ARENA OF PUBLIC OPINION : STADIUM PLAN'S FOES `SPINNING' NEGATIVES ALL OUT OF PROPORTION.

Byline: Kathryn S. Schloessman

THE city of Los Angeles has been presented with an unbelievable opportunity to revitalize the downtown market, to ``stop the bleeding'' at the Convention Center and to build a tremendous future revenue source for public works by supporting the construction of a sports arena.

As a taxpayer, and more importantly, as a businessperson with a company located in downtown Los Angeles, I would like to present some of the pertinent facts and address some of the negative information that has been circulated. I have no financial tie to the arena or the Convention Center.

Let me address the ``concerns'' and questions that have been voiced by persons unfamiliar with the downtown marketplace and its dynamics:

1. How much will the city of Los Angeles have to contribute to help build the arena?

The maximum cost to the city for the land acquisition is $70.5 million. The annual repayment cost on the bond, similar to a homeowner's mortgage payment, will be approximately $5 million to $7 million per year for 27 years, depending on the cost of issuing the bonds. The entire arena's construction cost, an estimated $240 million, will be paid by the Arena Co.

2. Why are the numbers being quoted as a $200 million to $250 million cost to the city?

The opponents of this tremendous opportunity are doing what they can to ``spin'' the story in a negative light. When you buy a $200,000 home, what do you tell someone you are paying? Do you say $200,000, which is the present value of the amount you are paying, or do you add up all your mortgage payments for the next 30 years and give someone that figure? That is what's happening here. Arena opponents are adding up the annual repayment costs over 27 years and then adding on some ``phantom'' costs, including loss of sign rights, which the city is now generating nothing on, to come up with these astronomical figures.

3. Why should the city invest $70.5 million in a sports arena when there are more pressing social needs in the city?

The city is borrowing money, through a bond issue, to invest in an arena that has virtually no risk and unlimited reward. The tremendous return will give the city a better ability to address the numerous pressing and costly social needs in this city. It will give the city an ongoing revenue source to help pay for what is needed.

Some of actual (real dollar) revenues the $70.5 million investment will generate for the city include an increase in property tax sources because the arena will attract new business and new industries; an increase in income taxes paid by the business operations of the arena; an estimated $120 million in increased annual revenue generated by the arena; and more jobs.

4. What about the lost revenue on the North Hall at the Convention Center?

This is the most legitimate point that has been brought up by arena opponents and it should be the most publicized point in this whole debate. What about the $38 million subsidy the city of Los Angeles will pay in 1997, and every year thereafter, to subsidize the loss at the Convention Center each year? What is the city going to do about that?

The Convention Center will never be profitable, and will never attract the number of conventions it needs, without a major hotel. Right now, trade shows generate $350,000 a year in rental income. According to Michael Collins of the Los Angeles Visitors and Convention Bureau, the Los Angeles Convention Center has lost $460 million in Convention Center business - 70 major conventions - because of the lack of a major hotel to service it.

Trade shows will most likely increase due to the arena improving the safety of the area, the additional amenities that will be available for the attendees and the 3,700 additional parking spaces that will be constructed.

5. How do we know that an arena will generate additional business and revenue to the city?

This is not a speculative venture. The city of Los Angeles has met with a number of different cities and has studied the actual economic benefits produced in Phoenix, Cleveland, San Jose, Denver and a number of other cities. There is no question that these arenas have provided these cities exponentially increased revenue, jobs and economic growth.

6. Why should the city ``give'' money to teams/owners who don't need it?

The city of Los Angeles is not giving money to anyone - we are investing the city's money in something that will pay hefty returns. The city will own the property and lease it to the Arena Co.

7. What is the city of Los Angeles ``getting'' for its investment?

In addition to all the tangible financial benefits the city will receive, we will also be revitalizing the center of our city, rebuilding the image of Los Angeles and attracting business and visitors to this market. It will be a safer, cleaner and more attractive destination where people will want to come, visit and enjoy all the cultural amenities that the city has invested in for the past 10 years.

For the sports fans, it is an opportunity to be able to enjoy numerous Kings and Lakers games, as well as other concerts and entertainment events, in an easy-to-access location.

8. What happens to downtown Los Angeles if we don't proceed?

Not supporting this venture will perpetuate the image that the city of Los Angeles is difficult to deal with, unfriendly to business and will kill all efforts the LA Business Team is making to retain and attract business to this city - something we desperately need to do.

The bottom line is this: Does the city of Los Angeles want to risk losing the only opportunity they have to stop the $38 million annual loss of subsidizing the Convention Center, not to mention losing the opportunity to gain all the other economic benefits the sports arena provides? I don't think so.

I sincerely hope not.

MEMO: Kathryn S. Schloessman is senior vice president and managing officer for CB Commercial Real Estate Group Inc. in Los Angeles.

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Photo

Photo: Vacancies galore: The L.A. Convention Center has los t an estimated 70 conventions due to the lack of a large hotel nearby.

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