An interview with CCDC President Fred Maas on the possible Chargers stadium Downtown
On Thursday, I chatted with Fred Maas, president of the board of the Centre City Development Corporation—which administers redevelopment Downtown on behalf of the city of San Diego—about the proposal to build a football stadium in East Village. Here’s how it went:
CityBeat: Given the fact that CCDC has paid $160,000 for sports-stadium expert Mitchell Ziets to help CCDC deal with the Chargers, that would lead someone to assume that CCDC finds its own value in negotiating with the team, right?
Fred Maas: We certainly see the value in being prepared to negotiate with the Chargers.
But the Chargers are a private business, so it must be a very special private business to compel CCDC to spend public money to be prepared for a proposal.
No, I think if you take a look at lots and lots of things that we’ve done of a large scale, we’ve engaged people to look at things beyond just a private individual, whether it’s the civic center [project], whether it was engaging people on our park plans, whether it was engaging a group to talk about sustainability issues. We’ve done this in a number of different instances. Clearly, this, if it happens, is a very significant transaction and opportunity for Downtown that warrants preparation. But we’ve made significant expenditures over the years on other projects that would never even rise to your attention. We spent $26 million on the Balboa Theatre and engaged lots of different historical folks to counsel us on what the most prudent course of business was. So, we’ve done this routinely—not in something that is potentially as visible as a football stadium.
I think the civic center is as good an example as any, given that the studies we embarked on that were significantly more than what we spent for Evolution Media [consultants on the stadium proposal]. I’m not sure anyone questioned [them] as being an imprudent expenditure to define the boundaries of what made sense for the civic center.
But that’s a public building.
Involving a private developer…
But the private developer was responding to a request for proposals.
Well, sure… but when we first embarked on the civic center, there was a huge private component being contemplated. So, while we’re talking flavors of apples, I don’t think we’re talking apples to oranges. We spent an enormous amount of money on the Navy Broadway Complex and brought in outside consultants, had a design-review panel that we spent money on—a number of things to try to improve the design of Navy Broadway… which no one seemed to question.
But that one had its own set of circumstances. It was a development agreement from the 1990s, and the city and CCDC were pretty much backed into a corner and you’re just trying to make the best of it.
And we’re trying to make the best of this, too. … In each one of these circumstances, there are nuances and twists that justify the expenditure of our funds that were unique in their own nature.
It has been our belief that this is going to be a long and complicated discussion, and we want to, as fiduciaries of the city, be fairly armed in our conversations with a very sophisticated developer-tenant-owner, and I’m always one to believe that we should have the finest talent we can possibly recruit to be there to engage in those conversations.
You’ve said that something has to happen at this site. Can you elaborate on that?
If you explore the activities that are currently on the [Metropolitan Transit System] site [which has been identified for a possible football stadium, just east of Petco Park], and you look at our community plan, in which some redevelopment or reuse of that site is contemplated… my guess is that it’s somewhere between $50 [million] and $100 million to remediate the site, acquire an appropriate alternative site for MTS and then relocate their existing activities. … It is going to take some significant development to warrant that kind of expenditure of funds. Put aside whether it’s a stadium that makes that possible. But it’s certainly going to have to be something that’s momentous. Merely putting an office building there or a residential complex or something else will not justify the expenditure to prepare a site of that magnitude. … Even if we’re going to put a surface parking lot there or a park, we’re still looking at a very significant expenditure of funds.
Can you think of other types of development that would reach that threshold?
I haven’t be able to think of anything yet.
After this week’s CCDC meeting, you said a nuclear power plant.
I was toying with you, but that certainly would justify the expenditure. Frankly, nothing comes to mind, but I’m certainly open to any opportunity that may make sense, but in order to justify $100 million for a 10-acre site Downtown, [it has to be] pretty significant in this day and age.
Have any projects currently in the pipeline in the immediate vicinity of the proposed stadium site been put on hold pending the Chargers’ proposal?
No… things have been on hold, frankly, for a couple reasons: 1) the general economic state, but 2) there have always been real reservations about that site and what would happen there. The sites that I thought were most ripe were the two parcels that JMI [former Padres owner John Moores’ company] owned—clearly because of the Ballpark Village opportunity—but even that’s been put on hold. So, my sense is—and I’m just speaking as an individual—that something will have to happen at that site to fully realize the redevelopment opportunities on all the properties that are adjacent to the current MTS site.
Was there anything during Mitchell Ziets’ presentation this week that gave you new insights about the financing of the stadium?
One was that in virtually every case [of teams that have recently built new stadiums], the team had taken all construction risk exposure, as well as operating-deficit exposure. That was enlightening to me, that they would be willing to do that. [There are] potential opportunities that had never been discussed in the context of a negotiation like this that may be sources of revenue. I think it leaves open certain conversations of pioneering new ground with the NFL and with the team about opportunities for shared revenues to recover private investments. I think this was very helpful. You always like to see what has happened before to define the boundaries of what’s been acceptable when you’re dealing with an institution like we’re dealing with here. I was, frankly, astounded by the amount of facilities around the country that have all had public financing—and to the extent that they’ve had public financing.
What about the feasibility of redevelopment financing of this project?
There are threshold questions that I don’t want to be prejudicial on—clearly, how we raise this cap [on how much cumulative redevelopment CCDC can do] is a threshold determination of how we make this work. I don’t want to prejudge that process. We hope that we get the permission of the Redevelopment Agency [the City Council] to go forward, but to the extent that the cap is lifted, that eliminates a significant impediment to even considering this proposal or many other proposals. Assuming that the cap gets lifted, then the next threshold question is, is there sufficient tax increment [increased property taxes generated by redevelopment] in the near term to provide the amount of capital to infuse into a project like this or any other projects that we might be considering. We’ve got a long way to go before we’re at a point at which we have any level of certainly as to how this will work.
But I can say this: I think the possibilities and opportunities of a stadium in this location, if done the proper way, assuming a negotiation that makes sense for the city and the public, can be very, very exciting. To create an environment akin to L.A. Live [the area around Staples Center in Los Angeles] in that edge of the East Village, with a moderate stadium completely surrounded with various pedestrian experiences, retail and restaurants and other things, that may or may not include some type of arena that completes that area from Petco east, is terribly exciting and I think would be a signature for our Downtown that this community will enjoy for decades.
I also think, at some point, we’ll have visionaries here, our successors, that will be representatives of the city or representatives of the port, that will begin to create a dialogue about… opening up the 10th Avenue Terminal straight to the water and create an amazing public amenity of parks and open space that connect the water to the sports venues. Those kinds of things will have a catalytic effect on other development opportunities in the area surrounding this sports and entertainment district.
What about the neighborhoods near this area. Can the impacts of what you’re describing be mitigated?
Clearly, with a baseball stadium with 41,000 people 81 days a year virtually next door, we’ve got a pretty good indication of what the impacts may be. I think a lot depends on the urban planning design of what we contemplate there. Clearly, the transit nodes that are available today and the expansion of transit from northern and eastern areas of the city and county make it a site amenable to more intense development. So, while we are constantly sensitive to Sherman Heights and Barrio Logan and our neighbors to the east, we’re going to have to pay particular attention to them, and we’re going to have to work out plans so that it’s not over-parked during football games or during events there—all things that can be managed as you work through the construction and event phasing of development like this.
I think things that attract people to Downtown and create a magnet for new activity and jobs to create a real vibrant experience Downtown is something that was always envisioned. If you look at the community plan, there was significant intensity of development that was always contemplated in East Village to accommodate 90,000 people there. So, I absolutely think it’s something that’s consistent with the community plan and something that is vital to fully realize what its potential is.
Downtown was not supposed to be a sleepy residential community; it was supposed to be a magnet to attract people that would otherwise urbanize other areas around the city. That was the wisdom of our predecessors at CCDC and, more significantly, our predecessors on the [City] Council that believe we could accommodate 90,000 people and double the number of jobs that we have there today—and we would be creating hotels and incubate other retail venues that would be creating sales tax for the city. There were a number of engines that were attempted to be fueled by development Downtown.
So, I think that was always expected, and I think that we’ve designed the infrastructure to accommodate it—and I think the ballpark being the best example. That is not to say that we have to be insensitive to our neighbors and we’re not going to have to take time to think through these things and create something that is more than just a football venue for 10 Sundays a year.
Would this kind of thing create more challenges for diversity in housing affordability in that area?
I don’t think so. … We’ve been as sensitive as anybody in this town to developing low- and moderate-income housing… Downtown. We’ve got 1,000 low-mod units in the pipeline today in Downtown. So, I think the suggestion that somehow we’re going to be denying a full range of economic opportunities Downtown is an unfair criticism. Clearly, there will be market-rate things that happen. There will be a fill compliment of housing Downtown, and I think we’ve been the leader in that vein. And that’s not to [mention] the activities that we’ve been engaged in on the homeless front, from the winter shelter to providing $10 million for a permanent facility…. So, that’s a common, uninformed criticism of us—that we just cater to the affluent and the developers Downtown—but, in fact, the facts belie that allegation.
Is the Chargers’ proposal an excuse, in a way, to raise the redevelopment cap in order to finish the job Downtown?
The notion of raising this cap to complete the mission of the community plan is important for Downtown irrespective of the stadium. I the stadium is a catalyst to make that happen, to provide dollars over and above what the stadium cost may be, or investment may be, then so be it. Because we’ve got significant things that will go unresolved or incomplete.
Can you elaborate on that?
Sure. For example, we’ve got obligations on C Street, we’ve got neighborhood improvements, we’ve got our park plan that needs to be accomplished, we’ve got the North Embarcadero, we’ve got an SDG&E substation in Little Italy that we’ve been talking for years about how to resolve. We’ve got nothing in our community plan for improvements along Broadway, which is one of my pet peeves. I’d love to see a circumstance one day in which B Street was open to the civic center, we took some of the buses off of Broadway and moved them to B, and we expanded the sidewalks on Broadway to create the grand thoroughfare that it was intended to be. There are number of things in the aesthetic pipeline that don’t have the dollars to support them.
What about the suggestion that putting redevelopment money into a stadium will take money away from other, infrastructure-type projects?
If taking a piece of pie from an empty pie pan—that’s what we’re really talking about. No one has ever talked about diverting dollars from the existing discretionary budget that currently is before us. We’re all fairly clear about that—at CCDC, the city and, I think, the Chargers. It’s going to require the infusion of new dollars. … So, [if the cap isn’t raised and] the dollars never happen, are we sacrificing anything for something that didn’t exist?
The payoff for the entities that currently give up property tax revenues from the redevelopment area—the county, the San Diego School District, the Community College District and the county Board of Education—is that you do more development in the near term so that once the revenue kicks back to them, after the redevelopment area is disbanded, there’s more money in the pot later. Right?
Do we grow the pie big enough to make it in everyone’s interest to pursue raising the cap. That’s the fundamental question that all the tax-sharing entities are going to have to believe in.
Any final thoughts?
There’s always a lot of suspicion by people who don’t understand how we are organized as a corporation, that we serve the Redevelopment Agency and what the nature of our financing is and, really, what our mission is. It’s unfortunate that the introduction of a stadium here has elevated some of those misunderstandings, because people need to understand the deliberative nature of how we’re going about this and that nothing’s been finalized yet—in fact, nothing’s been proposed.
Ultimately, this is going to have to be a good deal for the city of San Diego, and it’s going to have to be a good deal for the county, and it’s going to have to be a good deal for our tax-sharing entities, and it’s going to have to be a good deal for the Chargers. But… the real hard work is yet to get started.
As the president of the board of CCDC, do you care if the Chargers leave or stay in San Diego?
I think the Chargers are an important part of the fabric of San Diego, and I hope they stay. But by the same token, I’m a fiduciary of the city, and my obligation, first and foremost, is to do what’s in the best interest of Downtown and the best interest of our city—and I don’t think those two are inconsistent.