LOS ANGELES -- Los Angeles moved a step closer to coaxing a pro football team back to the region Monday with the release of a draft agreement between city negotiators and the company planning a downtown NFL stadium.
Officials said the non-binding memorandum of understanding, which still requires a City Council vote, contains taxpayer protections that go further than those initially sought by stadium planner Anschutz Entertainment Group.
The agreement calls on the city to issue $275 million in tax-exempt bonds for the relocation of a convention center hall to accommodate the roughly 72,000-seat venue. The bond amount was down from the $350 million bond issue that AEG had initially sought.
Los Angeles administrative officer Miguel Santana said the negotiating team's main concern was that money to repay those bonds would come from a reliable source and that city savings would not be put at risk.
"What you have before you is a proposal that does exactly that," he told reporters at a news conference.
Under the deal, nearly three-quarters of the annual cost to pay back the bonds would come primarily from property lease payments from AEG to the city and from the city's share of property taxes, which negotiators said can be counted on not to fluctuate year to year.
The rest of the roughly $16.1 million in annual payments over 34 years would come from new tax revenue from stadium activity, although the agreement requires AEG to extend a series of financial guarantees over the course of the project as a safeguard against shortfalls and other risks.
AEG had originally sought to pay back bonds with sales taxes and other new stadium-related revenue that will now flow into public coffers, earning a projected $410 million for the city's general fund over 30 years.
A further protection breaks $80 million of the $275 million in debt into a special type of bond that is financed with a tax on AEG's nearby properties -- such as Staples Center and the LA Live entertainment complex -- and puts the facilities on the line if the company doesn't pay.
"If they don't pay the tax, the city can step in and foreclose on LA Live," the city's chief legislative analyst Gerry Miller said.
Warehouse magnate Ed Roski's Majestic Realty Co. has permits in place to build a separate 75,000-seat stadium about 15 miles east of Los Angeles, in City of Industry.
Neither proposed site has secured a team.
Councilwoman Jan Perry, in whose district the downtown project would be built, said she was eager to begin looking over the memorandum of understanding with a special stadium committee that she chairs and before the full City Council, which is set to vote on the deal in coming weeks.
"This is just one piece of a much larger puzzle," she said.
If the framework is endorsed, the city will later vote on separate definitive stadium-related agreements, such as its development and financing deals and its clearance under state environmental regulations.
AEG president and CEO Tim Leiweke, who has been pushing city officials to take action on the memorandum so he can ramp up efforts to recruit a team, said he was confident the plan would be endorsed by council members and Los Angeles Mayor Antonio Villaraigosa.
"There remains much work to be done ... but approval of this MOU will represent a critical milestone in our efforts to break ground on this project within the next year," he said.
Villaraigosa, meanwhile, released a statement encouraging city residents to participate in the hearings scheduled for the weeks leading up to a vote on the proposed framework.
"Done right, this could be an enormous boost to our local economy, creating jobs, and millions in new revenue," he said.
But he added that there should be no rush to judgment on the deal. "I encourage the public, the council, and stakeholders to engage in a thorough and public debate to ensure we come to a sound agreement for Los Angeles," he said.
Copyright 2011 by The Associated Press