ARENA COULD BE TAXING, REPORT SAYS.

Byline: Rick Orlov Daily News Staff Writer

The construction of a new $240 million sports and entertainment arena complex in downtown Los Angeles for the Lakers and Kings could cost taxpayers between $5.5 million and $7 million a year for the next 25 years, a report released Wednesday estimates.

The report states the city would need to spend between $60.5 million and $70.5 million to cover the costs of demolishing the Convention Center's North Hall, the oldest part of the facility, as well as acquiring properties across the street at 11th Street and Figueroa Street for parking for the 20,000-seat arena.

The report, to be considered by the City Council next week, urges the council to try to secure a memorandum of understanding that the downtown site will be selected by Oct. 15 to meet the time line set by Kings owners Ed Roski and Philip Anschutz to open a facility in September 1999.

The report by City Administrative Officer Keith Comrie and Chief Legislative Analyst Ron Deaton, says the city could use a variety of fees or taxes to cover the costs, including business taxes, parking fees, hotel bed taxes or sales taxes.

While the amount of the city contribution is high, the report states it would represent about 25 percent of the total project. Other cities around the country have contributed an average investment of 50 percent, it says.

Mayor Richard Riordan was in Israel and his staff declined comment until the report could be further reviewed.

However, the mayor has been a strong backer of the project even as he has removed himself from negotiations because of his ownership of the nearby Pantry Restaurant. Riordan also has said he believes the city's share can be covered without increasing taxes.

Councilman Nate Holden, however, said the use of general fund revenues to subsidize the arena is unacceptable.

``This is just a pig in a poke and too risky for the city,'' Holden said.

The councilman said he was opposed to the city spending any money on the project unless it can be guaranteed its potential losses will be covered.

Other city officials who have been involved in the talks, council President John Ferraro and Rita Walters, said they wanted more time to study the report before commenting.

Roski and Anschutz also are negotiating with the city of Inglewood over whether to remain in that city. Inglewood has offered the developers up to $30 million in cash to build there.

The Kings and Lakers currently play at the Great Western Forum in Inglewood.

Representatives of the two developers did not return telephone calls. In the past, they have said they would analyze both the Los Angeles and Inglewood offers to see which makes the best financial sense.

Suggestions for financing the project have included raising the hotel bed tax. But Deputy Chief Legislative Analyst Sharon Tso said the report does not look specifically at that option, since that action cannot be taken by the council alone and must include an agreement with the hotel industry.

The Comrie-Deaton report recommends that $150,000 be spent with the private law firm of Brand, Farrar, Dziubla, Freilich and Kolstad to resolve outstanding financial issues and speed negotiations.

Among the areas to be negotiated include the cost and use of the new parking area and accommodating the Convention Center's own plans to expand by 1 million square feet.

The report suggests that Roski and Anschutz be encouraged to build a hotel on the site connected to the Convention Center that could be used as a lure to draw new conventions. They have requested the right of first refusal on any further private development in the area.

Included with the report is an analysis by the firm of Ernst and Young for the Los Angeles Convention and Visitors Bureau; it estimates the project would create a total of 1,500 jobs in the area, with 850 of those within the city.

In addition, the project would be expected to bring in $200 million a year to the Southern California economy, with $120 million of that going to the city.

Los Angeles officials have been active supporters of the proposal, in hopes that it would create a sports corridor stretching from Dodger Stadium to a rebuilt Coliseum hosting a new National Football League team.