briggs, I've learned a couple of important things:

Briggs himself said that any downtown stadium would not receive any public money.

Also, Briggs has made it more clear what the "hoteliers" can spend money on, and what they can't spend money on when it comes to the off-site convention center expansion.

So, this leaves one extremely critical question about any downtown stadium: How do you pay for it?

Well, let's quote Sherlock Holmes, by way of Mr. Spock: "If you eliminate the impossible, whatever remains, however improbable, must be the truth."

In my view, there are two possible truths here:

  • The Briggs Initiative is yet another smokescreen by the Chargers designed to make San Diego look incompetent, and bolster their case for Los Angeles (which for our purposes means Carson).
  • The Briggs Initiative leads to a 100% privately financed downtown stadium in San Diego.

What's been said, and what does the Initiative Say?

I made a mistake in my last post. While one part was correct — any path to a downtown stadium would rely on the Briggs Initiative in order to entitle the location for the JMI Convention Center/Stadium (Convadium) — a second part was incorrect: a second initiative or Memorandum of Understanding (MOU) would be drafted between the Chargers and the city regarding potential financing.

This Initiative will not use a single dollar of public money for a Stadium

Now, if that was the case, it's precisely the type of bait-and-switch that Chargers' Special Counsel Mark Fabiani told the Citizens' Stadium Advisory Group (CSAG) the Chargers would not support:

With regards to a new stadium project, we are hearing rumblings of another ill-conceived scheme to avoid the two-thirds vote requirement: Two ballot measures, one that would raise a tax for a general purpose, and one that would be non-binding and would advise the City to spend some of the money on a stadium. To be clear, we will not support any such effort to circumvent the State Constitution.

That's when I re-read the initiative, and also listened to an interview with Briggs on 1090 AM's Scott and BR Show.

This Initiative will not use a single dollar of public money for a Stadium.

Here's what the initiative says regarding public money and a downtown stadium (note this has been condensed and combined by the author in the interests of clarity. No words have been omitted which change the context):

The City shall not directly or indirectly provide any form or manner of financial support, lend its credit, pledge anything of value, allow any public asset to be used for less than fair-market value as determined by an independent fee appraiser, or otherwise make any kind of expenditure or commitment for a future expenditure that would in any way facilitate either of the following ... Convention center, exhibition and meeting facilities, Professional, semi-professional, collegiate, or recreational sports facilities; or Any structures, facilities, or infrastructure that provide for one or more authorized uses, including a single structure or facility that combines one or more authorized uses.

So, just so we're all clear. No public money for a downtown stadium or convention center expansion. Period. However, the Initiative does allow hoteliers to form a Tourism-Financed Improvement District, self-assess for the purposes of collecting money to fund the building of an off-site Convention Center space (as long as it's in the specified zone between Petco Park and 17th Street).

However, here's what the initiative says about using the money from the hoteliers on a stadium:

None of the improvements financed by such a district may include any portion of the acquisition (by purchase, lease, or otherwise), development, design, entitlement, construction, operation, or maintenance of an entertainment or sports facility. If the improvements financed by a district consist of any convention center, exhibition, and meeting facilities described in Section 61.2804(b)(1) and are combined with any entertainment or professional sports facility, all incremental costs of acquisition, development, design, entitlement, construction, operation, and maintenance exclusively attributable to the added facility shall be paid from sources other than district assessments or any proceeds from bonds issued by the district.

Again, just so we're all clear. No money which is raised by the hoteliers can be used for any part of the Convadium other than Convention Center / Exhibit space.

Now that we know what the Initiative says, and we know what all the principals have said, let's examine the arguments.

Photo credit: Kirby Lee-USA TODAY Sports

The Arguments In Favor of a Smokescreen

First and foremost: the Chargers have said they will file for relocation. That very unsurprising statement was made Friday morning by Fabiani on 1090 AM's Dan Sileo Show. This means, as it has since the Carson Stadium project was announced, Carson is the Chargers' number-one choice. This means anything in San Diego — or partnering with the Rams in Inglewood — is a back-up plan at the moment.

That does not mix well with the claim of "We want to stay in San Diego."Second: the Chargers told Mayor Kevin Faulconer, County Supervisor Ron Roberts, and the Citizen's Stadium Advisory Group (CSAG) they were agnostic on location, as long as the delivered plan was actionable.

Third: the urgency of the stadium situation. The Chargers want a new stadium in San Diego before they lose the leverage of Los Angeles. Ideally, that means a stadium should be built as soon as possible. The apparent best location for that scenario is Mission Valley, which is already zoned for a stadium and the land is controlled by the City.

To accentuate the point about Mission Valley, the City released a new video this morning showing off their updated plan for Mission Valley, narrated by sports broadcasting icon Dick Enberg.

Fourth: we know the Chargers' narrative is essentially, San Diego can't get anything done, therefore we have to go to Los Angeles. It is certainly reasonable to think that adding a second stadium option downtown which is unsupported by the City Government only makes San Diego look worse in the eyes of other NFL Owners.

Fifth: the Chargers (especially Fabiani) have played fast and loose with facts in the past several months. Consider these examples:

Sixth: the Chargers could very easily use the Briggs Initiative and its prohibition on use of public funds for a downtown stadium as the final nail in the coffin for their preferred plan in San Diego, and bolster their case for Los Angeles.

Most importantly, the Chargers came this close to taking the AEG deal for Farmers' Field in 2011, had at least cursory discussions with Stan Kroenke regarding Inglewood, and may have started pursuing Carson as soon as August 2013. That does not mix well with the claim of "We want to stay in San Diego."

Anyone who says this isn't a smokescreen with 100% assurance hasn't been paying attention over the last year.

Photo credit: Krutsinger/Getty Images

The Argument In Favor of a 100% Privately Financed Downtown Stadium

Having said all that, let's consider this possibility.

As we established above, the Briggs' Initiative prohibits public money from being used for a downtown stadium.

So, without public money, how on Earth can a downtown stadium be paid for? If it's a standalone stadium, it's probably not possible. With the Convadium, however, it might be possible.

First let's recap the Convadium costs:

Convadium Costs Costs
(in millions)
Facility $1,420
Land Purchase $100
Moving the MTS Bus yard $150
Total $1,670

So, here's how this could work (most of this is my speculation, take it for what it's worth):

First, the Chargers contribute $500 million. $200 million of their own, $200 million from the NFL (which has indicated they're willing to modify the loan program to help pay for a privately financed stadium in Inglewood or Carson), and then $100 million from Personal Seat Licenses (PSLs).

The terms of Briggs' Initiative meets the Chargers' own ground rulesSecond, JMI would cover the $100 million land acquisition, the $150 million relocation of the bus yard, and maybe another $100 million towards the Convention Center elements of the structure from their two hotels next to Petco Park. That way they can capture the tax credit.

Third, the remaining hoteliers contribute $350 million combined toward the Convention Center elements of the structure. Again, they split the costs and receive a tax credit.

Fourth, the remaining $500 million comes from the NFL. As outlined by Vincent Bonsignore of the LA Daily News in this post (and slightly modified by me), that money would come from a compromise which allows the Rams and Raiders to go to Inglewood, in exchange for sending extra cash to the Chargers to finish the deal in San Diego. Possibly the Raiders' NFL Loan worth $200 million, and then another $300 million of the combined $1 billion in relocation fees paid by the Rams and Raiders. By the way, the only reason this can work now is because the Chargers have a $500 million bargaining chip in Carson.

Convadium Partners Element Contribution
(in millions)
Chargers Stadium $200
NFL Loan Stadium $200
PSLs Stadium $100
JMI - Land Both $100
JMI - Bus Yard Both $150
JMI - Hotels Convention Center $100
Hoteliers Convention Center $350
Relocation fee x 2 Stadium $300
Second NFL Loan Stadium $200
Total $1,700

The Convadium paid in full. 100% privately financed.

Based on the terms of Briggs' Initiative and the Chargers' own ground rules, we've met the following conditions:

  • No public money has been spent.
  • No attempt to circumvent the law regarding special taxes has been performed.
  • No second initiative regarding a stadium is required.
  • JMI purchased the land as a Chargers' partner, and have the initial plan ready to start.
  • The hoteliers were only responsible for costs related to the Convention Center elements.
  • No attempt to expand the existing convention center has occurred.
  • The downtown site is fully insulated from CEQA. Yes the project may take longer to finish, but there's no possibility of EIR lawsuits derailing the project.
Regarding Mission Valley

I know someone's going to make an argument that if the Chargers can do this downtown, why can't they (or won't they) do it in Mission Valley?

Here's my guesses as to why:

Photo credit: Sandy Huffaker/Getty Images

In Closing

Here's where I stand on this: I'm going to treat this like a smokescreen until proven otherwise. And there's no way to know whether this is even a possibility until January 2016, after the NFL completes its relocation process and determines which team (or teams) go to Los Angeles.

Nothing which has happened in the last several months has indicated the Chargers are interested in anything other than getting to move to Los Angeles, eventually building their project in Carson.

However, if the Chargers are denied Carson — a distinct possibility — and they don't want to partner with the Rams in Inglewood, they will likely have the one-time leverage with the NFL to pursue a privately financed stadium in downtown San Diego, if the Briggs Initiative passes.

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