The San Diego City Council’s approval of a $166 million bond sale cleared the way for work to restart on the stalled ballpark project in the East Village.
The council voted 8-1 Nov. 20 to proceed with the bond measure needed to cover the city’s portion of the $450 million baseball-only stadium. Councilwoman Donna Frye was the lone opposing vote on the project that was approved with a few changes , changes some critics say require a second public vote.
Three years ago, ballpark proponents were stressing the project was more than just a ballpark. Last week, Mike Aguirre, one of the initial supporters turned critic, said the project is now just a ballpark and voters are being sold out by the city.
Aguirre said the plan approved by the city dramatically changes the deal voters approved between the city and the Padres. Aguirre claimed the city is letting the Padres “off the hook” and taking on more obligations.
“What this has become is the ticket guarantee at Qualcomm Stadium times 10,” Aguirre said at a news conference before the city’s vote. “This is the same mistake we’ve made before.”
One of the major changes of the deal is the city’s reliance on more redevelopment money instead of transient occupancy taxes that would have been generated from new hotels built in the area.
The city will make an upfront $75 million cash payment, which lowers its bond sale to $166.3 million. The additional funds would be generated by repaid loans from the Centre City Development Corp., the city’s Downtown redevelopment agency.
Because of pending litigation, the city will pay a higher interest rate of 7.84 percent on the bonds. That’s compared to a rate of 5.86 percent in a plan released by Mayor Dick Murphy in February and a 6.25 percent rate originally proposed when voters approved the plan.
Murphy said just as homeowners do, the city could refinance the deal for a better interest rate once the litigation is resolved.
The city’s annual bond payment under the approved plan would be $13.9 million, plus a one-time $6.2 million insurance premium.
The CCDC increased its share of the project by $15.4 million to $76.4 million, while the San Diego Unified Port District has committed to $21 million. The Padres are responsible for $146.1 million for the project. The Padres are also responsible for a significant portion of private development surrounding the project.
Aguirre pointed out a section of the official document needed to issue the city’s bonds that indicated the Padres have no current financial commitments needed to fund their share of the project. The document states “the Padres hope to do so in the near future.”
Padres President Bob Vizas said the team is “absolutely committed” to moving ahead with their portion of the project and never expected to secure financing before the city had its money in place.
Vizas said the team has spent more than $100 million on the project thus far and plan to issue a bond measure of about $160 million.
“The Padres commitment has not wavered,” Vizas told the council.
If the Padres’ bond offering fails, Major League Baseball has agreed to step in with up to $47.8 million until the Padres’ money was in place, Vizas said. Another change from the initial deal approved by voters involves the 26 blocks of ancillary development surrounding the project.
Under the agreement approved by voters, the Padres are responsible for constructing hotels, office and retail space, residential development and parking. According to the city, the Padres have the right to “fine-tune” that development if market conditions warrant it, so long as the taxes generated by the development are equivalent to the original plan.
The 600,000 square feet of office space originally planned will be replaced by four blocks of apartment buildings, expected to generate more interest in the current market.
Aguirre and other critics want the project to go before another public vote because of the changes. The council’s approval of the deal, with the included changes, indicates the plan is legal and doesn’t need a second vote, but that doesn’t eliminate the possibility of future lawsuits.
The city’s bond sale is expected to close Dec. 13. Work on the stalled ballpark project could restart before Christmas, with an opening day set for 2004.
