In a potentially devastating blow to a planned downtown sports arena, L.A. City Councilman Joel Wachs said last week that he will move forward with an initiative to require voter approval for use of public funds in building professional sports facilities.
Wachs said he is also is adding language to his initiative that would restrict the type of revenues that can be used to pay off city-issued bonds for such projects to ticket taxes and increased revenues from hotel bed taxes.
Under the sports arena plan, the city would issue $70.5 million in bonds to finance the project. The bonds and their interest would be paid off through a variety of sources, including ticket taxes, increased bed taxes, parking taxes, property taxes, business license taxes, sales taxes, utility taxes and additional parking revenues at the city-owned Convention Center parking areas.
Developers of the arena which would house the National Hockey League’s Kings and the National Basketball Association’s Lakers say that if the initiative is put on a citywide ballot and passed, it will likely kill their deal with the city because revenues from the hotel and ticket taxes alone would not be enough to pay off the bonds.
“We have not yet analyzed what the true impact of that initiative is, but at first blush it is an initiative that will prevent that arena from ever being built,” said John Semcken, a spokesman for arena developers Ed Roski Jr. and Philip Anschutz, who own the Kings.
Wachs said the existing deal with the developers does not guarantee that the taxpayers won’t get stuck with the bill if the arena is a failure.
Semcken, however, criticized Wachs for not exempting the sports arena from his initiative, even though he said late last month that he would if he could be guaranteed that a promise by the developers to insure the city bonds was solid.
Developers last week said they were in discussions with Bank of America to formulate an irrevocable letter of credit to ensure that taxpayers do not become liable for the bonds.
“He’s made it obvious that his main objective is to kill the arena,” Semcken said. “He has not been a man of his word and we are no longer going to respond to his requests.”
Wachs expects this week to resubmit his initiative to the city attorney, who then has 10 days to return it. Wachs will then have 120 days to collect 61,170 voter signatures to get the initiative qualified for the ballot, but Dec. 24 is the deadline to qualify it for the June 2, 1998, ballot.
