Los Angeles wary of cost as it looks to lure NFL team

LOS ANGELES (Reuters) - The company looking to build a football stadium in downtown Los Angeles has said time and again the project will not cost taxpayers money.

But that has not stopped officials and residents, even those who support the project, from asking: Really?

The nation's second biggest city has been without a National Football League team since 1994.

But with the city facing a budget gap of $350 million next year, officials are vigilant about Anschutz Entertainment Group's plans for a stadium meant to attract an NFL team.

Cities across the United States have faced similar dilemmas in recent years, as rising construction costs and dwindling public funds have raised the stakes for stadium projects.

"Everybody likes the idea of having the NFL here, and it would be great to have them back, but at what cost?" said L.A. City Councilman Paul Krekorian. "And for me, if the cost is a dime of taxpayers money, then it's too much."

AEG is asking the city to provide $350 million in bond financing to help cover the $1.4 billion construction of its planned Farmers Field, and the company promises the city will be refunded with, among other things, tax revenue from increased economic activity and a surcharge on tickets.

Also, AEG promises to pay cash to bridge any gap on the amount owed for the bonds each year.

Teams rumored to be considering Farmers Field, with its projected completion date of 2015, are the San Diego Chargers, Oakland Raiders, Minnesota Vikings, Buffalo Bills, Jacksonville Jaguars and St. Louis Rams. The Rams and Raiders were both based in the L.A.-area until 1994.

Still to be determined are such issues as how much AEG would pay to lease ground underneath the stadium, whether it will provide a letter of credit guarantee for the $350 million and whether the city will have to cough up for infrastructure work around the project, officials said.

Robert Boland, professor of sports management at New York University, said building a stadium used to cost $500 million. But as the cost ballooned in the last decade to $1 billion, cities faced more pressure to help finance such projects.

"There are very few localities right now that have the money," Boland said.

MAYOR'S SUPPORT

AEG made its written proposal to the city in February. On Wednesday, city residents got a chance to see what the stadium would look like and to comment on the plan. Negotiations between AEG and the city have just begun.

Los Angeles Mayor Antonio Villaraigosa said in February that the project would "not cost taxpayers a dime." AEG says the same thing.

"We came to them (city officials) with a proposal that was at no cost to taxpayers," said Dan Beckerman, chief operating officer/chief financial officer for AEG. "We're committed to that, we've always been committed to that."

Farmers Field would be built on ground occupied by an aging wing of the L.A. Convention Center. AEG proposes dismantling the wing and building a replacement that would connect to the rest of the Convention Center, using the city bond money.

AEG built Staples Center, a facility just a stone's throw from the proposed stadium. It opened in 1999 and is home to basketball teams the Lakers and the Clippers, and the Kings hockey franchise.

City Councilwoman Jan Perry, who supports the concept of Farmers Field, said Staples Center has been great for downtown. But she said a lot needs to be worked out in the latest deal.

"This is going to be an arduous process and we're going to have to be very meticulous in the way that we peel back the layers of this proposal," she said.

Perry is an influential official on the project, because she represents the area where the stadium would be built.

If the project is derailed for any reason, there is another developer trying to draw an NFL team to the L.A.-area.

Ed Roski, a former partner in developing AEG's Staples Center, is proposing to build an $800 million stadium in City of Industry, about 20 miles from downtown Los Angeles.

That and the momentum for Farmers Field mean the L.A.-area stands its best shot at winning back an NFL team in years.

But even so, football fans such as Lisa Johnson, a 44 year-old postal worker and mother of two who attended the Farmers Field public comment meeting on Wednesday, remain skeptical even as they hope the stadium gets built.

"I'm sure I'm going to be paying for this somehow," Johnson said.

(Editing by Greg McCune)