In the aftermath of last week’s seismic announcement of Hollywood Park Land Company, LLC’s intent to build an 80,000 seat state-of-the-art stadium in Inglewood, voters must now consider a proposed ballot initiative seeking their approval. In spite of the initiative’s sheer volume, at its core it is remarkably uncomplicated. Still, voters are confronted with having to make sense out of the representations of business titans, elected officials, and journalistic pundits.
Add to this a meteor shower of special interest claims and the ever present cynics, and you start to appreciate how easy it is to become confused, distrusting and overwhelmed. This is, of course, unsettling since most Inglewood residents want a simple answer to the central question of whether they will be required to pay for any portion of a new stadium.
Breathe easy. I think I can help, while at the same time eliminating taxpayer angst.
Healthy voter skepticism regarding the construction of sports and entertainment complexes in America is warranted and understandable given the events of the past several decades. In their zeal to capture anticipated economic prosperity, boost civic pride and culturally enrich their communities, many cities have been seduced into paying hundreds of millions of dollars in public funds to help build stadiums and attract professional sports franchises.
The most common failing of these public-private partnerships has been a business model that forces taxpayers to take nearly all the financial risks. Public funding was invested up front with the promise that direct local project revenues would not only support debt obligations for the new stadium, but would result in windfalls.
When the fanfare was over and the revenues fell dreadfully short, policymakers lamented a host of unforeseen factors, and sheepishly admitted that taxpayers were saddled with often crushing debt. Upside went to the stadium and team owners. The burden of risk was foisted upon the residents and taxpayers.
In unprecedented and sharp contrast, the Hollywood Park Project stadium initiative proposes modifying the current project zoning designation to permit a stadium to be built entirely with private capital. Furthermore, the developers promise to pay for all necessary public infrastructure (sewers, streets, sidewalks, lighting etc), public safety improvements, and municipal support services for events. These latter costs are the responsibility of, and customarily paid for by, host cities. As such, there is a provision that if the City’s direct revenues from the project exceed $25 million in any single year the developers begin to be reimbursed (in the form of revenue tax credits) by the City for these expenses.
If taxes and fees due the City from the Project never reach the threshold, the developers do not recover any of their public infrastructure expenditures. This isn’t sleight of hand, folks. In clear, legal terminology the paradigm has shifted and Inglewood taxpayers receive priority protection. The City and its residents enjoy substantial upside with no risk. This is a citizen’s initiative after all, and they are looking after their interests. It’s as it should be.
Critics claim that it is misleading to state the proposed stadium will not cost the City anything and contend that infrastructure credits could total $100 million. But this is a hollow “gotcha!” because before the City is obligated to reimburse the developers for infrastructure costs it will have to be awash in at least $25 million in new revenues that will renovate libraries, restore parks, and enhance policing and other public services. These will be City upgrades that propel local property values and measurably improve quality of life.
Throwing hundreds of millions of taxpayer dollars at privately owned stadium construction is foolhardy and Inglewood wisely refuses to do so. However, it is also naïve to expect developers to invest billions of dollars in a community unwilling to pay for public infrastructure necessary to accommodate growth when (and only when) that growth pays handsome returns to the community. How often does one get the opportunity to pay investment costs only after the investment has paid dividends in multiples? Frankly, it would sound like a shell game if we weren’t talking about the likely prospect of the NFL returning to the second strongest market in America. This is just good business all round.
In summary, it is erroneous and incites fear and opposition to contend taxpayers will be burdened with added costs for a new stadium. More insightful is the objective analysis that points to the potential for future local taxpayer relief and expanded municipal services subsidized by tourists and stadium patrons.
Inglewood’s proudest moments as a government and a community are invariably linked to its historic relationships with Hollywood Park Race Track, the Forum, and Hollywood Park Casino. All have been outstanding corporate partners who have collaborated with the City for mutual benefit. The Hollywood Park Project stadium, then, has a solid foundation to build on even before it pours its first cubic yard of concrete.
Mark F. Weinberg is a Municipal Management Consultant and former City Manager in both California and Washington State. He served as Inglewood City Manager in 2003-2005 and again in 2010-2011.