Talk:New Earthquakes Stadium

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[edit] OPM

Lewis Wolff has promoted this stadium very effectively as "requiring no public money". While I'm pleased to see a team back in the Bay Area, and support the idea of this team having a soccer specific stadium, I don't think it's fair to suggest this stadium requires no public money. There is no capital contribution from the city, but there is certainly a significant transfer of assets involved. The proposed plan is, unsurprisingly given the required result, a financial shell game. Wolff purchases an option on industrial land, then leans on the City to rezone it to residential, and to increase the allowable density on surrounding industrial lands to maintain the areas' industrial capacity (though who pays to demolish the existing facilities and rebuild them in a higher density industrial park isn't made clear...). Wolff then flips the land (or builds on it himself, which is less likely) for enough profit to build the stadium and surrounding retail opportunities on another parcel of (publicly owned) land near the airport.

It's a very interesting approach, far more palatable to most taxpayers than Tax Increment Financing plans and the like others have proposed.. But it still isn't a funding plan devoid of public assets/money... the City must agree to rezone the land Wolff buys, increasing it's value dramatically. It does seem like the net financial benefit will go directly to the stadium (not be bled off into other developer controlled corporations), so in that respect it's 'neutral' (assuming you don't mind this revenue going to a stadium controlled by a private corporation). While the land to be rezoned and sold is not public land, the parcel on which the stadium will be constructed is (The city is relieved of a $7.5m tax burden on the parcel? More like the city isn't getting it's allotted $7.5m on the old FMC site at present). Additionally, if we assume the city might rezone the iStar parcel to residential use absent a stadium project, potential developers would pay the city significantly more for the parcel than Wolff would pay (netting the tax payers of San Jose some direct benefit). Yet in that case, the profit from the actual residential development would be going into private coffers, not to a 'public facility' like a stadium.

This is a really interesting financing proposal in my view. It's clear Wolff isn't just a carpetbagger looking to absorb public assets (like the Yorks just up the road, for example). But at the same time, he isn't being all that altruistic either (he's paying the maintenance costs because he'll have control of the stadium, not because he's a 'great guy'. And he'll have control of a stadium he didn't actually pay for, on land he didn't pay for). I've spent a considerable amount of time reading up on this deal, and if asked honestly couldn't tell the good people of San Jose whether this is a good deal for them or not. Maybe this is a sign it's a good compromise for the taxpaying public (whether soccer fans or not)? Anyone else care to share their thoughts? Posthocergopropterhoc (talk) 23:31, 9 February 2008 (UTC)

While I agree that this proposal is intersting as a stadium financing proposaal some of your analysis of it isn't correct. First off you say the stadium will be controlled by a private corporation. That's just not the case. The city of San Jose will control the stadium. Wolff's group is leasing it from the city for 55 years.

Also you seem to be under the impression that Wolff's group isn't paying for the FMC site. They are. Under the proposal for the city Wolff and another developer, Storm I believe, are paying the city the current market value of the FMC site which will likely be in the hundreds of millions of dollars (and as the city staff has presented, that would also net the city a tidy profit over what they paid for the land 10 years ago). All of that is independent of any of the stadium's financing. The city isn't giving them the land nor will it still be public land. The transaction has a net of being very cash positive for San Jose, while eliminating 7.5 million dollars in taxes the city pays annually on the now decade long unused FMC site that the city and the airport have indicated they have no use for short or long term now that SJC has decided to expand on its existing footprint.

As for who pays for demolishing the existing buildings around iStar if their zoning density is increased that would go to the individual land owners surrounding that site. The iStar site itself has no existing buildings to demolish. Gateman1997 (talk) 00:37, 10 February 2008 (UTC)

As with all these deals, the devil is in the details. Yes, Wolff and his group are paying for the FMC site. They are paying "FMV"... what does that mean? I've read local sources that suggest there may be significant environmental issues related to the FMC site. Is Wolff's group on the hook for these costs (if they are genuine)? As for the actual transaction, it would surprise me a great deal if Wolff paid "Hundreds of millions" for the old FMC site. Have you any link to this info? No matter what he pays for this, he is guaranteed to resell the housing land for a great deal more than he pays. As for the tax revenue issue, the city is paying itself $7.5M in taxes on 'abandoned' property? I think it's fairer to suggest that the city is just not receiving the $7.5M in taxes. Even if they are 'paying' it, it's just a paper transaction in my view.

I'm not sure I understand your definition of "Control" regarding the stadium. Make no mistake, the stadium may be owned by the city, but it will be controlled by the Wolff group under the terms of their 55 year (or whatever it turns out to be... often these things have extension options built in) lease. Can you imagine a situation in which, 55 years from now, this stadium will still have value? In effect, Wolff's group has total control over the stadium for it's lifetime. To me, that's ownership. Do you disagree?

Don't misunderstand my position here, I'm not against Wolff and the stadium. I'm hoping the Quakes get their own field sooner rather than later. But I think it's hard to deny that his group will have full control over the facility for it's natural life (possibly handing it back to the city only when it is ready for destruction?). Regardless, it's a relatively cash neutral way for the city to get the stadium built. That's why I find it interesting.Posthocergopropterhoc (talk) 04:38, 12 February 2008 (UTC)