After three months of closed-door negotiations, city officials released a draft agreement Monday that would allow Anschutz Entertainment Group to build a $1 billion NFL football stadium and renovate a convention center hall on city-owned property in downtown Los Angeles.
The proposed memorandum details a 55-year lease for the land under the existing West Hall of the Los Angeles Convention Center. AEG would pay about $6.5 million for the land where the developer would build the stadium and parking structure.
It also spells out a financing plan for AEG to construct a convention center hall, which officials claim would boost the city from 15th to fifth place in the nation in terms of convention hall space.
City Councilwoman Jan Perry hailed the release of the proposed deal as a good starting place for negotiations going forward.
"This is our opportunity to create a strong foundation on which to build a project that is good for the city,'' she said. "It is just one piece of a much larger puzzle.''
AEG will not be given a final green light until a full environmental impact report has been completed, according to Perry, who chairs the ad hoc council committee charged with vetting the proposal.
AEG President Tim Leiweke said he was confident the council and Mayor Antonio Villaraigosa would endorse the framework for a final contract. Approval of the draft MOU, he said, would be a "critical milestone in our efforts to break ground on this project within the next year.''
AEG officials said they hope to have the stadium completed in time for the start of the 2016 NFL season.
The agreement would require the city to make two tax-exempt bond issues totaling $275 million for the construction of a new convention hall. It stipulates that nearly three-quarters of the bonds would be repaid by AEG directly. The remaining 27 percent would be covered by tax revenues generated by the stadium.
"Those revenues we're using are measurable. They're not variable. They are consistent, and they are reliable,'' said City Administrative Officer Miguel Santana, who was part of the city's negotiating team in talks with AEG. "All of that is critical in ensuring that the taxpayers of the city ultimately are not footing the bill for this to take place.''
Under the draft agreement, which still needs to be approved by the council and the mayor, the project could not go forward without an NFL team agreeing to stay in Los Angeles for at least 30 years, or the term of the bonds, whichever is longer. AEG could also make a deal for a second team to play at the stadium.
"There is no public money in the stadium. None,'' stressed Chief Legislative Analyst Gerry Miller, who was the city's lead negotiator in talks with AEG.
In fact, Miller said, studies commissioned by the city found that the entire project would bring in about $210 million over 30 years that would go back into city coffers.
Miller said there are a number of additional guarantees in the agreement that protect taxpayers from ever having to pay the bond payments for the convention center. He said they include a $50 million letter of credit from AEG in effect for the first four years of the contract and a completion guaranty for the football stadium and parking structure.
Miller said AEG has also agreed not to borrow money in order to pay for the parking structure, which means the city would own a completed parking structure with no debt if the deal falls through.
AEG also agreed to finance the stadium with no more than 60 percent of borrowed money. That would amount to as much as $500 million in equity in the stadium.
"The potential for job creation and for investment in our conventions and tourism is enormous,'' Perry said. "This is probably a once-in-a-lifetime opportunity.''
Officials expect the environmental impact report and a final contract to be completed in about a year.
The council will hold a preliminary discussion on the proposed agreement Friday, although a vote is not expected to be taken.
The draft MOU is available at www.downtownstadium.lacity.org.