Opinion: Angels Deal Is Good – Let’s Be Smart In Negotiating DDA

I am David Michael Klawe. I spoke at the December 20 meeting of the Anaheim City Council meeting. The Orange County Register quoted me in their article, “Anaheim Votes to Sell Angel Stadium and The Land Around It for $325 Million”:

“David Klawe, an executive committee member of the West Anaheim Neighborhood Development Council, called the agreement the “first step” in “achieving a great desired goal” of keeping the team in Anaheim while providing benefits to the city.

“The deal provides revenue to invest in public services,” he said, but urged the council to make sure the money gets distributed fairly to different parts of the city.”

In my public comments, I talked about wanting to invest in the Stadium area, such as a new public park, and other city benefits, but wanted the council to watch what they demand, to leave a lot of sale proceeds (a.k.a. cash) for the rest of the city, “North to South, East to West”.

And that is key, yes, I want to see a good amount of that spent in West Anaheim. We are working on implementing the Beach Boulevard Specific Plan and the start of the 39 Commons Development. But there are a lot of things that need to be done west of Euclid Avenue, where Districts 1 and 2 are located.

And both Councilmembers Barnes and Brandman know I will keep reminding them of that. I do want to take the time to say I have been in touch with Jordan Brandman, and he is hopefully following doctor’s orders this holiday season to take care of his throat. He did attend a morning meeting at City Hall on Friday, and many folks noticed he wasn’t in the best of shape. He went to get some medical attention before the full council meeting, and as we all know, it took quite a bit of time, and was strongly advised to go straight home. He truly wanted to be a part of the council discussion and vote, but was in no shape to do so. I hope both Jordan, and Esther Wallace, the Chairman of W.A.N.D get healthier in the upcoming weeks.

Here is the key to the deal with Arte Moreno.

His group, SRB Management has agreed to pay $325 million for the current Angel Stadium, and the 153 acres of land that the Stadium sits on, plus the surrounding parking lot land.

Arte Moreno, and his group has also agreed to the following, that the MLB Angels team will play at the site until at least 2050, and that they maintain 12,500 parking spaces for stadium use.

So in reality, what does that mean. Since Arte Moreno wants to develop the area, he will have to build a large parking structure to open up much of the parking lot for other uses.

He also needs to have a ballpark that will allow the Angels a place to play until at least 2050 and includes standards for stadium operation, maintenance and investment standards. That leaves two basic choices, he can either refurbish the current Angel Stadium, or build a new one to replace the current one. And to allow the team to keep playing in Anaheim, his options are limited. So that means building the parking structure first, then the new stadium, followed by demolishing the old one, to open up the land for development.

All these things will be fully paid for by Arte Moreno and his partners.

In 2020, the City of Anaheim, and SRB Management, will work on a Development Agreement that both parties can agree to, and that means City Council approval.

As with any development with the city, there are certain requirements, based on the specific type of uses proposed. Things include items like parking spaces, traffic mitigation, and public parkland. All these requirements will be provided to the city by SRB Management, under the current city codes/laws.

Now, anything above those requirements, what are described as “concessions” will come from the $325 million sale price.

So in the first part of the deal, Arte Moreno and his group has said, that while the appraisal said the current stadium, the land, and the requirements of the parking spaces and operating a Ballpark was between $300 to $320 Million, they are willing to pay $325 for the package. And that is our best offer.

They also agreed to follow the current city codes, such as Public Park Space.

Before I go any farther, I need to say I will be using some easy to follow numbers for strictly example use. They are not based on any real numbers. I am trying to explain the concept. Also, to easily tell the two apart, I am calling the owner of the Angels as Arte Moreno, and will refer to Councilmember Jose Moreno as Dr. Moreno.

Now, city code bases the amount of park land required based on the amount of housing you will develop. We don’t know that amount. Also, city code gives the developer two options, either give that amount of land to the city, or a Cash in Lieu payment.

So using numbers that I am making up, since we don’t know the numbers, Arte Moreno wants to build 3,000 housing units, and that city code says that requires 5 acres of park land. And both parties agree that the deal will be for 5 acres located in the current Angel Stadium site, instead of the Cash in Lieu payment.

Now, the City Council says they prefer a larger park, say 10 acres. So that is 5 acres more than required by law. And let’s use the appraisal price of $2.1 million per acre, though that the actual amount is to be negotiated. We have $10.5 million of land that city wants. Sometimes that is worked out as a “concession”. But in this case, Arte Moreno said we have agreed to a price of $325 Million, including any extra concessions the city wants.

So now, for the 5 extra acres, the City will now get $314.5 million in cash plus the 5 extra acres. The city now has a 10 acre park next to the stadium.

And this will also apply to affordable housing. If the city wants affordable housing, they will have to come to an agreement as to how many units they want, and how big of a reduction in price as compared to the market rate for similar housing units. Now the city can do one of three things, take money from its current affordable housing funds, take funds from the $325 million sale price, or a combination of the two. Let’s say the city will take all the funds from the sale price, and that the subsidy is projected to be $7 million for 250 units. So now we further reduce the sale price to $307.5 million, and that includes 10 acres of park space, plus 250 affordable housing units.

Using one more example, let us talk about Project Labor Agreements (PLA), or something similar.

For the building of the actual stadium, the use of the Building Trades union is normally expected, but in an analysis of how much the market rate would be compared to the city requiring it is $500,000. We are now down to $307 Million in Cash, and all the extras the city wanted in this example.

But let’s say Dr. Moreno wants all the housing units to be built using a PLA. A cost analysis shows that the difference between using market rate construction company rates (either non-Union, or a mix of Union and non-Union workers) and the additional costs due to the PLA is $7 Million. Now the City Council has to make a decision, do we reduce the sale price down to $300 Million, or do we decide to let SRB Management Company to make the decision of using Market Rate pricing, and keep the Sale price at $307 Million.

And these are the discussion and debates to expect in 2020. I want to see as much of that Sale Price as possible to be made available in Cash, so those monies can benefit the entire city, North to South, East to West.

Just as much as we, the residents, need to be smart about our budgets and how we spend our money in our daily lives, we also need to demand our City Council to do the same.