DOWNTOWN ARENA DEBATED; POTENTIAL EXISTS FOR GAIN OR DRAIN.

Byline: Rick Orlov Daily News Staff Writer

As the Los Angeles City Council prepares today to move forward with plans for a downtown sports arena, officials are wondering whether the $240 million project will be a boon or a bane.

Will the city find itself with a white elephant at the northern end of the Convention Center that adds to the lackluster image of downtown? Or will the project revitalize an area critics say is falling into disrepute?

``We don't have anything like this now,'' said City Administrative Officer Keith Comrie. ``It will provide an entertainment facility central to the 12 million people in the region.''

The City Council is scheduled to consider a memorandum of understanding today with Edward Roski Jr. and Philip Anschutz, co-owners of the Los Angeles Kings hockey team, to build the 20,000-seat, $240 million arena on the North Hall site of the Convention Center.

It would serve as home to the Kings and the NBA's Los Angeles Lakers as well as serve as the site for upwards of 200 events a year.

Under the terms of the proposal, the city would advance $70 million to turn over the property to the developers and acquire adjacent land for parking. All construction costs would be paid by Roski and Anschutz.

Under a worst-case scenario, the city could be forced to take over the arena if it's unsuccessful and be required to pay off the bonds at a rate of $6.8 million a year, critics say.

But supporters counter that not enough attention is being paid to the upside, what the project could mean to downtown revitalization.

``The best-case scenario would include rapid development of a retail and entertainment establishment and the development of a hotel,'' said Jack Kyser, chief economist for the Economic Development Corp. ``That, coupled with what else is going on downtown - the Disney Concert Hall, a new cathedral - could spark a major land rush.''

Roski said he has a goal of completing the building in time for the 1999 basketball and hockey seasons in conjunction with a commercial-retail-entertainment center.

He said several entertainment companies have approached him about becoming part of the initial project.

And if all goes well, his aides have said construction on a new hotel with 1,800 rooms to serve the Convention Center area could come within three years.

``These things, if you study them, do truly bring an economic revitalization to an urban area,'' said Roski, adding that similar projects provided significant boosts in Denver, Cleveland and Phoenix. ``In Denver, you saw these old buildings being torn down and new ones put up with people moving back.''

There have been no recent studies done of potential revenue from the facility, but an early report from the accounting firm of Ernst and Young said the arena alone would generate $200 million a year and create 1,800 jobs.

The project received unexpected support earlier this month from an Indiana University professor who has been critical of public subsidies of sports facilities.

Mark Rosentraub, director of that university's Center for Urban Policy and the Environment, who wrote ``Major League Losers'' about public financing of sports facilities, said he felt the Los Angeles proposal protected the city and could serve as a model to other cities.

Rosentraub said the primary reason the city would be protected is that the developers would be responsible for all construction costs, which would prevent cost overruns while encouraging them to make sure the arena is a success.

If just the Kings and Lakers are the only events staged at the facility, he said there would be an average yearly attendance of 1.2 million people. If 180 events a year are held at the facility, he boosted that figure to 2.6 million people, generating more than $212 million a year in business, with the city expected to get about 3 percent of that, or about $6.3 million.

However, David Carter of the USC School of Business, says his concern is that the development is being allowed to go along somewhat haphazardly.

``To make this successful, it has to be part of a broad downtown redevelopment plan that I really haven't seen yet,'' he said.