We are back . . . had a wonderful rest between Christmas and New Years but we are back. Hale, Hearty, and almost Healthy! We are, however, just as ornery and cantakerous as ever!
So far, I note not a lot has changed in city government. In Escondido, for example, the Escondido City Council is spending money like a drunken sailor - much of it on an idea that should have been buried long ago.
To date, $636,579 spent BEFORE the Council had approved the MOU ... (and YES, it should be added to the total cost of the Ballpark) on consultant studies. That figure doesn’t even begin to account for staff time, most of whom make well over $100,000 per year in salaries.
They have approved $5 million to buy the property at 480 N. Spruce. Question: Where is the $5 million coming from? The budget is not balanced yet we are spending money as though we have tons of it.
As to the Redevelopment Agency ... someone needs to sit down with the Council and have them explain where the money in that fund came from and why this is a higher priority than say ... paying the City loan to the Redevopment Agency back.
The city is proposing diverting existing cash flow from increment financing. Is that wise? Robbing Peter to pay Paul? And we don’t even really know Paul. Other than he’s a pretty slick, but shifty, operator. If we understand this here game correctly the real problem is they can't use tax increment financing in the short term, they need some sort of bridge financing until 2019 as I understand it.
For example, Mr. Slick wants a 30 year lease with two five year extension. For this, he wants to pay $200,000 per year in rent, plus COLA every five years. You’ll pardon me if I don’t get excited about the rental income. The mouthpiece for Mr. Moorad says they have to have that rent at $200,000 (an admittedly low rental rate) in order to qualify for special tax exempt financing.
Fine. Make it up somewhere else. Take what the realistic annual rental value is and make that a payment under some other term. Just don’t shortchange the city!
Better yet, I think the City should get market rent and pass through the cost of non-tax exempt financing ... Moorad is getting the BENEFIT of tax exempt financing and the City is paying for it ... CLASSIC subsidy for the Billionaire Boys.
Mr. Moorad has agreed to pay operating costs, maintenance, and capital maintenance, as well he should, what with his expectation that the city of Escondido is giving him everything but the kitchen sink.
He is even giving the city a whole nine “event days.” Again, pardon me if I don’t get excited. Plus, I’ll bet you a nickle, no, make that a dime, that Mr. Moorad will charge the City for the operating costs for those events ... no free lunch. Unless, of course, you’re the city. They want to give most everything away. Including free lunch.
Has anyone on the Escondido City Council figured out that the proposed stadium is going to sit idle 291 days of the year? Last I knew, there were 365 days in a year. The proposed ball park would stage games 74 days a year. That leaves 291 days the stadium is dark. Kinda like a giant White Elephant, just sitting there near the edge of downtown . . . much like the other Great Big White Elephant, the California Center for the Arts, Escondido. A beautiful facility, but badly planned and constructed, and without proper financing or financial support (other than Big Daddy Warbucks, aka the Escondido City Council and the Escondido city taxpayers.)
Mr. Moorad, pleading poverty, says he has to have the revenue from advertising, concession and naming rights. He will, however, agree to a 50/50 split on parking. There are 1155 spaces allocated for parking. Can someone please tell me how much 50% of 1155 parking spaces comes to? Assuming, of course, that someone even comes to the games?
Mr. Moorad also wants the option to purchase the city yard. But, he says, he also wants credit for any cost overruns he guarantees to the city, to apply to the purchase price of the city yard. That is, any money he pays the city to protect them from exceeding $10 million in cost overruns, he wants back in order to purchase the land, which is priced at the current value. This is a clear ADDITION to the total cost of the stadium. Under this plan, the subsidy/credit on the land increases the total to $52.5 million. The City must account for the credit somewhere.
Pretty sharp trick if he can pull it off . . . and it appears he’s on his way to pulling it off as he leads the Escondido City Council around by the nose. Even the new city council, one that is more conservative, shows no signs of discomfort at having the wool pulled over the eyes.
To her credit, Councilmember Olga Diaz called for financial projections on the proposed deal based on a variety of interest rates. Reason? Because we are talking $50 million but that figured does NOT include debt service. Debt service will add enormous extra costs to the package. Moorad knows that, apparently city staff and the council, except for Councilmember Ed Gallo and Olga Diaz, don’t. Can you imagine that the Council made this decision and THEY DON'T EVEN KNOW WHAT THE PAYMENTS WILL BE?
The costs of relocating existing city facilities have not been properly addressed either. There are so many loose holes in this deal even a San Diego Charger running back could run through them . . . and they haven’t been doing much of that lately. The relocation costs ARE COSTS ASSOCIATED WITH THIS PROJECT. They should be accounted for as a cost to build the stadium AND THE VALUE OF THE LAND should also be added in.
We have a difficult time following Mayor Sam Abed’s logic. He wants to spend $5 million on the Spruce Street property that is generating $900,000 in lease payments. Yet he wants to spend $50 million on a property that would generate $200,000 in lease payments? Please, somebody get me some smelling salts!
Councilman Ed Gallo has come up with the best idea I’ve heard yet. Have Moorad match whatever funds Escondido puts up so it is a true partnership. Moorad should do that and take care of operating and maintenance costs as well. If that happens, maybe, just maybe, I might jump on board this bandwagon.
I’m also impressed with Councilmember Olga Diaz’s challenges to the deal. She says she’s uncomfortable with the financing costs. The lease payments don’t cover the financing costs. This is public spending but the city gets nothing to speak of from generated revenue. As she says, “I don’t want to feel cheated every time I’d go to the ball park.”
She also expresses strong concern that we are committing all our money to the ballpark and neglecting downtown. There should be a linkage, she says, and we agree.
Diaz and Gallo recognize that it is their duty to play hardball on proposals like this . . . and it appears they are doing it. Would that the rest of the council show the same stubborness. (Being stubborn can be good!)
Other observers are asking similar tough questions. For example, just how does the ball park increase sales tax? And by how much?
It appears to us that Moorad is investing to buy land around the proposed ballpark. Moorad wants the City to spend $50 million and then he and his group profit from it directly over and over and over.
We urge the Escondido City Council to end these discussions and tell Mr. Moorad and his investor group, thanks, but no thanks.
Then, let’s get to work on downtown Escondido, and Councilmember Diaz’s proposal to explore the Escondido River Walk Project. Here, there are possibilities . . . and a need. We should begin to explore them.