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Questions About the Carson Stadium Project Site

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The Carson City Council has approved the proposed stadium site shared by the San Diego Chargers and Oakland Raiders. Here are some thoughts I have about whether this stadium is for real (like a loaded gun), or for show (like an unloaded gun)

The now-approved Carson Stadium project
The now-approved Carson Stadium project

There are very few details about this stadium itself. Following the vote on Tuesday night, Chargers and Raiders officials are expected to provide more details in a meeting with NFL officials in New York.

According to an article in the Los Angeles Times, the Chargers expect to follow a plan similar to the plan pursued by the San Francisco 49ers for the construction of Levi's Stadium in Santa Clara. The rough outline of the plan works as follows:

  • The projected stadium cost is currently $1.7 billion.
  • Carson would create a Stadium Authority.
  • The Chargers will purchase the land through a subsidiary, then transfer the land to the newly created Stadium Authority.
  • The Stadium Authority would then issue bonds for construction. These bonds would be repaid through sale of PSLs, naming rights, stadium surcharges, etc.
  • The NFL will provide $200 million per team, either with a special fund -or- amending their bylaws to allow the teams to receive money from the G4 loan program.
  • Goldman Sachs, along with other banks, would loan the Stadium Authority the remaining money to complete construction. The stadium authority and team(s) would then repay the loans from the banks.
  • Additional development would take place on the site, including a 350 room hotel and an 850,000 square feet of additional commercial development space - funny that the NFL isn't concerned with "additional mouths to feed" in the Inglewood and Carson projects, but it's problem in San Diego.
Author's Note: This post has been updated and corrected. The Santa Clara Stadium Authority issued construction bonds, not revenue bonds. Also, the inclusion of loans from the NFL has been included.

With the vote of approval, the Carson Stadium project site becomes fully entitled. This means construction could begin once permits are obtained, architectural plans are detailed and finalized, and labor agreements are reached.

All of that said, I'd now like to make the following points:

An entitled Carson Stadium Project does not "draw Carson even with Inglewood."

According to the article linked above, Carson, the Chargers, and the Raiders have been discussing this plan since December. Honestly, I think it's possible this was first broached back in October of 2014 (maybe even earlier) when the Raiders first mentioned the possibility of moving to the NFC West in exchange for a shared stadium in Los Angeles. Still, that's a full 8 months after Stan Kroenke purchased land in Inglewood.

Kroenke clearly had a vision in place for the Inglewood site when he purchased it in February of 2014. Even assuming the Chargers started planning for Carson before October of 2014, it still means that Kroenke has at least a 6-12 month head start. Kroenke already has finalized general plans and labor agreements in place. Inglewood is projected to start construction around the end of this year - Carson would be at least 6 months to 1 year behind, assuming there are no problems putting together the stadium authority, or getting the loans in place.

The Carson Stadium Needs Two Tenants to Ensure Profitability

According to the Fiscal Analysis prepared by Carson for this project (Exhibit B, Appendix II), the Carson Stadium project is only profitable with two teams in place once construction is completed. In Scenario #1, the report projects annual fiscal losses in most of the first 30 years, before performance rent begins.

This is because the city of Carson potentially loses $1.4 million annually in federal housing funding, This funding was from residential development which was originally going to be built on the stadium site, before the stadium was proposed. According to Fabiani, this is an accounting error which can be resolved by the city of Carson simply finding another suitable location for this projected housing. Of course, he doesn't have any ideas or suggestions for where this could be located.

The Carson Stadium Site Has Issues

First of all, the Chargers and Raiders do not yet own the site. The site is owned by Starwood Capital. The current plan is for the Chargers to create a subsidiary holding company, have the subsidiary purchase the land, then transfer the land to the Carson Stadium Authority once it is formed.

More significantly, however, the Carson Stadium project is on top of a former landfill. That, in and of itself, is not necessarily significant. Most of the remedial measures have been enacted.  However, there are still "remedial measures" which need to addressed before any construction can take place on the site. Here is what Carson's own report says about the location (Exhibit B, page 32):
"The Project Site does contain some hazardous materials and remediation activities will be needed to ensure the Stadium project can be built and operated safely."
Much of the remediation work has already been completed over the last 15 years, but the report states modifications to the existing or planned remediation is required to accommodate stadium construction. These changes could include:
  • Changes to piling locations.
  • Changes to the landfill cap.
  • Changes to the Landfill Gas Control system.
I spoke to a former Civil Engineer for the City of San Diego who used to work on landfills for this article (and specifically, has been to the Carson site and is aware of its conditions). According to him, the modified remedial measures which need to take place are potentially significant issues. He projected that "these types of remedial changes could cost millions of dollars, and would probably take at least a year to enact, assuming everything went well" (e.g. there were no other problems discovered, subsidence hadn't occurred, etc.).

Any stadium site with these issues is just begging for a lawsuit demanding a full Environmental Impact Report (EIR).

Wrapping Up

The NFL loves competition, and it now has two fully entitled stadium projects in Los Angeles. However, there are significant differences between the two.

Inglewood's $1.8 billion stadium project has already settled land, design, and labor issues. Detailed architectural schematics are being drawn up, and permits are being acquired. This project can be started by December  2015, and likely finished in time for the 2018 NFL Regular Season. Stan Kroenke is worth $6.3 billion, and his wife is worth another $5.5 billion. The NFL has no legal recourse to stop Kroenke from relocating his franchise.

Carson's $1.7 billion stadium project is still finalizing the general design. Land hasn't officially been purchased yet. No labor agreements are in place. The site is on top of an old landfill, and requires some additional remediation work before construction can take place. This, plus the lack of finalized design and labor agreements means actual stadium construction can't likely begin until at least January 2017, and football can't be played there until 2019. The location is vulnerable to a lawsuit demanding an EIR. Most importantly, the project likely requires 2 teams to produce an economic benefit to Carson.

If the NFL does in fact decide to accelerate it's relocation application process to November 2015, it seems to me the only plausible scenario allowing the NFL to choose Carson this fall involves the Chargers and Raiders determining they have no options remaining in San Diego and Oakland, respectively.

This would be the NFL imposing an artificial timeline upon itself, simply to freeze out two current NFL cities, and the NFL would be turning away a shovel-ready project backed by the third-wealthiest owner in the NFL, which could be built 2-3 years sooner, in favor of saving Dean Spanos' and Mark Davis' bacon.

That doesn't make sense to me, and the Carson stadium project doesn't either. At least not yet.