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San Diego Padres, the project contains three hotels, retail and residential. Baseball stadiums
have been a very popular urban development project in the US. In fact, it is “a very sexy thing
in American cities”.20 The project is still in its first phase which include construction of at
least 850 hotel rooms, 600,000 square feet of office space, and 150,000 square feet of retail
space.21 The City Council approved phase I in April 1999. Two DDA’s for hotel development
have been executed so far. A proposal for a third hotel is still missing. A DDA for the mixed-
use development is still in negotiation. Pamela Hamilton who is major negotiator for the city
in the project, stated:
“The ballpark project is very complicated. It is far more complicated than the Horton Plaza project. Horton Plaza
had only been a real estate transaction whereas a ball club is intensively involved in the ballpark project as well
as plenty single developments that are encompassed by the ballpark project. There is a lot more required and the
land covered by the project is considerably bigger.”22
Whereas in the Horton Plaza project the developer required something from the city
(convention center and downtown housing) in addition to the contracted development, it is the
other way around in the Ballpark project. Here, the city requires a lot from the Ball Club to
make the project feasible. Thus, the DDA’s of both projects contain commitments by the
developer and the city that are pertinent to the feasibility of the project.
The investment in the $411 million multiple-use ballpark is shared as follows:
|
Padres/Other private sources CCDC Other Investments/Port City of San Diego |
$115 million $ 50 million $ 21 million $225 million |
|
Project Total |
$411 million |
Consequently, the city is highly financially involved in the project. In contrast to the Horton
Plaza project, the city invests considerably more in the project than the private sector. The city
and the Padres struck a very complicated joint ownership as well as use and management
agreement that highlights the entrepreneurial strategy used by the city to create an
entertainment and sports district in downtown San Diego. According to the Memoranda of
Understanding (MOU), the agreement commits the Padres to play in San Diego for 30 years
or until the ballpark debt is paid off. Thus, this passage provides financial security for the city.
Moreover, the Padres will be responsible for all Ballpark construction cost overruns. The city
will own 70 percent of the ballpark (the Padres 30 percent), whereas at the end of 30 years the
city will own 100 percent of the facility. The Padres will have to pay $500,000 per year to the
city for rent payments. According to the joint use and management agreement, the Padres and
the city share use of the ballpark. Thus, each partner is allowed to organize own events and
will retain revenue from its own events. The city will pay 70 percent or $3.5 million of the
costs for general maintenance and operation, whichever is less.23
As we have seen, responsibilities, financing and management of the project are highly
intertwined. Due to complicated ballpark ownership, use and capital improvement agreements
it is difficult to distinguish between public and private spheres. For instance, the capital
improvements will jointly paid by the partners. The city holds the majority interest (70%) in
the joint venture, while the Padres holds a minority interest of 30%. However, the city will
20 Pamela Hamilton in a phone interview on the 21st of December 2000
21 Agreement to redevelop downtown between the City of San Diego and the San Diego Padres
22 Phone interview with Pamela Hamilton on the 17th of December 2000
23 Memoranda of Understanding: www.ci.san-diego.ca.us.ballpark/mou.html