Lawsuit could ask to undo Angels stadium deal for violating state transparency law

It’s no secret that the Los Angeles Angels heavily subsidized stadium land purchase deal was done largely in secret — the city didn’t even release details of the sale until ten days before its single public hearing on the matter, and even then a lot of questions were left unanswered — but now the sale is facing a potential lawsuit for violating California’s Brown Act requiring open government:

“The Council’s approval of this Agreement was a rubber stamp of the terms that had been improperly discussed, negotiated, and agreed upon outside of public view, in violation of the Brown Act (state transparency law),” reads the Jan. 19 letter filed by attorney Kelly Aviles.

Aviles letter alleges councilmembers violated the state’s transparency law because the 1953 Ralph M. Brown Act limits private discussion of any sale of public property to “price and terms of payment” for the sale of the land…

“If the Board fails or refuses to cure and correct or respond as demanded, my client will seek judicial invalidation of the challenged actions…” states Aviles’ letter.

That’s not a lawsuit yet, but it sounds like it’s going to be one unless the city council “corrects” its decision, which seems pretty durn unlikely. The success rate of these things at overturning city decisions isn’t all that great, but it’s not zero either, so it’s entirely possible that the $325 million land sale — which is probably at least a $175 million discount from what the land could have fetched on the open market — will have to be re-voted on, this time with more time for open debate. Hope springs eternal!

Why the Angels’ now-approved (maybe, kinda) stadium land sale represents at least $175m in public subsidies

So yeah, the Anaheim city council voted 4-2 late Friday night (early Saturday morning if you were watching from the East Coast like me) to approve the sale of Angel Stadium and its surrounding parking lots to Los Angeles Angels owner Arte Moreno, despite the concerns of some (well, two) on the council and many Anaheim residents that the deal was being rushed through without considering some of its very very many known unknowns. With the vote officials, the city and team will now move ahead on … well, that’s not entirely known, either.

Throughout Friday’s near-endless council hearing, Anaheim Mayor Harry Sidhu and other backers of the deal insisted that the vote to finalize the sale was not actually final in any way, because either side can still walk away from the deal before it’s consummated, which could take up to five years:

Several other agreements are expected to come forward by spring: a commitment that the team would play in Anaheim through 2050, with another 25 years of extensions; and a separate agreement that commits SRB Management to renovate the stadium or build a new one without any public financing, describes what would be developed around the stadium, and lays out details and costs of affordable housing, park space and a labor agreement.

Those community benefit costs would be subtracted from the $325 million land price, so the final cost is not yet known. Closing the sale could take until 2025, so until then the current lease remains in place.

How the value of those “community benefits” would be calculated, or what would be included (Anaheim planning director David Belmer said during the hearing that it could also include things like transit upgrades paid for by the developers) remains a mystery, something that councilmember Jose Moreno asked about to no avail on Friday. The only thing really agreed upon in the vote, according to this argument, was the baseline sale price of $325 million — everything else remains TBD.

A little more information has seeped out about how that $325 million figure was arrived at, when some iterations of the city’s appraisal came up with a value for the parcel of $500 million, and comparable properties nearby have sold for even more than that per acre. The $325 million number is the value of the land “encumbered” by a stadium and parking spaces for one, which is a good bit less than its value if you could fill it from edge to edge with any kind of development you wanted.

Think about this for a second, and this seems reasonable: If you want the Angels to remain on the land, this is a condition of the sale, and so that’s how the land should be valued. Think about it for more than a second, and it comes to a significant public subsidy being handed to Moreno:

Let’s say you’re selling, I don’t know, an ice cream truck. The value of the ice cream truck is going to depend on how much ice cream you can sell out of it, which is going to depend on the demand for ice cream, how much ice cream it can carry, etc. However, the only person who is allowed to bid for the ice cream truck is someone who lives in another state during the summer months, so would only use it to sell ice cream when it’s cold out. You can see how the value of an ice cream truck to them would be far less than to someone who would use it year-round. If you calculate the sale price based on the value to our single bidder, then, they’re getting a significant discount compared to what anyone else would pay.

Dropping the metaphor and back to reality, Arte Moreno is getting a piece of land worth $500 million or more for only $325 million because he wants to keep playing baseball on it. You can certainly make a case that that’s a reasonable deal to make to keep the team in Anaheim — many, many people at the hearing talked about how terrible it would be for the Angels to leave Anaheim — but then be honest about what you’re doing in exchange for keeping the team: selling 153 acres of public land at a massive discount. That’s still absolutely a public cost, just as much as if Moreno saw the land for sale at the market price and said, “I’ll buy that, so long as you give me a $175 million rebate check as part of the deal.”

And that’s before even accounting for the “community benefits” discount, which would be like if you (sorry, back to the metaphor) agreed to allow your ice-cream truck buyer to deduct even more from the sale price for giving out free ice cream on Tuesdays, or something, without knowing how much that free ice cream would count against the final payment. (City officials testified on several occasions that it would not be impossible for Moreno to get so many credits that the city would end up having to pay him to take the land, though they didn’t hazard any guesses as to how likely that was.)

The good news is that it’s still possible for Anaheim (or Moreno, for that matter) to walk away from the deal if the two sides can’t agree on the community benefits discounts and other yet-to-be-negotiated elements of the deal — and if so, the Angels would presumably then be locked into their current lease through 2029, since their opt-out clause would by then have expired. The less-good news, if you’re rooting for that to happen, is that the council seems dead set on moving ahead with this plan full speed ahead: Five of seven councilmembers (one missed the hearing because he was in the emergency room for unexplained reasons) are solidly behind it, meaning the two council seats up for re-election next November held by deal supporters would have to flip to anti-stadium-sale, with deal critic Denise Barnes holding her seat, to change the voting calculus.

This is all, needless to say, a big mess, and hopefully makes clear why sports team owners are increasingly turning to things like discounted land prices as a way to get subsidies for their stadium projects: If Arte Moreno had walked up to the city council and said, “I’ll keep the Angels in Anaheim, but only if you pay me $175 million to do so,” he probably would have gotten “What the hell, no way” for an answer. (Probably; elected officials writing checks like that has been known to happen.) By couching the demand in terms of a discounted land sale, however, with its necessary accompanying talk of appraisals and fair market value and encumbrances and other words that tend to make laypeople doze off, Moreno effectively muddied the waters to where at times those testifying on Friday often seemed more upset about whether the team would still be called “Los Angeles Angels” rather than “Anaheim Angels” that whether the public was leaving $175 million on the table. It’s all about misdirection.

Liveblogging Anaheim’s vote on the Los Angeles Angels stadium sale (UPDATE: it passed)

After years of negotiations, the Anaheim city council is set to debate and vote on the plan to sell the Los Angeles Angels stadium and its surrounding parking lots to team owner Arte Moreno for development in just a single hearing, held naturally enough on the afternoon of the Friday before Christmas. I’m going to start by heading over to Twitter to do the play-by-play, so meet me over there, and open up your streaming video of the hearing if you want to watch along.

Going to re-paste the Twitter thread here as we go, because this hearing is dirt-boring (sorry: spoilers!) and I need to keep myself busy:

 

 

Land sales across street show Angels stadium site could be worth double what Anaheim is asking

It’s now 32 hours until the Los Angeles Angels stadium land sale vote, and here’s what’s happening:

  • The Voice of OC’s Spencer Custodio reports that some land across the street from the stadium site sold for twice as much per acre as team owner Arte Moreno is offering the city of Anaheim: A 3.8-acre plot that became the George Apartments sold for $4.5 million an acre in 2014; 6.48 acres that’s now the Gateway Apartments sold for $3.5 million an acre in 2012; and 3.72 acres that became condos on State College Boulevard sold for $8.06 million an acre in 2005. Moreno’s $325 million offer — if not reduced further by discounts for building parks and affordable housing — comes to just $2.1 million an acre. Land appraisals are more art than science, and pricing of comparable properties is just one method of figuring out land value (and finding comparable parcels can be nearly impossible, since most other sites for sale aren’t nearly so large and also don’t have a stadium sitting in the middle of them), but as I tell Custodio in his article, these figures are “probably a red flag that you should reevaluate the numbers.”
  • Some locals like the deal, some don’t, and some just want the Angels to get more pitching.
  • A majority of the city council appears set to vote for the deal, with councilmembers Trevor O’Neil and Stephen Faessel telling the OC Register that while the city is admittedly accepting less than top market value for the land, it’s worth it to lock in the Angels for 30 years and get the land developed now; and also that, in the Register’s words, “residents they’ve heard from want the team to stay in town and folks are not concerned with the minutiae of a deal to make that happen.”
  • Maybe they’ll be more concerned once they read the Register’s editorial declaring that “the devil is in the details, and city officials need to provide more crucial details before moving forward with the plan.” Though the paper’s editorial board doesn’t actually call for a “no” vote tomorrow, just saying that they’d like to get more information.
  • The Register has an explainer on what we know about the deal and what we still don’t know, with an emphasis on “don’t know.”

That’s a big mess, frankly, and I’d say we still don’t know enough to say where the land sale plan falls on the spectrum between “not too terrible” and “total ripoff.” Which is why taking a vote tomorrow seems bizarrely rushed — if the council puts off a vote, Moreno will have to choose between opting out of his lease and having nowhere to play in 2021 (not super likely, though he could always try it as brinksmanship) or getting locked into his current lease through 2029, which would give the council plenty of time to vet the deal properly. As I told Custodio: “You’re only going to be able to sell the stadium land once. You want to get it correct.”

Two days before final vote, still nobody can say how much Anaheim would get for selling stadium land

There are just two days left before the Anaheim city council holds its only public hearing on the Los Angeles Angels stadium land sale and then votes on it, and instead of getting answers to the outstanding questions about the project, the questions are starting to pile up like cordwood:

  • The actual price paid for the stadium and surrounding land could be as little as half the announced $325 million, according to the Los Angeles Times’ Bill Shaikin, citing “two people familiar with the deal but unwilling to discuss it publicly because the Anaheim City Council has not voted to approve the documents that will determine the final price.” Shaikin didn’t specify whether this massive price drop would be because of those credits for building parks and affordable housing that were previously announced — he noted that a previous affordable-housing development in Anaheim received $100,000 in city subsidies per unit, which if Angels owner Arte Moreno built 1,500 units would come to $150 million in discounts, but that’s a lot of speculation there when we don’t know what the project will even look like yet or who will build it. (Under the deal, Moreno would be allowed to flip the stadium site to another developer if he wants.)
  • The city did release an “economic impact analysis” that projects more than $3.4 billion worth of construction costs for the project, mostly for rental apartments and office space, but without further details. Also, that’s only what a development consultant to the Angels came up with back in August, so there’s no way of knowing if it’s what Moreno or his development partners would actually build.
  • The economic impact analysis also includes a year-by-year breakdown of projected tax revenue from the project, with property tax revenues, for example, kicking in at just $498,000 starting in 2022 and then rising to over $10 million a year by 2035. Is that because construction will take that long, or because property values are projected to rise that much over the next 15 years? Is there zero property tax revenue projected for 2021 because the Angels’ stadium itself will remain tax-exempt despite the team taking possession of it, or because the stadium isn’t included in this projection, or what? And do all these numbers account for substitution, or do they assume that all this new housing and office and retail space won’t cannibalize people living in homes and renting office space and buying stuff elsewhere? The study is silent on these matters, and it’s hard to interrogate a Powerpoint.
  • Two previous Anaheim mayors, Tom Tait and Tom Daly, came out against the land sale yesterday in an op-ed in the Voice of OC, arguing that “crucial information about this real estate deal is missing, and what little has been made public appears stunningly one sided against Anaheim taxpayers.”

The Anaheim council is set to hold its hearing, and its vote, starting at 2 pm Pacific time this Friday. You should be able to watch live here, if you feel like yelling at your computer screen.

Friday roundup: Nashville and Miami stadiums still on hold, cable bubble may finally be bursting, minor-league contraction war heats up

Happy Scottish Independence Day! And now for the rest of the news:

Anaheim releases two new Angels land sale documents that still don’t provide many answers

With just ten days to go before the Anaheim city council is set to vote on a proposed $325 million land sale to Los Angeles Angels owner Arte Moreno, the city of Anaheim has finally released more than just that three-page summary of the deal. The new documents: an agreement spelling out some details of the land sale, and a summary report on some of the financing.

Unfortunately, neither document answers any of the big questions about the sale, namely whether Moreno will pay full property taxes on both the stadium and surrounding development, what kind of deduction he’ll be able to take for building parks and affordable housing, and how the $325 million sale price was arrived at in the first place. In fact, according to Alicia Robinson of the OC Register, some of that won’t even be decided on until after next week’s council vote:

Council members won’t know when they vote Dec. 20 what that remaining balance will be because the city would reduce the final bill by a yet-to-be-determined amount for benefits it has requested, including affordable housing, additional public park facilities and a workforce agreement to encourage local hiring and the like.

The deal won’t become final without all three parts, the last of which is the city receiving tract maps for development on the property, [city spokesperson Mike] Lyster said, so “it’s not like they’re being asked to vote on something today and they don’t have all the details.”

In fact, it’s exactly like that! Lyster indicated that the deal is “contingent” on the council approving a development agreement and a community benefits agreement sometime in the spring, but if so, then why exactly are they voting on the land sale part now? And also, the land sale agreement seems to indicate (section 4.3) that the sale goes into effect as soon as Moreno signs an agreement to commit to playing games in Anaheim through 2050, agrees with the city on who’ll pay for operations and maintenance of a stadium, and determines “other terms and conditions upon which the parties agree,” so is this really contingent on the spring votes or what?

The sale agreement does indicate how Moreno would make the $325 million in payments, which would come in installments over the next five years, reducing the present value of the sale to Anaheim slightly (to $281 million, by my calculations using a 5% discount rate). Still, there are still more questions than answers about this project, the biggest of which is becoming Why the rush already? It’s going to be an interesting Anaheim council hearing next week, especially if there’s time for public comments.

Anaheim to spend all of three days reviewing $325m land sale to Angels owner before final vote

There can be a weirdly recursive snake-eating-its-own-tail aspect to this site at times: Because I’m reporting here on stadium deals, mostly via other outlets’ reports on breaking news, and yet also I’m often interviewed by these same outlets as an expert on these deals, it’s not uncommon for me to report on articles that use me as a source. Such is the case today, where I talked to a reporter yesterday about the Los Angeles Angels stadium deal, and am waiting for the resulting article to go up — but thanks to some nonsense about the Earth being round and it being earlier in California than New York, I’m still waiting.

So instead, here’s the latest news that I gleaned from that conversation, and one other with a different source: The Anaheim city council has scheduled a hearing for December 17, at which it will presumably finally give the public (and its own members) a look at the full plan to sell Angel Stadium and its surrounding parking lots to Angels owner Arte Moreno for $325 million or maybe less if he takes deductions for building parks and affordable housing. Then it has scheduled a final vote for December 20 — meaning there will be all of three days to look over the plans in any detail more than the three-page marketing brochure that the city has posted on its website.

This is, and I’m pretty sure I used this word in my interview, bonkers: There’s simply no way to accurately vet a $325 million land sale with this many moving parts in just 72 hours. Plus, apparently some elements of the deal won’t be resolved until after the vote — which as we’ve seen before is a great way to set yourself up for unexpected costs.

The obvious solution is to wait: The Angels’ lease is now back in place through 2029 after a council vote in January (which the council didn’t even realize it was voting on), so there’s no reason not to take the time to actually read the damn plan, not to mention cross all the t’s in it. Instead, though, the council seems set to rush through the process, either because they don’t understand how contracts and leases work or because they do all too well and are just trying to limit time for anyone to take a look at the inner workings of this deal. Either way, it’s the direct opposite of due diligence — something else you’ll probably see me quoted elsewhere as saying, any minute now.

Angels’ $325m stadium land deal, day two: Still more questions than answers

I was hoping by this morning we’d know more about the proposed $325 million Los Angeles Angels stadium land purchase deal with Anaheim that would answer some of yesterday’s unanswered questions, like whether the team would pay full property taxes,  and what kind of sale-price breaks would be allowed if the team builds parks and affordable housing, etc. Unfortunately, so far today’s news coverage hasn’t shed much more light on these issues:

  • A Bill Shaikin article in the L.A. Times didn’t cover any new ground since yesterday, or even ask any new questions, preferring to focus on how “the city of Anaheim is on a pretty good run” with retaining its sports teams. (First bullet point: “So when do the Angels open their brand new, grand new [sic] stadium?“)
  • The O.C. Register’s Alicia Robinson stuck to he-said-she-said, with quotes from people calling the proposed deal a “home run” (councilmembers Lucille Kring and Trevor O’Neil) and those who still have concerns (councilmember Jose Moreno, me).
  • The Voice of OC’s Spencer Custodio posted an article focused on the secrecy with which the council negotiated this deal — the paper’s lawyer, open government attorney Kelly Aviles, said this seems like an obvious violation of the Brown Act, the state’s transparency law — but didn’t have much more on the questions left hanging by the city’s perfunctory three-page summary.

Yesterday afternoon did see the release of the appraisal of the Angels’ stadium-plus-parking-lot land, but that wasn’t super-clear either: It determined a “Range of Hypothetical Prospective Fair Market Value” for the site of between $300 million and $320 million — but then laid out more specific examples that provided a range of values between $134 million and $500 million, so it’s not totally apparent where the $300-320 million determination comes from. It still makes the $325 million sale price at least not too far off from fair market value, but when “not too far off” could potentially mean leaving $175 million on the table, you really want to make sure all the t’s are crossed.

One reporter I spoke to indicated that it was their understanding that Angels owner Arte Moreno will pay property taxes on the site, though I haven’t seen that in writing yet. If so, the main concern would be those deductions from the sale price that Moreno would be eligible for in exchange for building parks and affordable housing; as I told Custodio, while there’s some logic to Moreno getting to claim credits for building stuff that would otherwise be on the public’s dime, sometimes developers choose to build things that are public benefits because they’ll also benefit them, so getting that benefit and a land price discount too would effectively be double-dipping.

It’s too soon to be super-negative about this deal — $325 million is a hell of a lot more than the $1 Moreno wanted to pay back in 2013 — but it’s also too soon to say whether it’s a good deal for the public without knowing how all the finances will work. And it’s definitely a concern that this process is being rushed through without much time for public or council debate, with a final vote now likely before the holidays. Those unanswered questions are big ones, and the clock is ticking.

Report: Angels offer to buy stadium and surrounding land from Anaheim for $325m, so is this a good deal or what?

The Anaheim city council met last night to go over the Los Angeles Angels stadium renovation and lease extension plan, and came out promising to finally reveal the city’s land valuation of the Angel Stadium site that team owner Arte Moreno wants to develop. Only somebody jumped the gun and leaked details of the team’s actual offer to the O.C. Register:

Anaheim’s hometown baseball team would continue playing in Angel Stadium for another 30 years, and the city would sell the stadium and 133 acres around it to a business partnership including team owner Arte Moreno for about $325 million, under the proposed outline of a deal that Anaheim City Council members were briefed on Tuesday, Dec. 3…

“For every fan who told us to keep the Angels, this proposal would do exactly that,” Mayor Harry Sidhu said in a statement. “This proposal reflects what we’ve heard from the community – keep the Angels, a fair land price, money for neighborhoods, ongoing revenue, affordable housing, parks and jobs for Anaheim.”…

Angels officials are still considering whether to renovate the stadium or build a new one, team spokeswoman Marie Garvey said. They’ve hired HKS Architects – which designed Minneapolis’ recently opened NFL stadium and is working on a new ballpark for the Texas Rangers – to explore their options.

Okay, so would it actually be a fair land price? There are still a bunch of big questions that the Register story leaves unanswered:

  • What’s the land valuation on that appraisal? The last appraisal, in 2014, came up with a figure of $325 million, so this would seem to be slightly light given inflation in the real estate market since then, but in the (sorry) ballpark. But we should know more this afternoon.
  • Would selling the land mean no more rent payments from the team to the city? Though given that the city gets pretty much nothing from the stadium now, that’s not much of a loss.
  • If the Angels are outright buying the land, does this mean they’d start paying property taxes on it? If so, this could be a huge benefit for Anaheim; if not, then that’s a tax break there, friends.
  • The Register writes that “the [affordable] housing and parks would be given a dollar value that would be subtracted from the land’s selling price” — so does this mean that the team can build affordable housing and parks on its land and claim this as an in-kind payment to reduce its land price? If so, who’s going to be determining that dollar value, and what recourse is there if Moreno tries to claim this his parks are so nice that they’re worth $325 million?

The Register gives no indication of whether its reporters saw the actual agreement or just got some cherry-picked highlights (the only sourcing note is to “city information”), so it’s really tough to know if we’re getting the whole picture here, or just the PR spin. More tomorrow morning after the appraisal is out and I’ve had time to read it, because that’s what journalists are supposed to do, read source materials and report back what they find, or at least so I always thought.

UPDATE: Spencer Custodio of Voice of OC points out that this entire story is apparently sourced to a three-page fact sheet on the city of Anaheim’s website, which is exactly as undetailed as you’d expect a three-page city fact sheet to be. Questions above answered: zero.