Walters Says She May Oppose Arena

A key member of the Los Angeles City Council expressed serious reservations Wednesday about the proposal to build a new hockey and basketball arena downtown, refusing to vote for the project during a committee hearing and saying she may oppose it when it comes to the council floor Friday.

City Councilwoman Rita Walters--who represents the neighborhood around the Convention Center where the arena would go, and chairs the special council panel considering the matter--said she is “extremely concerned” about the deal because it leaves the city responsible for $70 million in bonds if the arena fails.

“I am increasingly uncomfortable that we don’t have an exit clause, that it falls back on the general fund. . . . The general fund of the city can’t pay its own obligations,” Walters said at the 90-minute hearing crowded with high-paid lobbyists and business moguls. “If these people pick up and leave, we’re stuck with it.”

Trying to reassure her, staff members said that under such a scenario, the city would get to keep the $200-million facility.

“Just like we have the Coliseum,” Walters retorted, referring to the usually empty football stadium and underused Sports Arena a few miles away in Exposition Park.

The city’s chief legislative analyst, Ron Deaton, and other city staff members said the question of who would be liable for the bonds in the case of the arena’s failure has been the subject of fierce negotiations for months, and that the current deal is the best available.

Officials say the arrangement is “revenue-neutral” for the city, and could eventually result in a profit. Developers have agreed to levy a special surcharge on arena tickets to help the city pay for about $7 million in debt service each year.

“It takes two parties to get an agreement,” pointed out Deaton’s deputy, Stephen Wong.

“That’s right,” Walters said, hinting that she might try to undo the project’s support among her council colleagues before Friday’s vote. “It takes two parties.”

George Mihlsten, a lawyer for the arena’s developers, who also own the Los Angeles Kings hockey team, said there would be no flexibility on the bottom-line responsibility for the bonds.

“We think it’s a fair deal for all parties,” he said. “If we’re in default, they get an arena, a [$200] million arena.”

Despite Walters’ concerns, the project is likely to gain support from a council majority. The detailed memorandum of understanding that lawmakers are scheduled to vote on Friday closely follows the outline that earned votes from 13 of the 15 members--including Walters--in January.

Approval of the memorandum is a crucial step that clears the way for the project, although certain aspects of the deal--including environmental impact reports and agreements on minority-business involvement--still are pending.

“We need [an arena],” Councilman Richard Alatorre, who also sits on the committee, said. “I think there’s enough protection for the city to get back our money.”

Besides Walters’ broad question regarding an exit clause, council members raised several smaller items that officials from both sides said could be adjusted before Friday’s vote.

On a suggestion from Councilman Mike Hernandez, a line will be added encouraging spinoff development in the Pico-Union neighborhood. There will also be a technical adjustment regarding preferred areas for parking lots.

Based on a separate Walters concern, the developers will agree to add open space to replace any portions of Gilbert Lindsay Plaza lost because of the project.

But Mihlsten said there is no flexibility on another item that raised Walters’ ire: whether a large sign on the private arena property can contain advertisements for beer (the council has banned alcohol and tobacco ads from signs on public property).

“I can’t support this beer advertising,” Walters said.

The discussion was disrupted as another council member called for a roll-call vote on the entire memorandum, which is unusual for committee meetings, where most decisions are reached by consensus.

When her name was called, Walters remained silent.

By day’s end, Walters had not decided how she wanted to record her position--or whether she would say “yea” or “nay” during the more important full-council vote Friday.