Bill Shaikin who covers baseball for the LA Times, posted this column in Sunday’s paper and it’s the first time there is actually a peek at what the Angels might be doing for the city of Anaheim when negotiations resume.
From the column: “You’re the mayor. A guy walks into City Hall and offers to spend half a billion bucks to revitalize property owned by the city, at no cost to the city. What do you say? If you’re Anaheim Mayor Tom Tait, you call it a taxpayer giveaway. This is not a knock at Tait. This is a tip of the cap toward a mayor who has been so incredibly successful in framing the debate surrounding the Angels‘ stadium lease negotiations that the process has ground to a dead halt. It has been six months since the Anaheim City Council voted to approve the framework of a deal designed to keep the Angels in town for the long term, and to determine how to cover the estimated $150 million needed to keep Angel Stadium up and running for the long term.”
What’s interesting lies in the comments of the story. CATER President Cynthia Ward offers Shaikin her thoughts and it appears Shaikin doesn’t buy into CATER’s heavy breathing. Ward writes: “profit called CATER and we filed a Complaint in Superior Court on Dec 26 alleging violation of Open Meetings Law and Public Records Act in the Sep 3 approval of the deal points. They may finalize a deal by following State Law. Meanwhile we have discovered the “experts” who crafted the econ impact report appear to have major conflict of interest issues with their parent company scoring a huge contract with the Angels immediately after their glowing report sold the deal to a 4 of 5 vote, and the Mayor exposed them for not even using Anaheim info to draft the report! As for the maintenance, Arte Moreno has been responsible for that since he bought the team so if the stadium is falling apart he has only himself to blame, that is why he scored free rent and nearly all revenues. I don’t trust Moreno further than I could throw him, so hopefully the mayor can put some completion guarantees into whatever comes next. I am glad to hear Charles Black quit, since he was arguing so hard on behalf of the Angels AGAINST Anaheim’s best interests one reporter thought he worked for Arte. Good riddance to him. Anaheim loves our Angels, but we value our City’s long term fiscal health too.”
Shaikin replies: “The economic impact report has been discredited, as you noted. But the land value appaears (sic) pretty minimal so long as the Angels play there, in part because the parking requirements for baseball games would require any developer to build expensive parking structures. The city and the Angels jointly commissioned a study that determined how much infrastructure work the stadium would need over the next 20 years. That’s not routine maintenance; that’s extending the life span of a 50-year-old stadium.”
And he adds: “Arte is no more obligated to keep paying maintenance in a new deal than the city is obligated to keep paying $600,000 a year toward stadium capital improvements. It’s all part of negotiations.”
Back to Shaikin’s story, Tait presumes to speak for Angel owner Arte Moreno on why the owner has been silent on the negotiations by telling Shaikin, “That’s because it’s not a good deal for the people,” Tait said.
Angels spokeswoman Marie Garvey says there’s no deal. Garvey told the LA Times, “For us to discuss deal points that have not been agreed upon is misleading and unfair to the public.”
The nut of Shakin’s column is here: Tait has framed the deal as a taxpayer giveaway because the potential land value, and return from development, might far exceed the $150 million cited as the Angels’ contribution. Yet, if that land were so valuable, the city ought to have put up for bid the 45 acres, about a third of the land, that it can sell without the Angels having veto rights. So long as the Angels play there, any significant development would require the construction of parking structures, to replace the spaces used for new buildings. That means, as the city has acknowledged, that the Angels are the most logical developer.
Two prominent developers, who reviewed the proposed Angels deal for The Times on condition of anonymity, estimated Moreno might spend $250 million to develop the site into something about as large as The Grove shopping and entertainment center in Los Angeles, about $150 million for construction, and about $100 million for parking structures. Moreno could take on a development partner, but that would be his responsibility. And, given that Moreno would want money-making amenities as well as the required infrastructure improvements to stay at Angel Stadium, one major league owner estimated Moreno might put $200 million to $400 million into the ballpark, in all.
The Dodgers‘ new owners have spent $150 million over the last two off-seasons on stadium upgrades. Add it up, and Moreno might be in for more than $500 million. In fact, when former Dodgers owner Frank McCourt made a 2004 pitch for long-term Dodger Stadium improvements that included shops, concessions, parks, team offices, a team museum and two parking structures, he estimated the cost at $500 million. All of this, remember, at no cost to the city of Anaheim.
The developers contacted by The Times said the city should be concerned about the possibility of Moreno selling the team at a premium because of the development rights, then laughing all the way to the bank without developing anything. Tait is concerned, and rightly so, that Moreno could make windfall profits without the city getting a cent. The Angels are believed to be willing to negotiate in such areas, for instance, to consider some revenue sharing, to bind the deal on any future owner and to discuss meeting development deadlines or letting the city take back the property.”
I’d say Shaikin, who’s covered professional baseball for years and knows how deals are done all over the country, has done a nice job of framing the benefits of letting the Angels develop the land near the stadium — something Tait and his clown car of supporters in CATER (which represent .000714% of Anaheim’s population) haven’t been talking about.
I’m not sure Shaikin knows this, he may have inadvertently revealed a reason Tait is being so hard core in Angels negotiations. Tait has told other council members that the city derives more tax revenue from homes than they do from the Angels, and Shakin writes: “But the city does not need an appraisal to realize the land is worth much more without a baseball stadium, and without the parking it requires. If this is all about the best financial option for Tait — and that would be an entirely honorable position, given that the revenue could go to police and fire services, youth sports, libraries and such — then the city should let the Angels play out their lease and go elsewhere.”
About two years ago, Tait sought the advice of the FPPC on if he could participate in “governmental decisions affecting Angels Stadium” if he transferred ownership in property he owned within 500 feet of Angels Stadium. You can read the letter here.
Tait proposed to transfer his nearly 23% ownership in two properties — at Orangewood and Dupont — to two non-dependent adult children “for which Mayor Tait would received no consideration in return.” Tait basically gifted this to his kids, all completely legal, but if the Angels should leave and the value of the land near the stadium goes up without a baseball team there, do the Tait kids stand to benefit from a huge economic gain because their dad chased the Angels out of Anaheim? The easier thing for the Mayor to do would be to sell the properties outright to someone he’s not related to at all. But that property stands to financially benefit the Tait family if the Angels leave.
It’s nice to see Shaikin open the window on what a Moreno development/investment could look like to benefit Anaheim if a deal goes through. But there’s still absolutely no word from Moreno as to what the Angels are prepared to offer on their end.
You get into this stuff and sometimes, you really just can’t understand some people . . .
I’m guessing Dan bolded this from Shaikin: “The city and the Angels jointly commissioned a study that determined how much infrastructure work the stadium would need over the next 20 years. That’s not routine maintenance; that’s extending the life span of a 50-year-old stadium.”
Well, no– not exactly Shaikin. While you may have Cynthia on specific investment jargon between routine and capital expense, you got the major point wrong. Arte is indeed responsible for ordinary capital repair. Here’s the appropriate section from the 1996 lease.
“As used in this Section 10(b), capital, repairs and improvements shall mean expenditures for property, components, systems and structures with a useful life of not less than five (5) years or which extend the life of the structure or improvement into which incorporated by not less than five (5) years and having a unit cost of not less than Five Thousand Dollars ($5,000), specifically excluding regular maintenance and repairs, or replacement or repair of event-damaged property.”
“Tenant shall have full discretion and control over the expenditure of funds from the Capital Reserve for capital repairs and Improvements to the Baseball Stadium (Including fixtures, furnishings and equipment) and the Parking Area (or the Primary Parking Area If Sportstown Is developed), and for ordinary repairs and maintenance of the Baseball Stadium and the Parking Area during the period from the Commencement Date to the Completion Date”
So, the current lease explicitly addresses who is responsible for capital improvements (those that extend the life of the asset) and who is not. It also specifies to what standard the stadium ought to be kept. It’s a real shame that the author of this post chose to highlight an obvious oversight by Shaikin. Arte knew his obligations regarding the standard to which he must maintain the stadium going in. He doesn’t get extra credit for complaining about how expensive it is now . . . he still owes it. If the city wants to negotiate that leverage away, I suppose that’s up to the city– but he’d still owe the balance of any deferred maintenance causing a gap between the stadium’s current state and the standard to which he’s obligated to maintain the asset.
With regard to Tait’s motivation, it’s very clear that Tait requires at least two other votes on the council to facilitate any sort of sustained resistance to a new lease or to an amendment of the current lease. I hope the author of this blog post will be equally cynical of any Democrat supporting such an objection, which is likely to be the case.
The other thing Bill got wrong is that the rest of the council has been silent. I don’t think they were. But Ryan, contracts can be renegotiated and terms changed in business. It happens all the time.