San Diego officials, private developer to discuss $155 million sports arena.

LOS ANGELES - San Diego officials are scheduled to meet with a private developer today to negotiate a financial strategy to build a $155 million multipurpose sports arena.

San Diego Mayor Susan Golding said she is hopeful that the proposed 18,000-seat San Diego Entertainment and Sports Center, anchored by a National Basketball Association or National Hockey League franchise, could open as early as 1997. The city has no NBA or NHL, franchise.

Golding and six members of the San Diego City Council voted 7 to 0 on Tuesday to direct city staff members to negotiate a financial plan with Arena Group 2000. The council selected the San Diego private partnership last March to develop the arena and to secure a professional sports franchise.

The City Council underscored its continuing interest in building a new stadium on Tuesday when it directed its negotiating staff to return by next March 1 with a plan detailing financing options.

The council also selected a 12-block area on the east side of downtown San Diego as a "preferred location" for the arena.

The area is located within the Centre City East redevelopment project, raising the possibility that tax allocation bonds supported by tax increment revenues may be incorporated into the final financing package.

David Allsbrook, projects director for the Centre City Development Corp., a nonprofit public agency that is part of the city's negotiating team, confirmed yesterday that "tax increment financing is being considered" to finance capital projects related to the sports center.

The scope of tax increment dollars to be contributed to the arena's construction costs could be decided today when the development corporation and representatives of city management meet with Arena Group 2000, Allsbrook said.

Arena Group 2000, a partnership headed by Ronald E. Hahn and C. Samuel Marasco 3d, currently holds a long-term lease on the 25-year-old, 13,000-seat Sports Arena that the leaseholders say is outdated.

The mayor said that no matter what financing package emerges, a commitment from a major sports franchise to move to San Diego would be essential before she provides a final endorsement.

"My strong commitment is that we will not build an arena without first obtaining a franchise," Golding said. "The two go together."

A report published in Wednesday's Los Angeles Times said city officials have met with officials of the NBA's Minnesota Timberwolves to discuss the possibility of moving the team to San Diego.

Golding declined to confirm that report, but said officials "are having discussions with several owners" of NBA franchises.

"We are planning to attract an NBA team to San Diego," Golding said, adding that the city would also like to acquire an NHL franchise.

San Diego, the second largest city in California and the sixth largest in the nation, has a population of 1.25 million. Officials say San Diego is the largest U.S. city without a team in the NBA or the NHL.

Golding declined to state her preference for the financing package, although she said the city "possibly" would issue long-term bonds once a revenue stream is determined.

However, she said, "We haven't made that determination. Until we get the financials detailed out and determine what the team costs ... I can't answer the question" of bond issuance.

Golding said a "logical source" of revenues would be an increase in the hotel tax, which now stands at 9% and generates $52 million annually. But "there are other options available that I am looking at," she said.

Also, the mayor said private sources would be asked to contribute about two-thirds of the cost of the arena, land acquisition, parking, and related off-site improvements.

Assistant city manager Maureen Stapleton said "regional financing would certainly be an option to look at." An example would be a regional sales tax that would be less onerous on San Diego residents. "I don't think we are going to throw anything out," she said, "but [rather] look at all of the opportunities."

Stapleton said if the financing plan includes bond issuance, the city council would solicit by mid-1994 requests for proposals for a financial adviser and bond counsel.

Both Golding and Stapleton said they hoped a new sports complex would have positive credit rating implications.

Golding said the arena would be "a tremendous generator of additional sales tax dollars. That [would be] only a positive" for the city's rating.

David Brodsly, a vice president and manager with Moody's Investors Service, said San Diego's general obligation bonds are now a triple-A credit. "From a credit perspective, the existence of a sports stadium is not particularly significant one way or the other," Brodsly said.

Standard & Poor's Corp. rates San Diego's outstanding general obligation bonds AA-plus.

Robert F. Durante, an associate director for Standard & Poor's, said the rating agency generally believes that for a city "the benefits of a professional franchise might not be much in financial and economic implications."

Durante did say there would be "intangible benefits, particularly with professional baseball. People recognize you as a major league city."

San Diego already has a major league baseball team, the Padres.

Durante said local public officials contemplating an arena financing have a "balancing act" to consider. "Are they better off building roads and schools, versus a stadium? That is where civic pride comes in."

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