L.A. seeks to use $22.5m in anti-poverty funds to help build MLS stadium (UPDATED)

When the Los Angeles city council approved a $250 million stadium plan for the Los Angeles F.C. MLS expansion team in May, I wrote that it looked like it would be entirely paid for with private money, “unless there’s some other shoe yet to drop.” And you know, sometimes I really hate being right:

Los Angeles City Hall is seeking to give a loan of up to $22.5 million to the developers of a new soccer stadium near downtown Los Angeles.

A motion submitted this week by City Councilman Curren Price asks for city approval for a U.S. Department of Housing and Urban Development (HUD) loan for the backers of the Los Angeles Football Stadium.

Now, the HUD loan isn’t for the stadium per se — it’s for the “ancillary” construction, meaning a sports museum, conference rooms, and retail, i.e., all the parts of a stadium complex that don’t specifically involve watching the game. The excuse for using a federal housing loan program to build this is that it’s “economic revitalization,” which is the usual argument for this sort of thing.

If the government were just lending the money and the team repaying it, that wouldn’t be such a big deal. But HUD Section 108 loans are repaid by a local government’s federal Community Redevelopment Block Grant funding — meaning Los Angeles is considering taking $22.5 million in anti-poverty funds and giving it to the developer of a soccer stadium, because economic development.

MynewsLA reports that the city council voted on Friday to ask HUD for the loan, so presumably this is now up to the Obama administration (or its successor) to approve or deny it. I’m not sure what discretion HUD has to reject uses of its loans for really off-label purposes, but hopefully we’re going to find out.

UPDATE: A commenter who works in finance points out some fine print in the Section 108 program: The city’s CRBG funds are only used as security on the loan, but it’s still supposed to be paid off by the private developer. This is much better for the public than a straight subsidy, obviously — LAFC’s owners would be getting the benefit of a cheap loan rate, and there’s some risk to taxpayers if they default on the loan, but it’s not just handing over $22.5 million. You can still make a good case that HUD should be looking at this project with lots of skepticism — if building a soccer stadium is an anti-poverty program, then building pretty much anything is — but at least it’s less of a cash grab it appeared at first.

LAFC gets approval for new $250m stadium, looks like no tax money involved (fingers crossed)

The Los Angeles city council approved plans for a $250 million stadium for Los Angeles F.C. on the former L.A. Sports Arena site on Friday, and … that’s it. The documents approved by the council are just about rezoning the land to allow for a soccer stadium, with nothing about the tax incentives that LAFC’s owners had previously hinted at (and still hint at on their website). So unless there’s some other shoe yet to drop, it appears that this is like how stadium deals would work in a world without subsidies: A bunch of rich guys decide they want a team, decide on a place to build a stadium, ask for permission, and then start spending their own money.

There are also some renderings, which look about like a soccer stadium, and which if history is any guide won’t look much like the final stadium design anyway. The biggest controversy at the moment appears to be about whether the stadium will be open for the start of the 2018 season, or whether they’ll have to play a few games in one of the city’s other stadiums before moving into their own place. If that were all we had to worry about for every sports team, I could shut this site down.


LAFC to build $250m stadium on Sports Arena site with no public money, also maybe with public money

Los Angeles F.C., the sort-of MLS expansion team that will be replacing Chivas USA, has announced that it plans to build a $250 million soccer stadium plus conference center on the site of the Los Angeles Sports Arena, to be paid for by the team’s owners:

Construction would be financed by the team and its ownership group, which includes former Lakers Hall of Famer Magic Johnson; Mandalay Entertainment Chief Executive Peter Guber, co-owner of the Dodgers and the NBA’s Golden State Warriors; self-help author Tony Robbins; and women’s World Cup champion Mia Hamm and her husband Nomar Garciaparra, a former major league baseball all-star.

That’s certainly refreshing, and—

The project would be eligible for tax incentives.

Oh. How much in tax incentives, Los Angeles Times? What kind? Hello? Hellooooooo?

More to come, clearly.

LAFC launches as Chivas replacement, new owners crowdsource stadium plans

The new Los Angeles MLS team that will replace the now-disbanded Chivas USA in 2017 now officially has owners (Vietnamese venture capitalist Henry Nguyen, 21 other guys) and a name (Los Angeles F.C., though that’s subject to change if and when everyone decides it sucks). Now all they need is a place to play:

Nguyen said the group intends to scour the greater Los Angeles area for the perfect stadium site, with that search beginning immediately.

“Really, that home, that stadium, is going to be a critical part of our early work,” Nguyen told reporters…

According to Penn, the group has an early budget of $150 million for the stadium plan and is seeking development sites of between 15 and 100 acres.

L.A. already has a soccer stadium, of course — the StubHub Center in Carson, where Chivas played and the Los Angeles Galaxy still do — but Nguyen and his partners say they’re going to fund a new stadium on their own, so hey, it’s their money. Assuming it really is their money, of course: Plenty of sports team owners have said they won’t ask for public subsidies and then do anyway, so we’ll just have to wait and see on this one.

Meanwhile, Nguyen and friends have broken new ground in at least one way, becoming probably the first team owners ever to crowdsource their stadium plans:

The club has set up a website (www.lafc.com) and a Twitter account (http://twitter.com/lafc) where fans are encouraged to weigh in with site recommendations.

It’s probably mostly a gimmick to build interest in their as-yet-nonexistent team — “Hey look, our fans are telling us where to build a stadium, this must mean we have fans!” — but sure, why not? Random fans can’t do worse than whoever is running NYC F.C.‘s stadium planning process.