Latest Ballpark Lawsuit Targets City Finance Plan

Latest Ballpark Lawsuit Targets City Finance Plan

BY DENISE T. WARD



Staff Writer

The latest lawsuit filed against the Downtown ballpark project didn’t come as much of a surprise to anyone at City Hall , least of all City Attorney Casey Gwinn and Padres President Bob Vizas.






Both expect the suit to end the same way as 14 others filed against the project: tossed out of court.






Gwinn said city attorneys, as well as attorneys from the city’s underwriter, insurance company and bond counsel, are analyzing the suit, but early indications show it has no merit, he said.






“I don’t see any portion of the lawsuit that would have an impact on the validity of the city’s bonds,” Gwinn said. “We’re still on time to close escrow on the bonds by the end of December.”






The recent suit, filed Dec. 6 by retired law professor Robert Simmons, claims the financing plan approved by the San Diego City Council is so different from the original plan it warrants a new public vote.






“A new vote is required under the agreement, because the memorandum of understanding, which constitutes as the contract between the city, the Padres and the taxpayers, provides, in section 37, that a new vote is required whenever there has been significant changes in the financing plan,” Simmons said. “We have identified, not one, but seven significant changes.”






The city is on pace to issue $166 million in bonds to cover its portion of the $450 million ballpark project. Simmons’ suit seeks an injunction to stop that sale, but Gwinn said that is unlikely.






“In order to challenge the bond sale, he would have to post (the bond) amount to stop it,” Gwinn said. “He will not post $166.3 million.”






Simmons said he is not against the construction of the ballpark, but said the public has the right to re-vote on what is being done.






“If there is a new vote and taxpayers approve the ballpark construction that’s acceptable to me,” Simmons said. “I have no objection to the ballpark being constructed, but it should be built at the expense of the multimillion dollar Padres owners, not at the expense of taxpayers.”






The current financing plan is different from the original plan in the agreement approved by voters in 1998 that outlined the city relying upon transient occupancy tax dollars primarily from hotels to be constructed near the site for the bulk of its share , estimated to be $225 million at the time.






The City Council has since approved a financing plan that would shift the city’s focus to using Downtown redevelopment dollars instead of hotel taxes and a higher upfront cash contribution in order to lower the city’s bond sale to $166 million, of which the city would generate $130 million. The city’s annual debt service on the bonds would be about $14 million.






To date, the city’s share of the project has been lowered to $206 million, according to the official document detailing the deal, needed to issue the bonds.






Simmons’ lawsuit, however, claims the changes increase the city’s obligations to the project and decreases its rights. Language in the original plan calls for a re-vote if that is the case. Gwinn said it is not.






“All the changes, in my opinion, have increased the city’s position,” Gwinn said, “not increased the city’s obligations. That lawsuit is not alleging anything that I see as having a material impact on the (memorandum of understanding).”






Another change from the original plan mentioned in the suit is the contribution by the city’s Downtown redevelopment agency, the Centre City Development Corp. The CCDC was to contribute $50 million toward the project, but that amount has been increased to about $76 million under the revised plan.






The San Diego Unified Port District is projected to spend $21 million on the project, but if that contribution is legally stricken, the CCDC could cover that portion as well.






Critics of the city’s financing plan also claim the Padres, responsible for $146 million of the project, are being let off the hook and have been allowed to change their development plans.






Under the original plan, the Padres were responsible for constructing hotels, office and retail space, residential development and parking on 26 blocks surrounding the ballpark.






The Padres have chosen not to build the 400,000 square feet of office space and 50,000 square feet of retail space previously planned, and expect to build four blocks of apartment buildings because of changing market conditions, according to the team.






City officials say the Padres are free to make those changes to the ancillary development so long as the assessed value of the project is $311 million by 2004.






Vizas said the ballclub has spent more than $100 million on the project so far and plan to issue a $160 million bond measure of its own.






Vizas, contacted in New York last week, said he was meeting with potential financial backers there and planned to travel to Boston to meet with others.






As for the latest lawsuit, Vizas said, “The complaint looks pretty much like the challenges they always make. I don’t see anything new in it.






“Every time the City Council votes on anything, they (opponents) will file a new lawsuit. They will lose again.”






The city has won 14 lawsuits challenging the ballpark project. Two of those are on appeal.