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Selling the Coliseum

Two lawmakers urge shedding state properties to help cut deficit

2/11/2008

By Judy Lin, Sacramento Bee

Two Republican lawmakers are floating an idea to sell the state's stake in the historic Los Angeles Memorial Coliseum – a move they say would generate hundreds of millions of dollars that could be used to pay state debt.

As California faces a budget hole of $14.5 billion, Assemblyman Chuck DeVore of Irvine and Sen. Jeff Denham of Atwater are reviving a movement to sell surplus state properties for a quick cash infusion.

Conservative lawmakers have long maintained that California should shed its interest in high-value but under-used properties like the 85-year-old stadium, which has lost two NFL teams and recently ran into negotiation problems with neighboring University of Southern California to keep its football team.

"Just get the state out of it," DeVore said. "Why should the state be owning land in the middle of Los Angeles?"

Past efforts, however, have been short-lived because the property is a national landmark encumbered by existing lease agreements, said Pat Lynch, general manager of the Coliseum and Sports Arena. In December, Gov. Arnold Schwarzenegger announced an agreement between the state and Los Angeles Coliseum Commission on lease terms through 2055.

"Selling a partially state-owned landmark would be a difficult chore and to get any value would be even more difficult," Lynch said. "This isn't the first time this has been talked about."

The Coliseum and Los Angeles Memorial Sports Arena are under the authority of the Coliseum Commission, which was formed under a joint-powers act between the city and county of Los Angeles, as well as the state, back in 1945. Located in the 160-acre Exposition Park in South Los Angeles, the two structures sit on parcels of land owned by the state. The city and commission own smaller parcels of the park.

Both DeVore's Assembly Bill 1849 and Denham's Senate Bill 1133 propose to sell the state's share of land beneath the Coliseum and Sports Arena and use the proceeds to pay deficit bonds. The bills propose to dismantle the Coliseum Commission once the properties are sold.

DeVore said he got the idea from his predecessor, John Campbell, now a congressman serving the 48th District in Newport Beach. Campbell, who received a master's degree from USC, said he and other lawmakers had proposed to sell different state assets, including the Coliseum, to deal with a previous state deficit in 2003-04 while he was still in the Assembly. "I thought it was a good idea then, I think it's a good idea now," Campbell said.

The congressman said he revived the idea when negotiations stalled between USC and the commission. Officials say they are now near a deal.

Campbell said USC administrative officials told him the university would be interested in purchasing the Coliseum, where the Trojans have played since the stadium was built in 1923.

USC spokesman James Grant said the university "doesn't have a position" on the bills.

DeVore estimated the state could reap as much as $750 million from the sale, while Denham pegged the value around $400 million.

A 2004 catalog of potential state properties for sale put the Coliseum and Sports Arena between $240 million if sold "as-is" and $400 million if it were to be redeveloped.

"It would be a one-time cash infusion that would reduce our debt," said Denham, who said he drew up his bill independent of DeVore's legislation. "My goal is to pay off our debt."

In the past, Denham has suggested selling other high-value properties, including San Quentin State Prison in Marin County for $500 million.

Caltrans, criticized in the past for being a poor property manager, sold 629 surplus properties between July 2006 and December 2007 for $87.7 million. That money went toward public transit accounts, said Bimla Rhinehart, division chief of right of way.

State officials caution that the real estate transactions are legally and politically complex. Although the Schwarzenegger administration ordered an inventory of surplus state property back in 2004, most of the properties remain in the state's possession.

Sales move slowly even when there's a potential buyer. For example, officials with the Department of General Services said despite the scheduled June closing of a remaining 81 acres at Agnews Developmental Center, the property has not been declared surplus.

Cisco Systems, whose headquarters is next to Agnews in San Jose, has first right of refusal on the property, estimated to be worth $75 million to $100 million. Even once the land is vacated, DGS officials said it could take two years to complete the transaction.