Anaheim mayor hints at ways he could lowball Angels lease payments

The Anaheim city council met last night to discuss a new lease for the Los Angeles Angels that could include a sale of city development rights to team owner Arte Moreno to fund stadium renovations, but it’s 8:30 am on the West Coast already and nobody seems to be reporting on what happened, not even Twitter. Wake up and type already, Southern California!

In the meantime, though, the Voice of OC’s Spencer Custodio noted yesterday that an op-ed penned last Thursday by Mayor Harry Sidhu contained some clues about his thinking going into lease talks:

As part of the negotiating team, I will insist that any land sales or leases be at market prices, reflecting ongoing baseball use, development we’re likely to see and any requirements we may ask for with the land. You’ll hear some argue for unrealistic prices based on what we might see if we sold all of the land for housing.

That seems to imply that whatever valuation the city places on the land, it will be for its use for the hotel-and-retail development that’s actually planned, not the “highest and best use” test that would result if the whole site were turned over to housing. That’s not necessarily unreasonable — you want to value the land on what it’ll be used for — but it does mean any appraisal should be carefully judged for its methodology, particularly what comparables it uses to get a price per acre.

Sidhu also wrote:

If we see a new lease for a city-owned stadium, it should include annual rent payments, city revenue-sharing or a combination of both. You’ll hear a lot about rent at Angel Stadium. Unfortunately, much of it is misleading.

Those who don’t want the Angels to stay, or only want a deal on their terms, will tell you the team doesn’t pay rent at the stadium. From 1996 to 1998, the team paid $87 million to fix up Angel Stadium, which then was 30 years old.

That was $87 million our residents did not have to pay to fix up our stadium.

Under the team’s current lease, $80 million of that investment counted as prepaid rent, working out to $2.5 million a year for the 33-year life of the lease. But that’s history now.

That’s considerably less reasonable: The $87 million cost wasn’t for necessary repairs to Angel Stadium, it was for stuff the Angels (then owned by Disney) wanted, mostly the removal of the outfield grandstand that had been added for the Rams in the 1970s and its replacement by some bleachers and landscaping. Counting it as “prepaid rent” assumes that these were somehow public expenses for a public benefit that the team was reimbursing the city for, which is only true if Anaheim residents were clamoring for a giant fake pile of rocks.

Anyway, this is all very much the pregame: We’re not going to know what Sidhu has in mind until he lays his cards on the table, first and foremost that land appraisal. One can only hope that it will be revealed sooner than the day of a vote on the new lease, since that seems to be the way some governments operate these days. One councilmember has requested a minimum 30-day comment period, but Sidhu and the rest of the council weren’t having it — “I will not put any timeline,” said Sidhu said, “whether it’s 30 days, 45 days, 10 days, 5 days ”— so be afraid, be very afraid.

UPDATE: Here’s Custodio’s report on the Anaheim council hearing, and it doesn’t look like much of import happened, beyond agreeing that there should be “no public subsidy or giveaway of tax dollars,” which, nobody ever admits that their plan is a “giveaway.” The land appraisal is still being called a “draft” and has no set release date, and several councilmembers said they were against making public any of the proposals before a vote, with Councilmember Lucille Kring saying, “negotiations are done in secret for a reason.” Uhhh, so no one can find out about them and object to them before you vote for them and it’s too late? It’s that one, right?

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5 comments on “Anaheim mayor hints at ways he could lowball Angels lease payments

  1. There’s definitely merit to some of the arguments Sidhu is making… you don’t necessarily value developed land on highest and best use (given that it is already developed in a certain way… a sports stadium and parking lots at present, though the parking lots clearly could be subject to a higher and better use… and apparently will be under the proposed developments).

    That said, Sidhu also seems to be negotiating against himself without any prompting from the other party (IE: “You’ll hear some argue for unrealistic prices…”). This would be equivalent to submitting an offer on a house that is more or less the asking price while acknowledging that you ‘would be willing to pay significantly more than the current offer if necessary’.

    Typically, the seller tends to suggest the property is made of solid gold and mere money alone, no matter how much, could not possibly compensate them for the divestment…. while the buyer counters that the foundation has dry rot, the wood is termite riddled, the electrical and plumbing systems require total replacement and the roof leaks. Here we have the ‘vendor’s agent’ (Sidhu) taking very much the latter position.

    Don’t expect the Mayor to drive a hard bargain, in other words.

    I suppose we’re way too far along in this dog and pony show for anyone to suggest simply selling the site (and stadium) as is to Moreno at a price reached through averaging three independent (professional) appraisals of the land are we?

    1. If Moreno bought the land he’d have to pay property tax, and that is simply NOT DONE. Can you imagine all the other owners who’d be laughing behind his back?

      1. Sure, but he has other arrows in the franchise-owner’s extortion tactic quiver…

        He could take ownership as part of a transaction that authorizes annual PILOTs into a fund which is controlled by the city but mainly or mostly used to fund one half the cost of any future stadium improvements.

        Didn’t the Yankees do something similar with PILOTs a decade or so ago?

  2. Why is the highest and best use assumed to be housing? Shouldn’t it be what the land would be when developed based on how it’s zoned? Or what would be the best return on investment for the city (which is most likely non-residental)?

    1. “Highest and best” usage typically ignores the present zoning if the land is undeveloped (or under developed, in the case of surface parking lots).

      Housing may or may not be this parcel’s best usage. I am not sure whether they have actually determined this or not. If the city/county has decided it is then they are probably envisioning condo towers rather than single family homes on the parcel.

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