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Casey's Column
City Lease to Boy Scouts of America & ACLU Settlement
The 1995 Charger Contract and the Current "Trigger" Issue

City Lease to Boy Scouts of America & ACLU Settlement
There were several important points that were central to the City Council's decision to approve the recent settlement between the City and the American Civil Liberties Union (ACLU) regarding the lease of city property to the Boy Scouts of America. The settlement limited taxpayers' liability and also allowed the Boy Scouts to maintain their city leases while they challenge the ruling of the federal district court judge over the next few years. Beyond the rhetoric on both sides of the Boy Scout issues, are facts that the public should know.

In 2001, the City Council voted to extend the Boy Scout's lease at Balboa Park for an additional 25 years. The ACLU challenged the lease extension in federal court on a variety of grounds. The primary issue addressed in the Court's summary judgment ruling was whether the lease extension gave a preference or a special benefit to a "religious organization." The City's defense of the case rested on the position that, while the Boy Scouts may follow certain religious principles, it was not a "religious organization" subject to the restrictions in the state and federal constitutions. During the course of the case, however, and without forewarning the City as to its position, the Boy Scouts admitted in court documents that it was in fact a "religious organization." Based upon that admission, Federal Judge Napoleon Jones determined that the Boy Scouts are a religious organization and that the lease was invalid because the process by which it was extended violated both the state and federal constitutions in providing special preference and benefits to a religious organization. The Boy Scouts position that they are a religious organization makes Judge Jones' ruling understandable. Under current case law, no public entity can provide special preference or benefit to a religious organization whether it be a church, a mosque, a synagogue, or the Boy Scouts. It should be noted, however, that religious organizations can indeed lease public property and obtain other government benefits; they must do so however on equal terms with other potential lessees or recipients of such benefits.

Contrary to news reports and letters to the editor, Judge Jones did not find any violation by the City of its Human Dignity Ordinance or any legal violation related to the Boy Scouts' membership policies excluding gays and lesbians. Though these issues are part of the larger social debate and have motivated many letters to the editor, these issues were not a part of the judge's ruling.

Judge Jones' decision was appealed by the Boy Scouts but the appeal was dismissed by the 9th Circuit Court of Appeals. There will now be a lengthy trial and an appellate process on all the remaining issues with respect to the Boy Scout leases at Balboa Park and Fiesta Island.

Under the federal Civil Rights Act, plaintiffs who prevail in such cases are ordinarily entitled to recover their court costs and attorney's fees from the government defendant. Such attorney's fees are not recoverable from a non-government defendant like the Boy Scouts. In this case, the ACLU claims fees and costs of more than $2 million to date, and these are certain to increase significantly during the appeals process in the months and years to come, a bill that would come due to the City only. The Boy Scouts have repeatedly and pointedly refused to support the City in helping to pay any of the potential attorney's fees involved in this case. They want the City taxpayers to continue to argue the case even though they have acknowledged that they are a religious organization and even though they refuse to share in the potentially enormous attorney's fee award that will be ultimately awarded to plaintiffs who have already prevailed in Judge Jones' ruling noted above.

Meanwhile, the settlement agreement between the City and the ACLU ensures that the Scouts can continue to use both the Balboa Park and Mission Bay facilities while the case is in trial and then on appeal, and allows the Scouts to stay in these facilities for the full term of the lease extension if they prevail in court. This concession by the ACLU was an important consideration in the City's decision to accept the settlement.

Equally important, the settlement caps the City's liability for litigation costs and attorney's fees. By the time this case is finally decided on appeal, the ACLU's fees and costs will total millions more than they have claimed thus far. The City's settlement agreement limits the taxpayers' liability to less than $1 million.

In summary, the City's settlement agreement ensures the Boy Scouts' continued use of City facilities until a final legal determination on the lease is made, while limiting taxpayers' liability for what could have been the equivalent of a blank check to the ACLU. The settlement lets the primary parties to the dispute, the plaintiffs and the Boy Scouts themselves, continue the legal battle. The City will abide by the final decision of the court.

Many have strong feelings on both sides of the debate regarding the Boy Scouts and their leases with the City. Without question, each Council member that voted for the settlement had their own reasons. But the majority of the City Council made a prudent decision to protect the taxpayers from further expense while preserving the Boy Scouts' right to defend their legal position and allowing them to stay at Camp Balboa and Fiesta Island until the lawsuit is decided.

Casey Gwinn
San Diego City Attorney

San Diego Chargers
On the second topic, I would like to make some comments regarding the issues with the San Diego Chargers that have been much in the news lately that I think are important for the public to be aware of. These are issues that we have been in discussion with as a Mayor and Council. In Executive Session, I know quite a number of the council members have spoken publicly on their views related to the issues.

I'd like to preface them by saying that there is a history to where we stand today. This all didn't start yesterday. This has been going on for quite some time. The San Diego Chargers and the City of San Diego were in a contract back in 1994. That contract between the Chargers and the City actually should have run through 2003, through the 2003 season. That would be right now.

In fact, the prior mayor and prior council and prior city manager made a decision in 1994 to begin negotiations with the San Diego Chargers for a new contract. That contract was adopted on May 30 of 1995 by the prior mayor and city council.

That contract involved the renovation of then-Jack Murphy Stadium to become Qualcomm Stadium and that contract included the so-called rent credit, what is now referred to as the infamous "ticket guarantee" -- by anybody's measurement, a very poor public policy decision by the prior mayor and city council as it has played out and as this council has now had to deal with it in the fallout of what was decided back in 1995. The contract that is now in place extends through 2020. The so-called "ticket guarantee" extends through the pre-season games of 2007.

The issues that are before this council right now and before the people of San Diego really relate to the fact that there was a negotiation provision in that 1995 contract, a provision that according to Dean Spanos, who put it in writing in 1997, was intended only to protect the Chargers from severe financial hardship, and in fact that would be the only time the renegotiation provision would be triggered is if in fact the Chargers were suffering serious, or in his words "severe," financial hardship. Nevertheless, the Chargers sent the so-called "trigger notice" under that contract in March of this year. There was no documentation or substantiation to that claim that the trigger had been met, and we have not yet been able to verify the facts and figures to this very day. But that notice was sent.

Pursuant to the task force that this council created and the recommendations that they made, the City agreed to negotiate in good faith with the Chargers regardless of whether or not they had actually legally triggered under the renegotiation provision of the 1995 contract, and I would say that it is fair to say that we are extremely disappointed that the Chargers now appear to have embarked on a strategy of negotiating publicly and with third-party community individuals and organizations rather than negotiating directly with the City, which is what they had agreed to originally.

It is also fair to say that the picture that is being presented by Mr. Fabiani and the Chargers is not a complete picture of the issues that are before the taxpayers and the public. At best, the statements that have been made by Mr. Fabiani are misleading.

The real challenge that we have at this point is to educate the public on the status of the negotiations that have now been released publicly by the Chargers, though that was not the original agreement that they had with the City. The Chargers sent the trigger notice, from my perspective as the City Attorney, in an effort to put the City in an untenable position, in an attempt if you will to force the City to prematurely perhaps consider building a new stadium. The City has been negotiating nevertheless with the Chargers for seven months now in good faith, and even though I and members of the negotiating team have not come to a conclusion as to whether or not the trigger has been met, and in fact we have serious questions as to whether it has been met, we nevertheless have moved forward with good faith negotiations. We've committed a significant amount of time and money to working cooperatively with the Chargers on the issues that are before us. The City has made a number of offers that can only be described objectively as reasonable offers to deal with the ticket guarantee.

The goals that the task force had identified were basically these: the possibility of redeveloping the Qualcomm site, improving the City's financial position and keeping the Chargers in San Diego, though to say the least the one of greatest interest to the public, and to be sure in the short term this Mayor and Council, is trying to do something about the incredible cash drain that was created by this ticket guarantee from the 1995 contract.

And even though this Council has taken no positions related to the issue of redevelopment of the Qualcomm site, I think it's clear to say that this Mayor and Council and this City Manager and this City Attorney believe very strongly that we would like the Chargers to stay in San Diego, to be able to do that in a fiscally responsible way, protecting the taxpayers. We would like the Chargers to stay in San Diego. They're very much a part of San Diego, have been and we hope will be for many years.

But nevertheless, it becomes very clear to me that the Chargers have made every effort to in some way terminate the entire contract that they are now under in order to get out from under the back end of this contract. The first ten years gave the Chargers great benefit with a rent credit. The back end of this contract requires market rent after the pre-season games of 2007. So no sooner do the Chargers get the benefit of the front end of the contract then immediately they start talking about getting out of the back end of the contract when the taxpayers could actually be made whole again from all of the money that has gone to the Chargers since 1997.

So that's the difficult situation that we find ourselves in at this point. We have taken the position that we would like to maintain all of our options in protecting the taxpayers. The Chargers have taken the position, and I fully understand it, that they want to maintain all of their options, including their ability to leave San Diego and go somewhere else. They originally offered, the Chargers did, to eliminate the ticket guarantee for 2003 and to pay $2 million in rent and agree to binding arbitration on the trigger and the so-called "termination fee," the issue of what amount of money they would have to pay if they actually leave San Diego if in fact they have a right to leave under the renegotiation provision of the contract.

After consideration of a whole variety of scenarios, this Mayor and Council, after diligently thinking through the issues and evaluating them with the taxpayers' interests in mind, made the decision that we were willing to eliminate the ticket guarantee for two years -- not just one year, we wanted two years. We wanted to have the Chargers pay $2 million rent and we would agree to binding arbitration on the termination fee, which is the core issue at this moment in the discussions -- it's not the trigger.

The trigger is not the heart of the issue before us right now, it's simply what can we deal with in the interim that will allow them, the public, to think about these issues for the next two years as we in good faith try to keep the Chargers here and do what's fiscally responsible.

We wouldn't agree to binding arbitration on the trigger. There's a whole variety of complex legal reasons for that, but I would sum it up by saying that we believe quite strongly that in a court of law, we would have the opportunity to have full disclosure on the finances of the San Diego Chargers that would tell us how much money they really make, how much money they've made that relates to the so-called trigger provision in the contract and whether in fact the trigger's been met. And to this day, we have none of that information. So it's very difficult to even consider something like arbitration on that matter when in fact we believe that the people of San Diego in the form of a jury trial would probably be in the best position to decide whether or not the Chargers have the right to leave the city that they committed themselves through 2020 in the 1995 contract.

I think it's fair to say that we will not compromise our legal position on the charter, because we do not believe it is in the best interests of the taxpayers, and we represent the taxpayers. The Chargers do not represent the taxpayers. Nor does the Chamber. Nor do other community leaders who got involved in this in a third-party negotiation fashion. That is the responsibility of this Mayor and this City Council.

With all that said, I will still say that I want it to be very clear publicly that we want to continue good faith negotiations. We believe that we have a responsibility to the people of San Diego to continue good faith negotiations, and we would like to do that and be able to ensure that the Chargers stay in San Diego.

I do just want to say a couple of things, though, on a personal note, as I have reflected on all of this over the last seven months. And it's probably my right to say this. I took office the first week of December of 1996, a year and a half after the Charger contract was adopted and I, like everyone up here, inherited that contract. There's only one piece of litigation related to the contract thus far, and it was a piece of litigation that I personally argued in court. The issue in the litigation was not whether or not the contract was good or bad for the people of San Diego, whether or not it had provisions that protected the taxpayers or whether it didn't; the legal issue was whether or not the prior mayor and city council had entered into a binding contract with the City of San Diego and the Chargers, and the answer to that question from a judge in the San Diego Superior Court on February 21 of 1997 was "Yes." Good or bad, it was a legally binding contract on the City and the Chargers. So I've been dealing with this issue for a very long time.

The spin that has been put on this by the Chargers' public relations person, who has been working day and night issuing statements attempting to spin public opinion and community organizations, the spin that has been put on it would seem to convince the public or attempt to convince the public that the trigger issue is at the core of these negotiations and that somehow if we don't come to an agreement about how to figure out what the trigger provision means, we can't possibly reach a resolution. It couldn't be further from the truth.

As we sit here today, there is nothing that prevents the Chargers from doing the right thing. They can simply suspend the ticket guarantee. They have made tens of millions of dollars off the ticket guarantee since 1997. They can simply suspend it. There doesn't need to be a deal to do that. They can simply say it's in the best interest of San Diego, it's in the best interests of the taxpayers to simply eliminate the ticket guarantee if they want to create an atmosphere that says, "We're staying here no matter what, and we're committed to this community. Let's talk about what we can do to keep us here."

I was deeply troubled to see the Chamber of Commerce and the business labor community get involved in this. I believe that they thought they were doing the right thing. But when I get a statement from Mr. Fabiani in which the Chargers accept without qualification the proposal made by the leaders from labor, business and the community, it would be almost comical if it wasn't the taxpayers money at risk. The Chargers go to this coalition, they tell them what to say, the coalition then says to the Chargers here's the offer and the Chargers immediately accept it. And they haven't even been in the negotiations that have been going on for all these months.

The reality is that it is far more complex than that, and that the issues about the taxpayers' responsibility in this and the taxpayers' liabilities have to be considered, and that's the job of the Mayor and City Council. The irony of the whole thing is that the offer that the Chamber made actually was worse for the taxpayers than the offer that the Chargers themselves had made. So it actually got worse once the Chamber got involved in this.

So I simply want to make it very clear that we believe the public needs to understand the process, and I will say personally that I would like the public to know that this Mayor and this Council continue to act with incredible diligence and incredible thoughtfulness in a very difficult set of issues that they didn't create in a mess they didn't make that they're trying to resolve. And it doesn't help anyone in these discussions to turn this into a public relations battle, which is being waged by Mr. Fabiani and the Chargers now for quite some time, instead of coming to the table in good faith and reaching a resolution that allows us to continue this discussion in the months and years ahead if the Chargers want to stay in San Diego. Thank you, Mayor.

The 1995 Charger Contract and the current "Trigger" issue:
Will the Chargers stay? Will the Chargers leave? Will they ever have a winning season again? Will we end up in litigation or will we be able to successfully renegotiate the nightmare 1995 contract? I don't know the answers to all those questions.

I am, however, sure of this. This Mayor and Council will act with integrity and honor. They will be thoughtful, careful, and diligent. They will represent the taxpayers and the voters well in this process. My staff, as well, will act professionally and aggressively, on behalf of the City, enforcing what rights we do have under the Charger contract, and participating fully in re-negotiating the contract. History will not repeat itself.

In May, 1995, Mayor Susan Golding and the San Diego City Council voted to approve the now infamous Charger Contract. There was great fanfare in the wake of the Chargers having recently gone to the Super Bowl in January, 1995. But lost in the midst of the euphoria was a critical analysis of the actual terms of the Charger contract.

Eighteen months later, I took Office as the City Attorney of San Diego. My background and my professional passion were focused on helping hurting families in San Diego, families victimized by domestic violence and child abuse. But when I took Office, suddenly I was in the middle of the Charger contract controversy because construction was beginning based on the 1995 Contract terms that included a major remodeling of Jack Murphy Stadium. Indeed, though major demolition did not begin until December 30, 1996, the initial construction efforts began at the end of November, 1996.

My vision for the City Attorney's Office was and continues to be for an Office that is committed to proactive lawyering, a focus on early intervention, and a community outreach philosophy. Yet, within days of taking over the leadership of an Office of over 325 dedicated public servants, I was in the eye of the storm related to the Charger contract and Bruce Henderson's new lawsuit challenging the legality and finality of the 1995 contract.

With the support of Assistant City Attorney Les Girard and the outside counsel support of attorney Charlie Bird at Luce, Forward, Hamilton & Scripps, we went to court to deal with the legally unfounded allegations of Mr. Henderson. I held public forums to explain the extremely misunderstood contract. There was much anger and confusion. Many were mad about the so-called "ticket guarantee." Many were mad about the perceived misrepresentations by the Mayor, some members of the Council and the business community related to the contract.

My goal in holding public hearings was not to defend the contract. In fact, I said publicly how offensive the contract was in many respects. But I said that it was a valid, binding contract. By January, Henderson was calling for construction to stop and, in fact, seeking a court order to stop construction. The upcoming season of the Padres was in jeopardy and the 1998 Super Bowl was in jeopardy given the tight time line on the renovations. But more importantly, Mr. Henderson was wrong in each and every legal argument he was making. While I agreed with him on the bad public policy underlying the 1995 contract, the court room was not the place to argue about an otherwise legal and binding contract entered into by the City eighteen months earlier.

On February 21, 1997, Superior Court Judge Anthony Joseph ruled in the City's favor and found no merit to any of Mr. Henderson's legal arguments. I personally argued much of the case. Mr. Bird argued the rest of it. The City Attorney's victory in court solved nothing related to an unwise city contract, but it allowed construction to go forward. The renovation of the stadium went forward and in January 1998, the construction was completed in time for the Super Bowl.

The public anger briefly subsided over the issues surrounding the Charger contract. But the anger would eventually return. Once the infamous "ticket guarantee" kicked in, and the Chargers had losing seasons (over and over!), the costs to the City mounted and the public frustration rose to flood stage levels.

Now, the focus on "ticket guarantee" issues has shifted to the so-called "trigger clause." The trigger clause, found in Section 31, allows the Chargers to send a notice to the City based on a complex formula, saying that their expenses have exceeded a pre-determined formula and therefore they can negotiate with the City to "offset the impact on the Chargers of the Triggering Event." The Chargers Task Force described the trigger clause in this way, "For purposes of analyzing the leverage of the Chargers as against the City, the so-called "trigger" clause is crucial. Section 31 of the Contract, entitled "Renegotiation Rights," provides that if a certain financial ratio called a "triggering event" occurs, the Chargers may send a notice to the City demanding renegotiation of the contract." The Task Force Report is available on the City's website at www.sandiego.gov.

While the legal issues are complex, the Mayor and Council, on March 18, 2003, voted 7-2 to direct the City Attorney and the City Manager to begin negotiations with the Chargers even while preparing an outside counsel-based legal team if litigation with the Chargers becomes necessary. Whether people oppose or support the Chargers' future in San Diego, this is a wise course of action for the City. Neither I nor anyone else knows how this will all sort out.

However, we have very experienced city staff involved. Indeed, Assistant City Attorney Les Girard's experience rivals many nationally recognized consultants in dealing with professional sports issues. We also have nationally recognized experts and consultants to assist us in this process. I hope the Chargers stay in San Diego many years to come. But at the end of day, whether the Chargers leave or the Chargers stay, we will be faithful to the task of doing our job with integrity and excellence.

Casey Gwinn
San Diego City Attorney

   
 
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