A legal challenge from a small San Gabriel Valley city with a population that would not fill half a National Football League stadium could cause a serious delay in construction of a proposed arena in the City of Industry, the developer said last week.

If the city of Walnut, which borders a 600-acre site northwest of the Pomona Freeway where an $800 million NFL stadium is proposed, makes good on its threat to challenge the project’s environmental impact report, the arena plans could be put on hold and a football team may be scared off, at least temporarily.

“If they sue us, we’ll be delayed,” acknowledged John Semcken, project executive for developer Ed Roski Jr.’s Majestic Realty Co., which is pushing for a 75,000-seat stadium surrounded by nearly 3 million square feet of office, retail, medical, entertainment and restaurant space.

Jeff Marks, chief operating officer of Premier Partnerships, a sports advisory and sales firm based in Los Angeles, went a step further. “If it’s not buttoned up,” marks said, “it will be very hard to get the NFL’s final approval. The EIR is the Holy Grail of getting stadium deals done.”

A spokesman for the NFL declined to comment.

The legal bickering erupted last week against the backdrop of a separate matter. The 86 registered voters in the City of Industry will vote Jan. 20 whether to authorize a $500 million bond issue, about $150 million of which would pay for road improvements and other infrastructure work surrounding the stadium.

The developers say the stadium’s portion of the bonds would be repaid through future ticket and parking taxes. And city officials say the property tax implications of the measure have yet to be determined because the vote is only for authorization of the bonds.

“We’re not selling them right now,” Industry Mayor Dave Perez explained of the measure. “We may sell them if the market improves.”

Nevertheless, a vote against the bond issue could set back progress on the stadium because it would remove that option and the city would have to find another way to finance the infrastructure.

The likely legal challenge from Walnut is a possible problem, too.

“We’re very different from Industry,” Mayor Joaquin Lim said of Walnut, which has a population of about 32,000 and is primarily residential. The proposed NFL stadium would come within 3,000 feet of some homes in his city.

“Walnut was created as a bedroom community,” Lim said. “The type of rowdiness associated with professional games is something we don’t need or want. Tailgate parties, the consumption of alcohol; we are a family-oriented community that doesn’t need beer-drinking football fans.”

EIR controversy

At issue is the validity of the EIR process followed by developers and Industry officials. Prior to the April unveiling of the stadium plan, Majestic Realty had an approved environmental report for a 5 million-square-foot commercial center at the site. The company later submitted a supplemental EIR likely to be certified by city officials later this month adding the stadium and reducing the commercial component.

Walnut officials contend that the two EIRs should be incorporated into one new one. They believe developers need to prepare an environmental report analyzing the entire project, a process that could take up to a year and cost an additional $1 million.

“The seating capacity would be 2.5 times our population,” Lim said of the proposed stadium. “There’s no way you can mitigate a 75,000-seat stadium, no matter what you do.”

Majestic argues that the revised project will have less environmental impact than the original one because the stadium will operate only on certain days usually when other venues are closed and replace previously planned industrial uses that had potentially greater environmental effects.

Semcken said the stadium would, on average, create less traffic than the original plan, and Walnut didn’t challenge the original plan. “This project is smaller and has less traffic, with nearly twice the economic output. The citizens of Walnut are going to spend hundreds of thousands of dollars filing a lawsuit that they will lose.”

Officials from the two warring cities met last week in an unsuccessful effort to settle their differences.

“It was very cordial,” Lim said. “We agreed to disagree.”

Should Walnut file its lawsuit, a judge would decide whether the addition of the stadium has changed the project enough to warrant complete re-evaluation in a new EIR.

“The test may likely depend on whether the stadium is considered to be an adjunct of the initial project or a new project itself,” said Barbara Higgins, an attorney specializing in land development at the Los Angeles offices of Alston & Bird LLP.

Either way, Semcken said, there will likely be a delay.

Majestic has publicly promised that the stadium would be ready within three years of Roski’s acquisition of a team, which would play at another venue such as the Rose Bowl or the Coliseum until the Industry site is complete. It’s been speculated that bad economic conditions would delay the beginning of construction until at least 2012.

With the added uncertainty of a lawsuit, the NFL could be reluctant to commit a team to the stadium, said Marks of Premier Partnership.

“Any deal,” he said, “will probably be pending.”