L.A.’s Premier Citizen Parks Leader Grapples with Arena, Harbor, Etc.

Let us begin with recently-approved proposal for a professional sports arena in Downtown Los Angeles. Some still question the financial risk to the City. As the Mayor's historical point person, how do you respond to the critics' assertion that the risks out­weigh the rewards?

The Council acted on the basis of the 66 pages of terms and conditions for the transaction, which will be formally documented and binding when it comes back to them as a memorandum of understanding.

No one who objectively understands the transaction challenges it on the basis of financial risk. If the facts pointed to serious risk, the vote would have been thirteen-to-two the other way! 

You have said that the proposal by the owners of the Kings and the Lakers to the City of Los Angeles was the best the City could achieve. Los Angeles Chief Legislative Analyst Ron Deaton, in an interview in this month's Metro Investment Report says: "There is no question that [the City Council] arrived at a deal better than what was originally proposed by the venture behind the Arena. Originally, there was no parking revenue or use fee. The deal is now minimally $4.5 million better per year than what was originally proposed. There are other aspects or the deal, as well, that are not as easily quantified—approvals of relevant plans not in the original, among other things, that are significantly better. Clearly the Council's input must have improved the deal." Your comments? 

I agree completely. Keep in mind that the Lakers and the Kings did not approach us about moving Downtown to the Convention Center site. We went after them. 

As a whole, the Council's involvement improved the deal. The initial discussions did center around having no impact on the General Fund—revenue neutrality—and did incorporate a facilities fee, but that was later pulled back by the Venture. Every Council member, led by President Ferraro, had concerns and ideas. They were sincere. And the input of City Attorney Patty Tubert, Chief Legislative Analyst Ron Deaton and Chief Administrative Officer Keith Comrie definitely strengthened the City's side of the transaction. 

I was more receptive than many of the others on L.A.’s side of the table. 

Why? 

I have seen firsthand how arenas have jumpstarted other downtowns. I am anxious to see those benefits brought to Los Angeles, and, especially, the Convention Center. I also realize the threat posed by Inglewood. 

The rewards have always outweighed the risk. I would have supported the deal even if the scales were tipped only 75-25% in its favor. They currently stand at 95-5%. The council wanted an A+ deal and they got it!

As to improving the Convention Center’s viability, we must ask: “if not the Arena, then what?” We could passively choose to do nothing, or let Inglewood interests finance a voter initiative in Los Angeles. But that would show that Los Angeles' political system cannot appreciate a text­book public-private partnership deal that would make most cities salivate. The President of the NFL told one of our Council members that if the Arena deal Downtown does not close, the NFL will never locate in Los Angeles—there would be no reason to even start an NFL transaction.

Some assert that the deal is not revenue-neutral for the City, and that it could have been. At the Council meeting which approved the Arena proposal, Councilman Joe Wachs proposed a motion that would have made it a revenue-neutral deal. Why did it fail? 

Mr. Wachs wanted a "guarantee" of zero risk. But, in reality, his motion would have guaranteed two things: One, the project would have gone to Inglewood; two, the Convention Center would have been guaranteed to continue losing $40 to $50 million a year. And that adds up to billions of dollars of taxpayer money which could go for police, parks, libraries and other important services. 

Why are you so certain or that? Councilman Wachs' proposal represented an incremental difference of a minimum of $1 million per year. 

It was not just the $1 million per year; Mr. Wachs was asking for a 100% guarantee of revenue neutrality. Even the most conservative estimates—including analyses from Coopers & Lybrand, Ernst & Young and others—said this would be a revenue neutral transaction. 

The rewards outweigh the risks substantially. Even the most vociferous of the national critics of stadium/arena deals say L.A.'s is a "go." 

Ron Deaton agrees that the Arena deal will ultimately be either revenue-neutral or positive, as he stated in his MIRinterview. So how would a guarantee of the numbers everyone expects drive the owners of the Lakers and the Kings from the conference table? 

Because the guarantee would affect the Venture's ability to finance the project. Remember: it’s the Venture who is taking the risk—the City has a cap on its investment, though not its returns. 

For the City of L.A., the deal is a tightrope walk with no safety net—if we fall, we will not be able to get back up. And Inglewood is ready, willing, and able to make a cheaper, simpler, faster transaction. They are waiting for the "critics" by simply contouring their rhetoric. And there are the dollars behind a potential voter referendum against Los Angeles. 

You said earlier that the Council's involvement, along with the City Attorney and the CAO, added material value to the Arena deal. Given the current rift between the Mayor & Council, docs the Council's positive involvement here portend a better working relationship with the Mayor in the future? 

The premise of the question is not exactly correct In this case, the 13 Council members ultimately understood when to say "yes;"' they understood the complete transaction. That does not mean, however, that they will automatically either accept or challenge anything the Mayor thinks is beneficial. 

Again, there is a 95%-plus chance of no subsidy in this transaction. I looked up the words "subsidy" and "investment" in my Oxford Dictionary: there is a huge difference! A subsidy is a gift, a present; an investment gets a return. The Arena gets a return.

Let's turn to your role as President of the L.A. City Recreation and Parks Commission. When we last interviewed you in January, 1996, you had ambitious goals, including construction of $126 million worth of improvements in 121 different L.A. parks within 24 months. A year later, how close are you to achieving your goals, and what is on the table for 1997?

We are more than 80% there. One-hundred-one of the Department's 126 projects are now either under construction or in the design phase. Four times as many parks are now under construction than ever before in the Department's history. 

And we are not spending one dollar more on staff than we have before. By bringing in outside consultant (paid for by savings on the projects) and empowering our project managers, we have been able to meet our goals. 

From my perspective, that is nice to know. But, more importantly, the voters acknowledged our success by passing Prop A, whose campaign I co-chaired with Supervisor Zev Yaroslavsky. Seeing that we did what we promised with that money, they voted us even more support—twice—in the forms of Prop A and Prop K. 

What will citizens see, feel, and touch at the end of next year as a result of the two voter-approved park bond measures? 

From Prop A in 1992, and Prop A and Prop K in 1996, Angelenos will hopefully see the substantial completion of all projects proposed under Prop. A in 1992. 

A few years ago, we had projects from 1974 that were still not built. But we now have a 24-month implementation plan, which I call "Project 24." The Observatory is just about to start construction, and the Zoo and Exposition Park are under construction. The 1996 projects will be in design stages for at least a year after which their construction will begin. The Department has done a great job. Prop K, supported by Councilman Mike Hernandez, squeaked by on the heels of Prop A—it had no money behind it. It is a 25-year program, and there is immediate need to prioritize the allocation of its resources. 

We have $700 million worth of Prop K projects. Everybody is anxious to begin work on their project as soon as the Council pri­oritizes their $25 million annual chunks. 

We are looking at providing matching Prop K funds at a three-to-one ratio to communities who can generate private sector support. It is important for the council members, who have the right to prioritize in their districts, to work quickly to give Recreation and Parks the direction we need to move ahead in a timely manner. 

It is one thing to construct and invest in parks, but another thing to maintain them. Where do you expect the funds to come from for the operation of our parks? 

Prop K allocates funds for maintenance. Right now, we are learning how to boost our efficiency to maintain our park system without hiring more people. Additionally, we will save money by upgrading parks, and doing away with annual maintenance costs for old sprinklers and lighting systems. I am not concerned about Angelenos seeing and feeling what they voted for. 

Let us turn to the Coliseum. There's been some public speculation by the L.A. Times that the decision to choose the Coliseum over former Dodger Owner Peter O'Malley's plan for a football stadium next to Dodger Stadium figured prominently in his decision to sell the baseball team. Do you agree? 

Absolutely not, and neither does Mr. O'Malley. 

I take Peter at his word that the action on the Coliseum had no bearing on his decision to sell the Dodgers. The O'Malley family is the last of the single-asset families. Professional sports is a cash-flow drain (just look at Mike Piazza's new contract), and this is a bull market. So, it’s a great time to sell. 

The O'Malley's will continue to show their love of Los Angeles in this sale. They want to enhance the Dodger experience for everyone. 

Outside decisions regarding football, by his own admission, were not a factor for him. 

What is the status of NFL football in LA?

We are just a financing plan away from bringing football back to Exposition Park, and it will be in the style of the 1984 Olympics. People who came to the 1984 Olympics had a very different experience than people had during Raiders games. 

The NFL wants us to recreate the Olympic atmosphere at Exposition Park ten times a year: to combine the atmosphere of USC and the four corners of Exposition Park to create a "football fiesta" in which L.A. brings the feeling of the Olympics to football at Exposition Park. Feel safe, come early, leave late, bring your family and friends and spend money!

There is a plan and a design for it. Now it is a matter of putting it together financially, without tax payer subsidy. It will not be easy, but if it happens it will not only bring football back to L.A., it will bring us great football in a way we have never seen before. Potential owners will come out of the woodwork because the financial numbers will work. It will be a true celebration. 

The league is talking about making Los Angeles the home of the Super Bowl, giving us three or four in twelve years. The sales of those tickets would help finance the project. It’s a great step. And the improvements in the area, such as the $l00 million of construction now at the Museum, are a huge plus. League officers were recently looking at potentially using the Museum's meeting rooms during Super Bowls. 

Many NFL owners and the NFL, itself, will embrace Exposition Park under these Olympian circumstances. After talking to seventeen team owners at the Super Bowl, I am finally convinced of that. 

A year ago you seemed convinced that Exposition Park would not be the home of professional football in L.A. What has changed in that year? 

Councilpersons Mark Ridley-Thomas and John Ferraro, the Coliseum Commission, the County CAO, the Chief Legislative Analyst, the CRA and the County Board of Supervisor have pulled together. That unity has turned the NFL's head. Additionally, the progress of the master plan at Exposition Park‚ what Recreation and Parks and the Museums are doing, as well as a potentially upcoming $30 million Community Center—would get anyone excited. The owners who were previously dead set against it are definitely taking a new look now that they see the potential and real interest from the business community. 

Is this another example of the Council adding value to the City of L.A.'s efforts to bring sports to Los Angeles? 

Yes, that's two for the Council. 

What is the status or Progress L.A. and the reforms it pursued? Is development reform still a primary goal of Progress L.A.? 

Yes, development reform is still a primary goal, and Progress L.A. is, after a Phase I success, continuing the quest. Progress L.A. completed most of the goals Dick Furman and I set. Some of the remaining issues, such as reduction of business taxes, do not require a grassroots organization. They require sound economic analysis and strong council leadership to put them through. Others, however, do. 

From a global business perspective, Los Angeles is not an undesirable place for commerce. Business' expectations are being exceeded—I have a letter on my wall from the Chairman of Bloomingdale's supporting that. Still, L.A. is not competitive fee-wise and has a system in need of fixing, but it’s a lot better. 

Progress L.A. and Dan Garcia's Development Reform Committee got things rolling, but the work is not complete. In fact, we have a search for two or three new co-chairs to help me in Phase II. PLA is gaining new momentum to tackle some of the remaining, very difficult issues, such as reducing licensing fees and cutting taxes. 

We should look carefully when HMOs or other groups employing a lot of people have legitimate concerns. But if we start asking everyone if they want lower taxes, we open ourselves up to the risk of more businesses threatening to leave. It is a delicate balance that needs to be looked at carefully. 

Moving to the issue of City charter reform, Ron Deaton is again quoted as follows: "though we do have problems attributable to structure, the more serious issue is the officials' on both sides inability or unwillingness to build consensus. That is one of the primary responsibilities or any executive, from President of the U.S. down to our city mayors. In a city diversity, such as L.A., that is especially important. The mayor could do a lot to bridge the gaps and develop public consensus." What is your reaction?

It is not my issue, but I believe strongly in consensus-building and compromise. Both the Mayor and a great majority of Angelenos believe firmly that the Council should not have the right to make changes after the Charter Reform recommendations have been made. That is the issue. If the Council concedes that, it is easy to see how compromise would most likely be made in other areas.

What are the issues that threaten the City's structural efficiency and demand charter reform? 

Again, I have not been involved in the charter reform issue, but I can safely say that the charter reform's proponents sit on both sides of the aisle. It’s a matter of how to reform it, not if we should. A high-ranking reporter from a national newspaper told me L.A.'s Millennium Charter Reform should do three things: increase the number of Council districts, carefully balance power so that the Office of the Mayor is not just a bully pulpit, and require partisan elections. However, that reporter's opinion does not necessarily reflect mine or the Mayor's, and I know it does not reflect the Council's! 

In closing, as the eternal L.A. realist/optimist, please describe for our readers your expectations for Los Angeles five years from now. 

Most L.A. politicians ride the waves of trends that are happening anyway and take credit when they hit the shore. This mayoral administration is different. Our Mayor has been making the waves, even though many will not come to shore until he is out of office. The mammoth Alameda Corridor is one of many examples. 

Los Angeles is a much better place to live than it was four years ago. Four years from now, it will be even better by leaps and bounds. It will be safer and better culturally, and we should be seeing a better educational system. 

In three or four years the average citizen of Los Angeles will hopefully say that he or she is heard—through the park system, through the Council system, and at neighborhood meetings. The goal is not to be a "world-class city," but to be a group of "world-class neighborhoods." 

I am optimistic because I see a way to finish things that I did not see even a year ago. I see the Council and Mayor working together when they recognize that something is right and separate it from other issues in which they may differ, like charter reform.