San Diego MLS stadium with “no public money” pledge could demand $240m in infrastructure cash

One of the key attributes of the plan to build an MLS stadium on the site of the San Diego Chargers‘ old stadium was that it would not only require no public money, but also the developers would pay “fair market value” for the 80 acres of land involved. So how much would that be? How about maybe … $10,000?

The sale price would be linked to the fair market value, yet to be determined, but it would have to take into account the cost of demolishing Qualcomm, estimated at perhaps $15 million, and other environmental issues and other problems, such as flooding and habitat preservation. Also taken into consideration would be the potential of setting aside room for an NFL stadium, and other “extraordinary costs.”

If these conditions reduce “the fair market value…(to) a negative number,” the initiative says, then FS would be required to pay the city $10,000 as a one-time lease payment.

In effect, then, the soccer developers are asking the city to pay for the cost of prepping the land for new development, which could eat up the entire $240 million market value of the parcel. If that sounds crazy to you, that’s exactly the word one real estate expert uses to describe the proposal:

“If I was the city, I’d say this is crazy,” [real estate development consultant Gary] London said this week. “The city is selling the property as if it was distressed property (under the FS initiative).

“This is not distressed property,” he said. “This is almost an empty piece of land, with the exception of one stadium, that is practically flat. This is in the center of San Diego and is probably the most valuable land asset, public or private, in the city of San Diego right now.”

And then there’s this:

Greg Shannon, chairman of Sedona Development and current chairman of the local chapter of the Urban Land Institute, said a private landowner would “never sell” land the way the FS initiative proposes.

“From what I can tell, it’s a huge giveaway from the city to the developers,” Shannon said. “They’re saying there’s no taxpayer subsidy. That’s a huge taxpayer subsidy.”

One hopes that this is just a butt-covering clause to indicate what happens on the off chance that infrastructure costs get out of control, and not something the team actually anticipates. Even so, though, this is a potentially whopping hidden public cost that the developers really should have mentioned when they first announced their plan, though I guess then people might not have been quite as excited about it. We’ll see how excited voters are if and when this thing goes up as a ballot initiative later this year.


9 comments on “San Diego MLS stadium with “no public money” pledge could demand $240m in infrastructure cash

  1. They are also setting aside park land along with a future site for the NFL. What ever that is worth. Its not a simple land purchase and therefore things can will be spined depending what side you support. Demo costs in this country really are through the roof , even a one story framed house will cost 25-35k.

  2. Neil, how common is it for municipalities to pay for infrastructure costs of a non-sports related project, like a large shopping center or new subdivision? In Raleigh, the NCFC owner claims to be ok with paying for a new stadium plus the expansion fee, but hopes the city helps with street and utility infrastructure.

    • Not to butt in… but while municipalities may pay for the shallow surface utilities and infrastructure like sidewalks, curbs and gutters up front, these costs are typically folded into the cost of the (now improved) land the shopping centre or housing developer buys or leases.

      If that infrastructure also improves adjacent or nearby other lands (perhaps making unsaleable land marketable, or low value land suddenly increase in value), a caveat is often registered on those lands meaning that no future development can occur without the developer first paying the municipality their “share” of the cost of the utility improvements that they benefit from.

      I would never suggest that no big box store has ever played the heavy and gotten a city or town to stick the taxpayers with the cost of upgrading services running past their property, because I’m sure they have. But it is not often “free”. The big box store would generally agree to an increased rate of taxation or other PILOT measures to repay the cost of those upgrades over time. The municipality as infrastructure loan officer, in other words.
      HTH

  3. This is more a CYA thing then anything else. The Qualcomm site as is does require quite a bit of mitigation to be useable. It’s partially below the flood plain right now so it needs to be raised. There is still pollution from the neighboring gas tanks that have polluted the soil below the current stadium. The cleanup costs in particular are a somewhat unknown until they break into the soil and the cost should be born by the city who would be selling the polluted land to the developer.

    • This language seems to go a bit beyond “get it in buildable shape,” though. In any event, $240 million is a big enough number that it’s important to nail down what’s an actual cost of readying the land for sale and what’s covering development costs.

  4. The Feds have an agency dedicated to cleaning up contaminated abandoned sites throughout the country. They don’t go after the previous owners. Its all on the public dime. Realtor’s spend half their time trying to ruin others development deals so they can get in themselves.

    • That’s not really an accurate description of how Superfund site decontamination is paid for.

      1. For a long time, its general fund was financed through a tax on petroleum and chemical industries. As this financing source has decreased, so has the general amount of funding available for Superfund remediation.

      2. The EPA tries to recover as much of its costs as possible from the “responsible party” – ie whoever owned the site at the time of contamination. https://www.epa.gov/enforcement/superfund-cost-recovery

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