Going, going…

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It may be the baseball term for a possible home run, but in San Diego it will likely mean a strikeout, with two outs in the bottom of the 9th, as in the possibility of keeping the Chargers football team in San Diego. And pardon me for using baseball terminology as a methaphor for a football situation as I digress for a few moments from the hectic days of real estate to revisit an issue that has divided this community for the past few years. We are on a death watch and I have a hard time just sitting back and observing it. In just about any other major city in the country, this would not be happening. In fact, most other cities would love the opportunity to have the Chargers call them “Home”.

Over just the past ten years, according to the NFL Stadium Guide, 13 new NFL stadiums have been built, all with varying degrees of public participation, usually in the form of tax increases and/or bond issues, approved by public vote. There are at least 4 more new stadiums in the planning stages, and the new Dallas Cowboys stadium is under construction in, amazingly, Arlington. The newest, in Phoenix/Glendale, hosted not only the pitiful Cardinals this past season, but also two college Bowl Championship Series (BCS) games occurred in a span of less than two weeks, among other events. So, how is it that other such cutting edge cities like Detroit, Houston or Cincinnati (no offense to any of these great cities) can get this done but San Diego can’t?  

A look back at our recent history is very revealing. Just try to remember Horton Plaza, the Convention Center and Petco Park. These are three of the largest public or public/private projects I can remember since my arrival here in 1979. It must be in the ocean water or something, but every time someone proposes to try to do something great in this town, it ends up being best described as “massive” – massive opposition (by a very vocal minority) and/or massive litigation leading to massive delays and, therefore, massive cost overruns (as compared to the pre-litigation budget). But the most important “massive”, the one that people seem to forget, is the massive success that all of these projects have become. They now represent a major part of the fabric of our community and something we should all be proud of. They were not just built for the end product, which, by the way would have been great for just that purpose, but as investment – an investment in our City. All have and continue to pay back with dividends. Increased sales tax revenues, property tax revenues, hotel taxes and, of greatest importance, the huge amount of private investment that has been and continues to be stimulated in their wake. If you haven’t been dowtown in a while, like say six months, you may not recognize it. That’s how fast it’s evolving. 

In the interest of full disclosure, I have been watching the Chargers since I was a kid growing up in St. Louis. It was in the sixties, and usually the afternoon game started at 3:00 pm midwest time. I remember so many times staring at the TV seeing the field splashed in sunshine and the fans in t-shirts, footballs flying all over the field while, in my basement rec room I would look outside and see that it was getting dark and very cold, most often with snow on the ground. I thought, “some day THAT’S where I need to be.” Out of tornado alley, out of the snow and the cold and away from mosquitos. So, yes, I’m a fan. But I also understand business.

The deal proposed by the Chargers to the City of San Diego for the Qualcomm Stadium site, while not perfect, may be one of the best deals for any NFL City yet. It needs work, but not much. This is such a no-brainer. In short (according to a San Diego Union article, Jan., 06), in return for the City providing the 166 acres of land where the current stadium sits, the Chargers and the NFL will fund the entire development, a total investment in the neighborhood of $800 million, at no cost and little or no risk to the City. This money would be generally allocated toward the stadium ($450 mil.), off-site traffic improvements ($175 mil.), an on-site parking structure ($70 mil.), demolition of the existing stadium ($5 mil.), retiring the City’s existing bond debt on the stadium ($50 mil.), plus miscellaneous, contingency, etc. They would also dedicate and improve 30 acres as park land. To obtain a return and offset the huge investment in the stadium project, the Chargers would get development rights for the remainder of the site for condonminiums, hotel, office and retail uses. All they need is the land.

Ahhh, the land. This seems to be the sticking point. I keep reading that the land is worth $500 million, as-is. The opponents of this project, no doubt many of the same ones who opposed Horton Plaza, the Convention Center and Petco Park, have seized on the land issue. “We can’t give away land worth $500 million to a private, for profit, entity!” “Let them leave town” is the attitude. The opponents would have the City sell the land to the highest bidder to help generate funds presumably to pay down the $1 Billion + liability resulting from the City pension fund fiasco. Well, for starters the land is not worth anywhere close to $500 million. It’s a great piece of dirt, but any developer considering buying it would need to consider certain acquisition costs in their proforma to determine economic feasibility – Things like inheriting a site that has a stadium that needs to be demolished, like the cost of the off-site traffic improvements, like the 30-acre dedication and improvement of parkland that would be required. Oh, and what about the outstanding bond debt the City is stuck with after the Chargers leave town? These items all adversely impact the value of the land and are offsets from the so-called “retail” cost.

Then there are the alternate sites in the County. No offense to Chula Vista and National City, but these are non-starter locations. Oceanside is a maybe, but also doubtful. What we have at the Qualcomm site is the virtual center of the population distribution of the entire County. The site is underutilized and the stadium is aging, with deteriorating infrastructure and functional obsolescence in many ways. There is a way to redevelop this site that will not only not cost the City money but will provide a long-term return on the investment…if we can get someones attention in City Hall!!

I know we have financial problems in this City, but they are totally self-inflicted by the ongoing incompetence of our so-called City leaders for the past 10-15 years. The Chargers had nothing to do with it. At a time we when have the opportunity for a huge accomplishment through a public/private partnership, no one at City Hall has the balls or the leadership skills to pull off this potentially magnificent project.

It’s all about the land. Tweak the numbers, adjust the land uses, maybe add a multi-purpose community center and playing fields to the park. Whatever. There is a way to structure the deal to provide a decent return on the value of the land to the taxpayers and make this happen. Just like Horton Plaza, the Convention Center and Petco Park, it would be a fabulous investment in our community and the returns would go far beyond financial. And it would enhance and strengthen the fabric of our City. But no one seems to be listening. It’s going, going…it’s almost…gone! How sad.

Now back to real estate stuff.     

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