The city Monday approved a two-year lease extension for San Diego State University to continue use of SDCCU Stadium, meaning the college has secured a home for Aztecs football games in 2019 and 2020.

The City Council voted 6 to 1 in favor of the lease extension, with Councilman Scott Sherman the only dissenting vote. Council members Chris Cate and Chris Ward were absent.

Established in 2009, SDSU’s stadium lease was set to expire at the end of 2018. Prior to the meeting, the university had agreed to an annual rent increase from $1 a ticket to a flat fee of $1.1 million plus concession and parking revenue for seven Aztecs games. The new terms amount to a net annual revenue gain of $1.7 million based on last year’s figures.

The agreement was first considered at the end of July by the city’s Smart Growth & Land Use Committee, which opted to send the deal to the full council without its recommendation. The committee also instructed staff to negotiate better terms.


Terms presented to council on Monday were the same, however, with the university’s top brass recommitting their intention to help book additional revenue-generating concerts and events for SDCCU Stadium and the surrounding parking lot.

“We understand that the decision will require continued financial investment in the stadium, and coming from a public institution, where we’re resource driven, we appreciate the investment from the city,” Adela de la Torre, the new president of SDSU, said at the council meeting. “I have asked my vice president for business and financial affairs … Tom McCarron to collaborate with city officials to increase event opportunities to address revenue concerns.”

McCarron, who also spoke, highlighted a strong relationship with event promoter Live Nation, suggesting the university would have an ally in its efforts to fill up the stadium’s calendar. No events other than a five-game spring football contract with Legendary Field Exhibitions are currently booked for after the first of the year as city leaders had planned to shutter the stadium to cut costs.

The city’s operating deficit for fiscal 2018, which ended in June, was $3.3 million. Revenue far exceeded initial budget projections, though the year was characterized as an outlier.


Under the terms of the renegotiated lease, San Diego will lose an estimated $5.6 million in fiscal 2020 and fiscal 2021 on stadium operations, Charles Modica, the city’s fiscal and policy analyst, said in a report issued last week by the Office of the Independent Budget Analyst.

Monday, council members Sherman, Georgette Gomez and Mark Kersey acknowledged the financial strain of keeping the stadium up and running. Only Sherman voted against SDSU’s lease extension, with the others conceding that the deal was about more than money — or sports.

“It’s about education,” said Gomez, who had initially directed staff to negotiate a better deal for the city. “It’s very important that we don’t miss that focus.”

Sherman, however, questioned what staff had done to bring more favorable terms to the table.


“I don’t see how this is any different than what we sent you back with,” he said. “San Diego State just built a $2 million locker room, but we can’t get another million or two out of them to get to where the taxpayers break even?”

Kersey, who said he was torn between his support for the Aztecs and for taxpayers, asked for a “reopener provision” that would allow the city to revisit the deal after the upcoming election.

This November, voters will be asked to consider two separate ballot initiatives, SoccerCity and SDSU West, which each vie to redevelop the city’s 166-acre Mission Valley stadium site with housing, commercial projects, a new stadium and a public park along the San Diego River. If the measures each get more than 50 percent of the vote, the one with the highest level of support will win.

Kersey expressed concern that, should SDSU West prevail, there would be an interim period between the end of the lease extension and the completion of stadium construction not covered by the two-year extension. He asked for the addition of a clause that would allow the city to renegotiate the lease terms once election results are certified. SDSU’s CFO McCarron agreed to the provision and, after a brief recess, it was added to the motion put forth by Gomez and passed by council.


For the SoccerCity camp, Monday’s decision underscored what it sees as a financial kink in the SDSU West proposal. That plan calls for the university to buy the site from city at fair market value.

“This was the first opportunity for SDSU West to live up to their promise of ‘no cost to taxpayers,’ and they failed miserably,” said Nick Stone, a partner with the investor group behind SoccerCity. “This is a preview of what’s to come if SDSU West passes: more cost to taxpayers, but on a much grander scale.”

The university isn’t behind the ballot measure, which is instead backed by a booster group of alumni known as Friends of SDSU. But the university has discussed its aim for site, should it win the privilege to negotiate with the city for the land. The most recent vision includes plans for a a technology park modeled after what Georgia Institute of Technology has done in Atlanta.


Business

jennifer.vangrove@sduniontribune.com (619) 293-1840 Twitter: @jbruin


UPDATES:

6:45 p.m.: This article was updated with additional details.

This article was originally published at 4:05 p.m.