The company looking to develop a National Football League stadium in Los Angeles saw two challenges crop up late last week.
AEG’s stadium proposal, first introduced on Feb. 1, appeared to be on the fast track, with the City Council approving a financial agreement with the developer in early August.
But California’s Legislative Analyst’s Office on Friday released a report that raised questions about what exposure Los Angeles would have to the $250 million of bonds the city plans to issue to fund AEG’s stadium project near the company’s LA Live entertainment center. Under the company’s agreement with the city, the bonds would be paid for by AEG under a ground lease agreement.
The main issue raised by the report is that if AEG faces any sort of fiscal uncertainty or has to pull out of the project, the city could be responsible for the bond debt.
A spokesman for the developer noted that the city’s analysis says it would not be on the hook for the bonds if revenues are insufficient.
“We haven’t reviewed the state’s report, but the report that came out of the city contained far more scrutiny and was much more intensive,” said AEG’s Michael Roth. “So, maybe the reason the city’s report and the state’s report don’t match is because the city worked on its report for months and months and had access to far more research.”
AEG also has been seeking exemptions from environmental requirements. But the tone of a public meeting held by Sen. Kevin de Leon on Friday in downtown Los Angeles to gauge sentiment on the developer’s request for an exemption to the California Environmental Quality Act apparently did not convince de Leon to support it.
“The senator has not made a decision yet, but he is skeptical,” said Greg Hayes, a de Leon spokesman.
AEG thus far has not been able to get a lawmaker to sponsor a bill that would allow for the CEQA exemption. It first began speaking with legislators early this year, Roth said.
“This is not last minute,” Roth said. “We have been working on getting legislation passed since we publicly announced the project on Feb. 1.”
The company has no intention of circumventing the CEQA process, Roth said, adding that AEG formed a team to work on an environmental impact statement in November 2010. When the statement is completed, it will probably be 30,000 pages long and include all the proper mitigations — just as AEG did when it constructed LA Live, Roth said.
“We would be able to submit a draft EIR in the first part of 2011,” Roth said. “We are not concerned with people who raise legitimate concerns under CEQA.”
What concerns AEG is the potential for frivolous lawsuits that could halt the project, or stall it long enough to make the NFL or a potential team wary of moving a team to Los Angeles, Roth said.
Developers with competing projects have used CEQA to halt or slow a competitor’s projects.
AEG has said it fears a developer with a competing stadium proposal in the City of Industry could bring an anticompetitive lawsuit challenging the project under CEQA. A Texas developer that owns nothing in California could try to challenge the project under the law to spite AEG for building a competing project in that state, Roth said.