Following The Money - Part 2: Chula Vista cutting and Chargers not running

Over the next week, Stadium Watch is taking a special look at budgets and financing. The first part detailed how legislators and citizens in Arizona came together to finance their stadium. The second part talks about Chula Vista’s budget crisis and how it affects the proposal.

Timing is everything. So far, time hasn’t been on the Chargers’ side.

When the team approached the city about a new place to play, San Diego was already in the midst of its long battle with downtown development. When the Chargers brought the issue back to life in 2002, the pension controversy two years later moved the team’s needs were moved out of the way so that the city could repair itself. And in the latest phase, Oceanside was deemed not ready to handle the growth required at this time and National City concluded its availability couldn’t match what the Chargers desired.

And now, with the Chargers’ plan as close as it has ever been to reaching a vote, Chula Vista’s budget could knock the Chargers off the clock.

Last year, the city faced a $15 million deficit that put department funding and government jobs on the line. A fire station was almost decommissioned. Spending was suspended across the board. Departments were forced to cut their budgets by 10 percent. Hiring has been frozen. City Manager David Garcia, who had only been in his position for a short time, called the city’s budget problems a crisis.

It didn’t get better in the new year, either. The city wants to cut $3 million more before the start of the 2008-2009 fiscal year to break even, and still faces an $8 million shortfall. Jobs that were saved in the last cut may not be safe this time. The sparkling City Hall campus can’t compare to the dirty mess Chula Vista’s finances are in. It isn’t the best news for someone trying to sell a stadium to voters.

“We are not seeking any tax dollars from Chula Vista for our proposed project,” Chargers special counsel Mark Fabiani said, ”so from a purely financial point of view the City's budget problems should not have a direct impact on the project.”

Chula Vista Mayor Cheryl Cox didn’t shy away from the reality of the budget.

“Property and sales taxes are in a slump, and development fees are not existent,” Cox said in her State Of The City Address. “Budget reductions in the last few months have been painful, and we’re not done yet.”

Property taxes in Chula Vista will only rise by 10 percent this year instead of the expected 14 percent. This is the latest result of the domino-like depreciation of city funds.

It starts with the city’s passion to build in the east. A housing boom meant that the sound of hammers cracking and saws splitting echoed down Chula Vista streets. The fees for this construction are paid for by the city.

When the boom stopped and the mortgage rates shot up, Chula Vista was left with no one buying homes while construction fees still had to be paid. Since people couldn’t afford to live in the homes they had bought, they stayed away from new shopping centers build to withstand Chula Vista’s growth. Permits for construction dropped from more than 3,000 to 600. A city once moving forward was at a standstill.

Is this the place for the Chargers to play the hero and save the day? The Chargers’ financing study is due in the summer, and it will detail how the Chargers plan to pay for a new bay front stadium. Could this new stadium help turn the tide of tax loss that’s choking the city, or would it be another hole in Chula Vista’s levy?

“We hope that our pending financing study will demonstrate that a new stadium and related commercial development will generate new tax revenue for the City of Chula Vista,” Fabiani said.

One of the biggest problems the Chargers face is proving one of their funding ideas can work in the economic climate. The team wants to build homes in stretches of Otay Mesa to help foot the bill.

“By the time the commercial or residential project reaches the marketplace, we hope that the economy will have improved,” Fabiani said. “But it is absolutely true that our ability to finance this project in the next several years will be [dependent] on overall credit market conditions -- conditions that are certainly not very promising right now.”

At the end of the day, the future of the Chargers is in the hands of Chula Vistans hoping their city can find the best-fitting bandage to stop the bleeding. And if the Chargers look like salt instead of antibiotic, their hopes will apart.

“The Chargers will be asking the voters of Chula Vista to support our project,” Fabiani said, “and those voters may be reluctant to vote for an ambitious project if they believe the City is in financial crisis. So the political impact remains to be seen.”