Mission Valley Stadium & Arena Development Proposal

MISSION VALLEY STADIUM & ARENA DEVELOPMENT PROPOSAL

SPORTS & ENTERTAINMENT ANCHORED TRANSIT ORIENTED MULTI-USE URBAN VILLAGE

HOK SPORTS – Proposed San Diego Chargers Stadium – Citizen’s Task Force on Charger Issues

PROPOSED & PREPARED BY:

JEFFREY M. RICE

CB RICHARD ELLIS, INC CAPITAL MARKETS DEBT & EQUITY FINANCE

© CB Richard Ellis, Inc. (2007). All Rights Reserved. The information and content contained herein is strictly confidential and The information contained herein is proprietary professional literary and intended for the exclusive use of CB Richard Ellis, City of San Diego, architectural work product. The information contained herein is protected County of San Diego, A.G. Spanos, Chargers Football, LLC, National by international copyright laws as a collective work and/or a compilation, Football League, Major League Soccer, and Sports Arena Group 2000. containing literary and architectural work including pictorial and graphic work. The unauthorized disclosure, duplication, reproduction or dissemination of the information contained is subject to civil penalties and liabilities. Any duplication, reproduction, transmission or dissemination without the express written permission of CB Richard Ellis is strictly prohibited, and subject to civil and criminal penalties. EXCLUSIVE REPRESENTATION

Upon acceptance and agreement of the principles and content of the DISCLAIMER proposal contained herein, the parties involved hereby agree to engage CB Richard Ellis to represent all of the parties involved in negotiating the The information contained herein has been obtained from sources terms of a mutually acceptable agreement for the development of the deemed believable. While we do not doubt it accuracy, we have not existing stadium site in Mission Valley for a new football stadium and verified it and make no guaranty, warranty or representation about it. arena/ convention center complex through a tiered master ground lease and sublease structure. It is your responsibility to independently confirm its accuracy or completeness. Any projections, opinions, assumptions or estimates are The parties will not seek to circumvent the representation of CB Richard used for example only and do not represent the current or future Ellis through direct communication amongst the parties with the intent to performance of the property. exclude or avoid representation and compensation.

The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. COMPENSATION

You and your advisors should conduct a careful, independent The parties shall be responsible for compensating Jeff Rice and CB investigation of the property to determine to your satisfaction the Richard Ellis for their services in the event the parties reach a mutually suitability of the property for your needs. satisfactory agreement; receive voter approval; and commence a ground lease. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the CB Richard Ellis shall be entitled to a brokerage fee equal to 5.0% of the property. value of the ground lease from the City to Master Developer to be paid in three installments, as follows: 1/4 at agreement of the parties; 1/4 The pro forma income and expenses set forth in this investment upon voter approval of the propositions; and 1/2 upon lease package are estimated projections based on certain assumptions, commencement. stated or not. In the event, no mutually acceptable agreement between the parties is You and your advisors should develop independent cash flow accepted and approved, the parties shall not be responsible for any projections and conduct other financial analysis as well as make an compensation to CB Richard Ellis. independent investigation of the property prior to making an investment decision.

The information contained herein has been obtained from sources deemed believable. While we do not doubt it accuracy, we have not verified it and make no guaranty, warranty or representation about it. It is your responsibility to independently confirm its accuracy or completeness. Any projections, opinions, assumptions or estimates are used for example only and do not represent the current or future STADIUM & ARENA performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct DEVELOPMENT PROPOSAL a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

TABLE OF CONTENTS

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

EXECUTIVE SUMMARY CITY ISSUES

OBJECTIVES Qualcomm Stadium is owned and operated by the City of San Diego. The Chargers utilize Qualcomm Stadium under an amended Partial The Mission Valley Stadium & Arena Development Proposal Use & Occupancy Agreement until 2020 which provides for annual (“Proposal”) seeks to mutually satisfy the objectives of the San Diego rent of $2.5 Million, offset by ticket payments and concession revenue, Chargers and the City of San Diego: with no obligation for reimbursement of utilities or operating expenses. The agreement also allows the team to relocate after 2008 and pay a • The San Diego Chargers want a new stadium to generate more termination fee to the City. revenue, become more financially competitive with other NFL teams, and provide a better entertainment experience for fans. The City is currently subsidizing operations and use of the stadium by incurring losses of $2.3 Million and stadium bond payments of $5.7 • The City of San Diego seeks to keep the Chargers in San Diego; Million annually, as well as transfers from the Sports Arena ground increase revenues to the General Fund; decrease budget expenses; leases of $3.6 million and TOT funds of $3.0 Million. The City does not and achieve a market return on the value of the stadium land. receive any direct rent from Charger Practice Facility. The total annual cost to the City is $14.6 Million.

STADIUM, ARENA & CONVENTION CENTER OVERVIEW As a publicly owned property, the 166 acre stadium site in Mission Valley generates no property tax revenue. The “as-is” unimproved and The Chargers have proposed building a new state-of-the-art football un-entitled market value of the stadium land is estimated to be $100 stadium with 65,600 seats (Expandable to 70,000 for Super Bowls), 120 Million. luxury suites and 8,600 club seats at a projected cost of $600 Million. Under the terms of the Sports Arena ground lease with the Hahn Arena The proposed Charger football stadium will host 10 NFL games, 6 Aztec Group until 2017, the City is receiving $400,000 in ground rent and no games, Holiday Bowl, Poinsettia Bowl, major concerts, and thrill events property tax revenue. The “as-is” unimproved and un-entitled market from August to January with estimated attendance of 1.1 Million. value of the 60 acre Sports Arena site is estimated to be $40 Million.

The Sports Arena facility in the Midway District hosts over 100 events annually with attendance over 800,000. The 40 years old facility is STADIUM PROPOSALS inferior compared to other arenas in Southern California and does not have the seating capacity required for major concert tours; the arena is Five years ago, the Chargers submitted a proposal for a new stadium unable to support or attract professional sports franchises due to the and mixed-use development as a 50/50 public-private partnership and lack of luxury suites, club seating and the limited ability to generate $200 million of public debt. The Citizen’s Task Force on Charger Issues revenue from advertising, sponsorship and branding. (“Task Force”) reviewed the use & occupancy agreement and the new stadium development proposal. The Task Force determined that the With 32 Million visitors and 16 Million overnight guests annually, San current operating agreement was financially unfavorable to the City and Diego is the second most visited city in California and seventh most concluded that the new stadium proposal should not be accepted. The visited destination in country. San Diego is the 10th most popular Task Force submitted a set of recommendations for accepting any convention destination in the country, and the leading choice in proposal for a new stadium and development of the stadium site. California. The San Diego Convention Center annually hosts 75-80 major conventions with 70%-75% occupancy and attendance exceeding The Chargers submitted a revised stadium & development proposal in 1 Million which generates $1.56 Billion in regional economic impact and 2005 which was not accepted by the City. The Chargers are pursuing tax revenues of $25 Million. negotiations and feasibility studies with the cities of Oceanside and Chula Vista as potential locations for a new stadium.

ECONOMIC & FINANCIAL ISSUES DEVELOPMENT ISSUES

Stadium construction costs continue to escalate. Recent NFL stadium The City is not willing to donate or sell the stadium site at this time. Any deals have required substantial equity investment from team owners, proposal involving the stadium land will need to be structured as a long the NFL G-3 fund and fans in the form of permanent seat licenses term ground lease. The City has expressed a requirement that any deal (PSL), as well as major public subsidies. Many stadium projects are must achieve a fair market return on the value of the land. 60%-70% funded by the public through new taxes or tax increases on sales, hotels, rental cars, liquor, and tickets. The remaining funds of the The City is encouraging any proposed developments close to trolley NFL G-3 Fund have been already committed to other stadium projects. stations to incorporate the “City of Villages” concept which allows potential developments to benefit from increased residential density and Taxpayers in San Diego already pay a significant tax burden and reduced parking requirements for commercial properties. City parking California law would require voter approval for any new taxes or tax regulations will require 18,500 parking spaces for 65,600 seats near a increases. The public has expressed a negative response to proposals trolley station (1 space / 3.53 seats). for new taxes or tax increases for new sports facilities, and approval of any measure involving an increased tax burden is unlikely. A year round destination is needed to attract major retail and restaurant tenants. A football stadium by itself will not generate sufficient visits to The City has major budget constraints and is focused on other priorities. generate the sales volume or business activity levels required to be Fiscal issues will not allow for public funding of a new stadium at this profitable and pay market rents. time. The City receives no property tax revenue from the site and is incurring substantial operating expenses and bond payments. The combination of a stadium, arena and convention center sharing the same site in close proximity to one another would provide the year A new stadium for football only hosting 20-30 events from August to round attraction to generate the number of visits, sales volumes, and January will not provide sufficient revenue to offset operating costs to levels of business activity required to attract and retain retail, restaurant economically justify the costs of construction. Any new stadium will need and office tenants, as well as support the occupancy and room rates to increase the number of events and annual attendance. required for hotels.

Major League Soccer (MLS) is growing in popularity and increasing The population of San Diego continues to increase and apartment attendance and TV viewership. MLS is expanding the number of construction has failed to satisfy demand for housing units. San Diego franchises and San Diego is viewed as a good potential location for a State University is located 2 miles from the stadium and is directly linked future team given the strong interest in the sport among the youth and by the trolley and bus transit. For many years SDSU has been facing a Hispanic demographic groups. critical shortage of student housing units.

Soccer has different seating configurations and TV camera angles than Structured parking is far more expensive to construct and operate than football, but can be reasonably accommodated in a football stadium. To surface parking. Parking usage, occupancy, and rates vary between be a profitable franchise, MLS team owners require similar revenue weekdays and weekends, days and nights, retail and office uses. sources as NFL teams including luxury suites, club seating, advertising, parking, and concessions. Part of the stadium site is located in a Flood Plain and another portion of the site is contaminated by underground gasoline seepage from the Given the history of local sports franchises failing or relocating, it is Mission Valley Terminal Facility. These issues must be incorporated into unlikely that will San Diego attract a sports franchise as anchor for a any proposed development plan. new arena. While the Sports Arena is old and inferior, the public still needs a major indoor events facility for large concerts, ice events, Developers, property owners and lenders prefer fee title not leasehold hockey, circuses, family events, thrill/motor events and sporting events. estates.

SUMMARY OF DEVELOPMENT PROPOSAL SUMMARY OF DEAL STRUCTURE

A sports and entertainment anchored transit oriented multi-use The City will ground lease the stadium site to a Master Developer for 99 urban village (“Project”) is proposed to be developed upon the years with the ground lessee’s right to purchase the land at fair market stadium site. The Project will anchored by a new 65,600 seat football & value after 40 years and upon satisfaction of public and private debt soccer stadium, and a 20,000 seat indoor arena and convention center obligations. The ground rent will be equal to the annual debt service converted from the shell of the vacated Qualcomm Stadium. cost of the refinanced 1997 stadium bonds. The City will contribute the land beneath the stadium and arena with reversion rights upon The stadium and arena/convention complex will provide a year round demolition or abandonment of those facilities. sports and entertainment destination for the San Diego region which is projected to host over 200 events annually and attract 3 Million The Master Developer will subdivide the site into individual development attendees. The sports & entertainment complex will justify the customer parcels, and sublease the parcels to developers. The sublease rent from traffic, sales volume, and tenant demand required to support the the commercial and residential developments will act as the source of development a multi-use project comprised of mixed-use properties income to support the cost of the infrastructure, parking structures and a incorporating retail, restaurants, office, hotels, apartments and student portion of the stadium and arena/convention complex. housing. The incremental tax revenue received from property taxes, sales taxes The Project will be composed of twenty individual developments to be and transient occupancy taxes resulting from the development will constructed in three phases over a 15 to 20 year period. The Project provide the source of funds for payment of the public debt and provide will be comprised of: an entertainment retail center with a multi-plex income and a return on investment for the City. cinema, Jumbo-Tron center stage, sports bar, arcade & bowling alley; a mixed-use lifestyle retail center with offices; a neighborhood shopping The $600 Million stadium will be privately developed, owned and center with apartments; a student housing project with retail stores; operated by a non-profit corporation. Over 50% of the construction cost mixed-use retail & office buildings; apartment complexes; limited service of the new stadium will be funded by equity with 30% obtained from the hotels; extended stay hotel; mid-rise office buildings; high-rise office proceeds from the sale PSLs to fans, and 20% provided by the towers; and, a high-rise hotel adjoining the convention center. The Chargers, NFL and MLS franchise. Long term private debt (34%) will be Project incorporates three parking structures containing 15,500 spaces supported by stadium operations including rent, naming rights, with two surface parking lots for tailgate parties, tailgate parking along advertising, and concessions, as well as parking and sublease income. the street, and tailgate parking on the grass of the park. Public debt will constitute 16% of the total cost with the City and County sharing equally in the costs of providing $100 Million in bond proceeds. The pedestrian friendly Project will separate people and bicycles from vehicles through the extensive use of plazas, walkways and sky-bridges The $190 Million conversion of the outdoor stadium into an indoor arena over traffic. A river walk and bridges will integrate the Project into the and $75 Million construction of a small/mid-size convention center will Mission Valley trail system. The Project include a 14 acre community be privately developed, owned and operated by a non-profit corporation. park along the San Diego River with picnic/BBQ areas, soccer/football fields, OMBAC rugby field, basketball courts, sand volleyball, and dog Equity from the Hahn Arena Group and proceeds from the sale PSLs to park. A children’s park with a child care center is located at the trolley fans will comprise 10% of the construction cost of the arena/convention station, and a local neighborhood park and dog park are situated in the complex. Long term private debt will supported by arena and convention residential sector. operations including event rent, naming rights, advertising, and concessions, as well as parking and sublease income. The $50 Million Upon completion of the third phase, the project will contain 800,000 SF in public debt provided by the City from incremental property taxes and of retail space, 2 Million SF of office space, 1,500 apartments, 200 TOT funds will constitute only 20% of the total cost. student housing units, and 1,000 hotel rooms. At stabilization the total market value of the 5.5 Million SF Project is estimated to be $1.5 Billion.

FINANCIAL BENEFITS TO CITY & COUNTY RETURN ON INVESTMENT TO THE CITY

The Proposal will eliminate the cost of the 1997 bonds by the end of The projected $7.9 million in net revenue and cost savings represents a 2009 and significantly reduce the operating losses of the stadium 7.9% annual return on investment of the estimated “as-is” market value incurred by the City. Upon completion of the new stadium, the City will of the stadium land of $100 Million. eliminate all operating losses from the stadium. If the City wants to receive the financial benefits of the ground lease and The City will gain $5.7 Million in revenue to the General Fund by ground future land sale proceeds in the near term rather than wait 40 years, the leasing the stadium site and refinancing the 1997 bonds. Further City is able to sell the leasehold interest to investors at an estimated amendments to the Use & Occupancy Agreement with the Chargers will market value of $150 Million. increase net revenues and expense reimbursements received by the City for the stadium and practice facility and reduce the operating losses In consideration of doing nothing while continuing to incur the operating to near break-even. losses and bond debt, the City will lose a total of $140 Million until the Use & Operating Agreement expires in 2020 and bonds maturity date in The City and County currently receives no property taxes from the 2027. The present value of the operating losses is projected to be a property. Development of the Project will generate revenue to the City negative $73 Million loss. from property taxes, sales taxes and hotels taxes, and from property taxes to the County. If the City decides to do nothing and allow the Chargers to relocate, receive the termination fee, refinance and recast the balance of the Upon completion of Phase 1 in 2012, the City will generate $4.2 Million stadium bonds, and then develop the stadium site under a ground lease in revenue; by completion of the stadium and Phase II, the City will in accordance with densities and building heights required by the generate cumulative revenue of $5.9 Million; and upon completion of the Mission Valley Community Plan, the City is projected to receive over arena/convention center and Phase 3, the Project will generate more $700 Million in revenue over 40 years with a net present value of $186 than $8.9 Million in tax revenue to the City annually. Million.

The County will generate $2.9 Million annually in property tax revenue By adopting this proposal and allowing the Project to be developed upon completion of the stadium and Phase II in 2015, and $3.9 Million in under the ground lease structure and providing $100 million in public tax revenues upon completion of the Project. debt for the stadium and arena/convention complex, the City is projected to receive over $1 Billion in revenue over 40 years with a net The $50 Million in public debt issued by the City for the stadium is present value of $383 Million. projected to cost $3.9 Million annually; the $50 Million in public debt issued by the City for the arena/convention complex is also projected to In comparison with the alternatives, the proposed Stadium & Arena cost $3.9 Million annually. The City shall receive after debt net tax Development Proposal provides more than five times the value to the revenues of $2.8 Million annually. City than continuing the current situation and twice the value to the City than allowing the Chargers to relocate and developing the stadium site The $50 Million in public debt issued by the County for the stadium is in the future. projected to cost $3.9 Million annually. By adoption of the Proposal by the City and approval of the voters, the The combined sum of the after debt net tax revenue, and savings from City will increase revenues by $5.7 Million in 2009, reduce operating the elimination of 1997 stadium bond payments and stadium operating costs to break-even, create more $180 Million in value than other losses is projected to be $7.9 Million annually to the City. alternatives, and could receive $150 Million in ground lease sale proceeds.

HISTORY & BACKGROUND SAN DIEGO CHARGERS

QUALCOMM STADIUM The San Diego Chargers are seeking to build a new 65,600 seat stadium with more suites and club seats to generate more revenue and The City of San Diego owns and operates the Qualcomm Stadium make the franchise more financially competitive with other NFL teams facility in Mission Valley. San Diego Stadium was originally constructed with newer stadium facilities. in 1967; the stadium was expanded to 61,000 seats and added 50 luxury suites in 1984; the stadium was expanded again with 10,500 Chargers Football, LLC is utilizing Qualcomm Stadium and the seats, club seating and lounges, and 34 additional suites in 1997; a Practice Facility at 4020 Murphy Canyon Road under the amended practice facility was constructed in 1997; and, the City granted naming terms of the 9th Supplement to the 1995 Agreement For Partial Use & rights to Qualcomm until 2017. Occupancy. The agreement which expires in 2020 provides for annual rent of $2.5 Million until 2013, which is offset by concession income and Qualcomm Stadium currently contains 70,560 seats, including 113 ticket credits, and no responsibility for any stadium operating costs. The luxury suites, and 7,882 club seats, with amenities including 4 club 9th Supplement amended the provisions in the 8th Supplement which lounges, and 2 Jumbo-Tron video displays. Qualcomm Stadium is allows the Chargers to negotiate to relocate the franchise within San home to the NFL Chargers, SDSU Aztecs, Holiday Bowl, Poinsettia Diego County and outside of San Diego after the 2008 season. Upon Bowl, and CIF Football, as well as other events including SkyShow, written notification of intent to relocate and terminate the agreement, the SuperCross, MonsterTrucks, concerts, and private events. The 40 year Chargers will pay a termination fee to the City. old stadium was designed as a multi-purpose facility in a “squircle” configuration for football and baseball. Reports indicate significant The Chargers have submitted two proposals to the City of San Diego to deferred maintenance issues estimated to exceed $20 Million. The build a new stadium on the existing 166 acre Stadium Site in Mission stadium site contains 166 acres with the stadium occupying 15 acres Valley (“Stadium Site”) which were not accepted. The Chargers have and 122 acres of parking for over 18,500 vehicles. initiated negotiations and feasibility analysis with the cities of Oceanside and Chula Vista.

NFL STADIUM BUILDING BOOM CITY OF SAN DIEGO Under the NFL Revenue Sharing Agreement, all NFL teams share equally in TV broadcast rights, and Official NFL merchandise licensing The City is operating Qualcomm Stadium with an annual budget of revenue. The NFL teams also share ticket revenue between the Home $15.98 Million which includes a subsidy of $3.6 Million from the Sports and Away teams on a 60/40 basis for regular season and playoff Arena ground leases and $3.0 Million transfer from TOT funds. The City games. Each franchise generates their own income from luxury suites, receives rental income of $6.2 Million but is incurring $8.5 Million for club seating, naming rights, advertising, concessions, parking, corporate utilities, maintenance costs, janitorial services, personnel costs and sponsorships, seat licenses, and team merchandise sales. capital expenditures, as well as servicing the bond debt from the 1997 stadium expansion at a annual cost of $5.7 Million. The total annual In order to generate more revenue for each team, over the past ten operating cost to the City exceeds $7.9 Million. years 16 new NFL stadiums have been built, 2 new stadiums are under construction and 2 new stadiums have been proposed. Based upon the Since the City owns the stadium and surrounding land, it receives no each team’s demand for additional revenue and the league’s objective property tax revenue from the site. to provide a better experience for fans, new NFL stadiums are considerably larger with more luxurious facilities and seats closer to the Based upon our financial analysis of residual land value, the 166 acre playing field with better viewing angles and improved amenities. The stadium site as un-entitled, un-subdivided, and un-improved land is cost of new NFL stadiums has increased from the $400 to $600 Million projected to be approximately $100 Million ($17/SF). range up into the $800 Million to $1.4 Billion range.

CHARGER TASK FORCE RECOMMENDATIONS

The Citizen’s Task Force on Charger Issues (“Charger Task Force”) concluded that the Mission Valley site is the best location for a new stadium and the City of San Diego should lease the 166 acre stadium site to the Chargers for the development of a new stadium, public park and other new development. The Charger Task Force recommended:

• Any new stadium will not incur any cost to the City’s General Fund;

• Incremental taxes generated from development of the site may be employed for infrastructure or existing debt;

• Any agreement should address the existing stadium bond debt, naming rights, infrastructure costs and environmental impacts;

• Chargers are to be responsible for all construction and operating cost of new stadium;

• Chargers are to execute a long-term lease and protect City from any sale of team in the future;

• Obtain a commitment from the NFL for multiple Super Bowls;

• Any agreement must provide for use of new stadium by Aztecs, Holiday Bowl and CIF Football;

• Chargers should obtain private contributions for new stadium;

• City should avoid any sale of the stadium site;

• Any ground lease of stadium site should be based upon the value;

• A Reversion Clause should revert ownership of the property upon termination of the agreement;

• Any development must support the surrounding infrastructure;

• Any development should incorporate “City of Villages” and “Sustainable Design” and meet needs of the community for housing & recreation, and provide 18 acres of park space;

• Any plan for a new stadium should be approved by the voters.

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

THE CHALLENGE THE DILEMMA

• CHARGERS WANT A NEW STADIUM • CHARGERS COULD LEAVE CITY FOR NEW STADIUM o INCREASE TEAM REVENUE o OCEANSIDE OR CHULA VISTA o IMPROVE COMPETITIVENESS IN NFL o LOS ANGELES, ORANGE COUNTY OR RIVERSIDE o PROVIDE BETTER FAN EXPERIENCE o LAS VEGAS, SAN ANTONIO, OKLAHOMA, PORTLAND,…

• CITY OF SAN DIEGO IS UNABLE TO BUILD NEW STADIUM • ABANDONMENT OF STADIUM ? o BUDGET CUTS & PENSION FUND LIABILITIIES o LOSS OF SDSU FOOTBALL & HOLIDAY BOWL o NO FUNDS FOR STADIUM OR INFRASTUCTURE o NO MORE SUPER BOWLS IN CITY EVER AGAIN o OUTSTANDING 1997 STADIUM DEBT ($57 MILLION) o DEMOLITION OF A HISTORIC STRUCTURE o QUALCOMM NAMING RIGHTS UNTIL 2017 o LOSS OF NATIONAL PRESTIGE & COMMUNITY PRIDE o NO REDEVELOPMENT AREA “BLIGHTED” DESIGNATION • CITY HAS LAND BUT NO FUNDS FOR DEVELOPMENT • EXISTING STADIUM IS OLD & OUTDATED o CITY & WATER DEPARTMENT OWN LAND o BUILT IN 1967 – 40 YEARS OLD o NO PROPERTY TAX EARNED FROM STADIUM SITE o “SQUIRCLE” DESIGN FOR FOOTBALL & BASEBALL o LIMITED SALES TAX REVENUE FROM CONCESSIONS o 40% END ZONE SEATING – CROWDED CONCOURSES o STADIUM OPERATING EXPENSE IS $5-$6 MILLION o FARTHER FROM FIELD & OBSTRUCTED VIEWS o 1997 STADIUM BONDS ARE $5.7 MILLION ANNUALLY o LIMITED SKYBOX & CLUB SEATING o BUDGET CONSTRAINTS & FISCAL PRIORITIES o INFERIOR FOOD & BEVERAGE SERVICE o DEFERRED MAINTENANCE ISSUES • MARKET DEMAND FOR NEW SPACE o OFFICE RENTS & ABSORPTION IN MISSION VALLEY • SPORTS ARENA IS OLD & OUT-DATED o UNDER CONSTRUCTION & PLANNED COMPETITION o BUILT IN 1967 – 40 YEARS OLD o FOR SALE CONDO MARKET IN DOLDRUMS o INFERIOR ARENA FACILITY & SOUND QUALITY o EXISTING & PLANNED RETAIL COMPETITION o NO CLUB SEATING, SKYBOXES OR SUITES o EXISTING HOTEL COMPETITION IN MISSION VALLEY o LIMITED ADVERTISING & SPONSORSHIP ABILITY o CANNOT ATTRACT OR SUPPORT SPORTS FRANCHISE • ECONOMIC VIABILITY o STADIUMS ARE INEFFICIENT USES OF CAPITAL • MISSION VALLEY SITE ISSUES o 70% TAXPAYER SUPPORT AS PUBLIC PROJECTS o TRAFFIC CONGESTION o LIMITED USAGE FOR ENORMOUS COST o NO PUBLIC PARKS IN AREA o MASSIVE PARKING REQUIREMENTS o FLOOD ZONE & SAN DIEGO RIVER HABITAT o LIMITED PRIVATE FINANCING & NFL G-3 EXHAUSTED o ENVIRONMENTAL CONTAMINATION • CITY IS UNABLE TO FIND A SOLUTION TO DILEMMA • PUBLIC WILL SUPPORT NEW STADIUM o CITY ATTORNEY DISPUTES WITH CHARGERS o MISSION VALLEY SITE IS MOST PREFERRED o FOCUSED ON OTHER ISSUES – NOT A PRIORITY o VERY LIMITED SUPPORT FOR TAX INCREASES o POLITICS & PERSONAL AGENDAS o TROLLEY & BUS TRANSIT ACCESS o SPECIAL INTEREST GROUPS & LOBBYISTS o CONVENIENT FREEWAY ACCESS o LACK OF CREATIVITY & IMAGINATION

THE PROPOSAL THE SOLUTION

THE CITY LEASES THE LAND & STADIUM TO A MASTER ABIDES BY THE INTENT OF THE CHARGER TASK FORCE DEVELOPER FOR 99 YEARS AT THE ANNUAL COST OF THE RECOMMENDATIONS REFINANCED 1997 STADIUM DEBT; AFTER 40 YEARS, DEVELOPERS HAVE RIGHT TO BUY LAND AT MARKET VALUE BUILDS NEW STADIUM ON STADIUM SITE AND CONVERTS QUALCOMM STADIUM INTO NEW ARENA & CONVENTION CENTER MASTER DEVELOPER SUBDIVIDES THE STADIUM SITE; MASTER DEVELOPER SUBLEASES THE INDIVIDUAL PARCELS TO 80% PRIVATE FINANCING CONSTRUCTION COSTS OF STADIUM & DEVELOPERS FOR THE COST OF MASTER GROUND LEASE, AND ARENA/CONVENTION CENTER COSTS OF UTILITY INFRASTRUCTURE, COMMON AREAS, PARKING GARAGES, AND PORTION OF STADIUM & ARENA COST NON-PROFIT CORPORATIONS WILL PRIVATELY BUILD, OWN & OPERATE NEW STADIUM & NEW ARENA/CONVENTION CENTER DEVELOPERS BUILD INDIVIDUAL PROJECTS WITHIN MASTER PLAN & SPECIFIC PLAN OF PROJECT – GOVERNED BY CC&RS PRIVATELY FINANCED MULTI-USE DEVELOPMENT ON STADIUM SITE WILL SUPPORTS THE COST OF PARKING GARAGES, RENEGOTIATE CHARGER LEASE FOR STADIUM & PRACTICE UTILITY INFRASTRUCTURE, & PORTION OF STADIUM COST FACILITY FOR MORE INCOME & EXPENSE RECOVERIES; CITY CONTINUES OPERATING STADIUM UNTIL NEW STADIUM IS BUILT; ELIMINATES COST OF 1997 STADIUM DEBT TO CITY & PHASES CHARGERS, AZTECS, HOLIDAY BOWL AND EVENTS CONTINUE AT OUT OPERATING COSTS OF QUALCOMM STADIUM BY CITY QUALCOMM UNTIL THE NEW STADIUM IS BUILT NO NEW TAXES OR ANY TAX INCREASES NEW STADIUM IS 80% PRIVATELY FINANCED AND BUILT BY CHARGERS LED DEVELOPMENT GROUP GENERATES NEW PROPERTY TAXES FOR CITY & COUNTY

NEW ARENA & CONVENTION CENTER IS 75% PRIVATELY GENERATES NEW SALES & HOTEL TAX REVENUE FOR CITY FINANCED AND BUILT BY HAHN LED DEVELOPMENT GROUP BY CONVERSION / ADAPTIVE RE-USE OF QUALCOMM STADIUM GENERATES NEW TRANSNET SALES TAX REVENUE

THE PROJECT IS BUILT OUT IN 3 PHASES OVER 15-20 YEARS ALL PUBLIC DEBT FINANCING IS PAID FOR BY INCREMENTAL FOR REALISTIC ABSORPTION & CONSTRUCTION SCHEDULES PROPERTY, SALES AND HOTEL TAXES FROM DEVELOPMENT

SANDAG USES TRANSNET SALES TAX TO PAY FOR DESIGN & NO PUBLIC SUBSIDY OF OPERATING COSTS OF NEW STADIUM CONSTRUCTION OF TRANSPORTATION INFRASTRUCTURE OR NEW ARENA/CONVENTION CENTER

CITY RESIDENTS VOTE FOR APPROVAL OF GROUND LEASE, CREATES JOBS IN RETAIL, HOSPITALITY & SERVICE SECTORS LAND TRANSFERS, SPECIFIC PLAN & ISSUING PUBLIC DEBT AVOIDS DEVELOPMENT IN FLOOD ZONES & SAN DIEGO RIVER COUNTY RESIDENTS VOTE FOR APPROVAL OF ISSUING PUBLIC HABITATS DEBT & SHARING INCREMENTAL PROPERTY TAXES WITH CITY; APPROVAL OF USING TRANSNET SALES TAX FOR PUBLIC RELOCATES SHELL GAS TANKS & MITIGATES MISSION VALLEY TRANSPORTATION INFRASTRUCTURE & TRANSIT COSTS TERMINAL UNDERGROUND CONTAMINATION

BENEFITS OF CBRE PROPOSAL • NON-PROFIT MUTUAL BENEFIT CORPORATION TO CONSTRUCT, OWN & OPERATE NEW ARENA & CONFERENCE • CITY RECEIVES GROUND RENT AT MARKET RETURNS FOR CENTER FACILITY USE OF STADIUM LAND – NO GIVEAWAY TO DEVELOPERS o Hahn-Arena Group Provides 10% of Costs o Financed by Permanent Seat Licenses, Naming Rights, • CITY HAS REVERSION RIGHTS FOR STADIUM & ARENA LAND Advertising, Operations, Annual Membership Fees & Equity. o City Provides Public Debt from Property & Hotel Taxes • 80% PRIVATE FINANCING & PRIVATELY OPERATED SPORTS FACILITIES BY NON-PROFIT MUTUAL BENEFIT CORPORATION • CREATES A NEW TRANSIT ORIENTED & PEDESTRIAN o NEW STADIUM IN 10 YEARS FRIENDLY MULTI-USE URBAN VILLAGE OF RETAIL, OFFICE, APARTMENTS, STUDENT HOUSING, HOTELS & RECREATION NEW ARENA & CONVENTION CENTER o o NEW COMMUNITY PARK & NEIGHBORHOOD PARK • CREATES A SYNERGY BETWEEN STADIUM, ARENA CONFERENCE CENTER AS A” WORLD CLASS” SPORTS & • NO NEW TAXES BY CITY OR COUNTY ENTERTAINMENT VENUE; CREATES NEW FAMILY ORIENTED ENTERTAINMENT & DINING DESTINATION RETAIL CENTER • ALL NEW PUBLIC DEBT BY CITY & COUNTY ARE PAID BY FOR THE REGION INCREMENTAL TAXES – NO EFFECT ON EXISTING BUDGETS • PROVIDES ADDITIONAL RENTAL HOUSING, STUDENT • NO NEW OBLIGATIONS BY CITY OR COUNTY TO OPERATE HOUSING & AFFORDABLE HOUSING CLOSE TO PUBLIC NEW STADIUM OR NEW ARENA / CONVENTION CENTER TRANSIT & TROLLEY

• USES EXISTING TRANSNET (PROP. A) SALES TAXES TO FUND • IMPROVES TRAFFIC FLOW WITH NEW I-15 FREEWAY OFF- PUBLIC TRANSPORTATION INFRASTRUCTURE RAMP / ON-RAMP INTERCHANGE, SAN DIEGO RIVER BRIDGE, FRIARS ROAD INTERCHANGES & RE-ROUTES SAN DIEGO • ELIMINATES COST OF 1997 STADIUM DEBT OBLIGATIONS TO RANCHO MISSION ROAD – LINKAGE WITH CAMINO DEL RIO CITY & REDUCES STADIUM OPERATING COSTS BY CITY • CONNECTION OF NEW WALKING & BIKE PATH ALONG SAN • INCREASES PROPERTY TAX, SALES TAX, & HOTEL TAX DIEGO RIVER TO EXISTING PATH AT RIO VISTA WITH NEW REVENUES TO CITY - INCREASES PROPERTY TAX TO PEDESTRIAN/BICYCLE BRIDGES TO CAMINO DEL RIO NORTH; COUNTY - INCREASES SALES TAX TO SANDAG-TRANSNET INCREASES ACCESS & WALKABILITY TO SURROUNDING AREAS & OFF-SITE PARKING FOR MAJOR STADIUM EVENTS • ALLOWS FOR FUTURE DEVELOPMENT OF SPORTS ARENA SITE & INCREASE IN GROUND RENT OR LAND SALE REVENUE • KEEPS CHARGERS, AZTECS & HOLIDAY BOWL IN CITY

• NON-PROFIT MUTUAL BENEFIT CORPORATION WILL • ATTACTS MLS SOCCER TEAM TO SAN DIEGO; ATTRACTS DEVELOP, OWN & OPERATE NEW STADIUM FACILITY FUTURE SUPER BOWLS, NCAA, FIFA, MSL, IRB-NA, USR, MLL, o Chargers & MLS Soccer Franchise Provide 20% of Cost. NBA & NHL EVENTS o Financed by Permanent Seat Licenses, Naming Rights, Advertising, Operations, Annual Membership Fees & Equity. • ATTRACTS ADDITIONAL CONVENTION, EXHIBITION,TRADE o City & County Share Equally in Costs of Public Debt SHOW & CONFERENCE ATTENDEES TO SAN DIEGO; CREATES JOBS IN RETAIL, RESTAURANTS & HOSPITALITY

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

PUBLIC PROCESS & RESPONSIBILITY OVERVIEW

CITY OF SAN DIEGO TRANSNET- SANDAG • City Voter Approval Required of Proposition for Ground Lease of • County Voter Approval Required of Proposition to Dedicate Stadium Land; Approval of Future Sale of Land to Developers; TransNet Sales Tax Revenue to Infrastructure & Subsidy of Transit. Approval of Specific Plan for Development of Project & Infrastructure Funding Plan; Approval of Public Financing for Stadium & Arena / • TransNet is Responsible for Design & Construction of the Public Convention Center. Transportation Infrastructure, Funded by Existing TransNet (0.5%) Sales Tax as Incremental Tax Funding derived from New • City is Ground Lessor of Stadium Land to Master Developer through Development, as follows: Long-term 99 Year Ground Lease; Developers have Right to Buy Land After 40 Years and Pay-off of Public & Private Stadium Debt, – Interstate 15 Interchange – New On/Off-ramp to Stadium/Arena Arena/Convention Center Debt, and Parking Garage Debt. – Fenton Parkway Extension & Bridge over San Diego River – Relocation of Existing Shell Gas Storage Tanks (Eminent Domain) • City Refinances 1997 Stadium Bonds in 2009; Master Ground Rent – Friars Road Interchange to West Stadium/Arena Parking Garage is equal to Annual Payments of Refinanced Stadium Bonds. – Friars Road Overpass Interchange & Ramp at Mission Village Drive – San Diego Mission Road Realignment to Mission Village Drive • City is Grantor of Fee Title of Land for New Stadium and Arena Sites – Rancho Mission Road Interchange (Eminent Domain) to Non-Profit Corporation as “Life Estate” with Reversion Rights; – Rancho Mission Road / I-15 Freeway Ground Lease from CalTrans Master Ground Lease provides Subordination & Release Provisions – Rancho Mission Road / I-15 Freeway Parking Lot for Construction and Financing of Parking Facilities – Transit/Bus stop at Mission Village Circle & Trolley Station – Pedestrian/Bike Path along San Diego River (Eminent Domain) • City Provides $50 Million of Permanent Debt for Stadium from – Pedestrian/Bike Bridge across San Diego River to Camino Del Rio N Incremental Property Taxes; City Provides $50 Million of Permanent – Pedestrian/Bike Bridge over Interstate 8 to Camino Del Rio S Debt for Arena/Convention Center from Incremental Property & – Pedestrian/Bike Path improvements along Murphy Canyon Hotel Taxes. – San Diego River & Murphy Canyon Protection & Restoration

• City Continues to Operate Stadium for Chargers, Aztecs, Holiday Bowl & other events until Completion of New Stadium; Portion of COUNTY OF SAN DIEGO Operating Costs Reimbursed by Chargers; City Leases Practice • County Voter Approval Required of Proposition to Provide Public Facility to Chargers on new Long-Term Ground Lease. Debt of $50 Million of Permanent Debt for Stadium.

• City Dedicates a Team of Planning & Development Officials & Staff • County Dedicates the Incremental Property Tax Revenue Received for Planning, Processing, Approvals, Plan Check and Issuance of from Stadium & Arena Development Project as Source of Funds for Permits for Stadium & Arena Development Project. Payment Public Debt Obligation.

• The Specific Plan & Entitlements for Project are Enacted by • County Transfers 80% of the Incremental Property Tax Revenue Proposition for Stadium Development, including all Zoning, Density, Received from Stadium & Arena Development Project to Stadium Floor-Area Ratios, Building Heights, Parking Requirements, Operations by City until New Stadium is Built. Landscaping, Public Art, Affordable Housing, Transportation Mitigation and Environmental Requirements.

PRIVATE PROCESS & RESPONSIBILITY OVERVIEW

MASTER DEVELOPER STADIUM DEVELOPER / OWNER • Master Developer is Comprised of: • Non-Profit Mutual Benefit Corporation is formed for the Construction, – Chargers/Spanos & Soccer (25% - 35%) – Stadium Developer Ownership & Operation of Stadium is Comprised of: – Hahn Arena Group (25% - 35%) – Arena Developer – PSL Seat Owners (35%) – Selected Major Developer (50% - 30%) – Project Developer – Chargers Football, LLC (35%) – MLS Soccer Franchise (15%) • Master Developer is Ground Lessee of Master Ground Lease from – City & County (15%) City; Master Developer is the Sub-Lessor of the Individual Development Parcels to Parcel Developers. • Chargers & Soccer Franchise are Responsible for Architectural, Engineering & Design and Construction Financing of Stadium. • Master Developer is Responsible for Planning, Design, and Development of Master Plan for Project and Project Infrastructure. • Stadium Construction is Funded Through Sale of Permanent Seat o Master Project Plan; Subdivision & Zoning Entitlements. Licenses, Charger Equity, Soccer Franchise Equity, Private Debt o Architectural & Landscaping Design Guidelines; POA & CC&R’s from Stadium Operations, Private Debt from Sublease & Parking o Coordination with SANDAG, City & County for Freeway Income, and Public Debt from City and County. Interchanges, Public Roads & Transit Infrastructure. • Stadium Owner is Responsible for Operating Stadium; Stadium • Master Developer is Responsible for Planning, Design, and Operating Costs & Debt Service are Funded by Event Revenue, Construction of Utilities, Landscaping, and Common Areas of Annual PSL Administration Fees, Stadium Naming Rights, Other Project; Responsible for Operation and Administration of Common Naming Rights, Advertising, Concessions, and Media Access Fees. Areas; Administration & Enforcement of CC&R’s.

• Master Developer is Responsible for Planning, Design, and ARENA / CONFERENCE CENTER DEVELOPER / OWNER Construction of Parking Garage and Surface Parking Facilities; • Non-Profit Mutual Benefit Corporation is formed for the Construction, Responsible for Operation and Administration of Parking Garage Ownership & Operation of Arena/Conference Center Comprised of: and Surface Parking Facilities. – Hahn-Arena Group & Financial Partners (70%) – PSL Seat Owners (30%) • Master Developer Retains 20%-30% Fee Ownership of Parking Garages; After Debt Cash Flows from Parking Utilized for Financing • Arena / Convention Center Developer / Operator is Responsible for Stadium & Arena/Convention Center. Design and Construction of Arena/Convention Center; Arena / Convention Center is Funded Through Sale of Permanent Seat Licenses, Developer Equity, Public Debt & Private Debt.

• Arena / Convention Center Owner is Responsible for Operating Arena / Convention Center; Arena / Convention Center Operating Costs & Debt Service are Funded by Event Revenue, Concessions, Club Seats, Luxury Suite Rentals, Naming Rights, Advertising, Parking Revenue, and Media Access Fees.

PARCEL DEVELOPERS NATIONAL FOOTBALL LEAGUE • Sub-Lessee of individual Development Parcels to Pay Proportion of Master Ground Rent; Pay Ground Sublease Rent to Pay for • Provide Financial Assistance & Construction Loan Guaranties to Construction of Parking and Infrastructure; Pay Pro-Rata Share of Chargers with Equity Contribution for New Stadium Operating Expenses of Master Association and Parking Garages. • Agree to Host 3rd Super Bowl at Qualcomm Stadium after • Responsible for Design, Development and Construction of Individual Completion of Entertainment Retail Center Development Projects. • Agree to Host 1st Super Bowl in New Stadium after Completion of • Grantee of Fee Title to Parcels through Right to Buy Land at Market Arena/Convention Center and Hotel Complex Value upon Satisfaction of the Sub-lease Debt Obligations.

• Parcel Developers Retain Proportional Ownership of 70%-80% Fee MLS SOCCER FRANCHISE Ownership of Parking Garages. • Execute Occupancy & Use Agreement with City for Qualcomm Stadium until New Stadium is Completed, as Industrial Gross CHARGERS FOOTBALL, LLC o Fixed Rent Schedule = $500,000 o Reimburse Utility Expenses • Renegotiate Existing Occupancy & Use Agreement at Qualcomm o Reimburse Lighting Repair & Maintenance Stadium with City until New Stadium is Completed, to be amended o Reimburse Janitorial Services as Industrial Gross: o Reimburse Field Maintenance Expenses o Fixed Rent Schedule = $1.5 Million/Year – No Offsets o Share Concession Income with City o Reimburse Utility Expenses o Retain All Parking Income o Reimburse Lighting Repair & Maintenance o Reimburse Janitorial Services • Commit to Execute 20 Year Lease in New Stadium o Reimburse Field Maintenance Expenses o Share Portion of Concession Net Income with City o Retain All Parking Income

• Execute Long-term Lease Agreement for Practice Facility at 4020 Murphy Canyon Road for 30 Years on Industrial Net: o $1.0 Million / Year for Years 1-10 o $1.2 Million / Year for Years 11-20 o $1.5 Million / Year for Years 21-30 o Responsible for Repair, Maintenance, Utilities, Insurance, Janitorial, Landscaping & Operating Expenses o Exempt from Property Taxes as Leasehold o Option to Purchase after 10 Years at Replacement Cost for User

• Commit to Execute 30 Year Lease in New Stadium

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

PROJECT DESIGN PRINCIPLES PARKING

TRANSIT-ORIENTED & PEDESTRIAN FRIENDLY URBAN VILLAGE CONVENIENT SHARED PARKING “Creates a Walkable Community” & “Benefits from Transit & Trolley” Office = Static Use (Daytime) Retail = Dynamic Use (Nights, Weekend & Holidays) LIVE-WORK-SHOP-DINE-PLAY ENVIRONMENT Stadium, Arena & Convention Center = High Capacity Use Tailgate = Surface Lots, Top Decks, Street Parking & Grass CREATES SYNERGY OF COMPLIMENTARY USES Residential & Hotel Use = Dedicated Use & INTEGRATES MULTIPLE USES INTO A SINGLE PROJECT CENTRALIZED PARKING GARAGES INTERCONNECTIVITY & LINKAGES TO SURROUNDING AREA - Close Proximity Between Use & Parking Facility - Pedestrian Sky Bridge Access to Plazas & Parking over Traffic TRUE DESTINATION – ENTERTAINMENT AS CORE COMPONENT

CREATES AN URBAN “TOWN CENTER” - “PLACE MAKING” RETAIL PRINCIPLES

HIGHER DENSITY – REDUCES SPRAWL – LESS INVASIVE MID-SCALE & MIDDLE MARKET FOCUS - GEO-DYNAMICS PRIZM U1- Urban Gold Coast, Money & Brains, Young Literati, Bohemian Mix SHARED PARKING – FREEWAY ACCESS – LOCAL CONVENIENCE U2- Urban Achievers, Big City Blend, Mid-City Mix, Latino America S2- Young Influentials, Boomers & Babies, Suburban Sprawl S3- New Beginnings, Mobility Blues, Single City Blues SPORTS & ENTERTAINMENT ANCHORED MULTI-USE PROJECT ENTERTAINMENT & LIFESTYLE RETAIL MULTI-USE – HORIZONTALLY INTEGRATED BY SITE DRAWS FROM COMMUNITY & REGION = 5 – 20 MILES Stadium – Arena / Events Center – Convention Center 2012: 477,000 Persons & 196,000 Households in 5 Mile Radius Retail – Office – Residential – Lodging – Recreation NEIGHBORHOOD RETAIL MIXED-USE – VERTICALLY INTEGRATED BY BUILDING DRAWS FROM LOCAL AREA = 1 - 3 MILES Retail & Office – Retail & Residential – Retail & Office & Residential 2012: 212,000 Persons & 86,000 Households in 3 Mile Radius Hotel & Retail – Hotel & Convention Center MAJOR RETAIL COMPETITION IN AREA Super-Regional Mall – Fashion Valley (Macys, JC Penney’s, SITE ACCESS Bloomingdales, Nordstrom, AMC 12)

FREEWAY – I-15; I-8; I-805; & Highway 163 Regional Mall – Mission Valley (Target, Macys, AMC 20)

STREET – Friars Road; San Diego Mission Road; Mission Village Drive; Community Centers – Fenton Marketplace (CostCo, Ikea, Lowes); Rio Rancho Mission Road; Fenton Parkway; Camino Del Rio North Vista (Sears); Mission Valley West (Borders, DSW, Old Navy); Hazard Center (UltraStar, Barnes & Noble); Valley del Rio (Best Buy). TROLLEY – SDSU / Mission Valley / Old Town – Coaster to North County / Downtown to Amtrak / East County / South Bay Neighborhood Center – Friars Mission (Ralphs & Longs), Hazard Center East (Food 4 Less), Quarry Falls (TBD), Mission Gorge (Vons) WALK / BIKE – San Diego River Trail & Murphy Canyon Trail The information contained herein has been obtained from sources deemed believable. While we do not doubt it accuracy, we have not verified it and make no guaranty, warranty or representation about it. It is your responsibility to independently confirm its accuracy or completeness. Any projections, opinions, assumptions or estimates are used for example only and do not represent the current or future STADIUM & ARENA performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct DEVELOPMENT PROPOSAL a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. SITE PLAN INTERSTATE 15 MISSION VILLAGE RAMP & FRIARS ROAD INTERCHANGE MISSION VALLEY ZONING & USE LEGEND TERMINAL RETAIL RELOCATION RESIDENTIAL RESIDENTIAL PARKING SAN DIEGO RETAIL FRIARS ROAD OFFICE MISSION ROAD INTERCHANGE HOTEL RE-ALIGNMENT OFFICE OFFICE & RESIDENTIAL RESIDENTIAL RETAIL & RETAIL RESIDENTIAL & RETAIL PARK

OFFICE & RETAIL OFFICE & RETAIL HOTEL TRANSIT HOTEL RESIDENTIAL HOTEL CONFERENCE CENTER & RETAIL STADIUM PARKING

TAILGATE / PARKING ARENA OFFICE & PARK / LANDSCAPING CONVENTION RETAIL CENTER PLAZAS & WALKWAYS OFFICE & RETAIL PARKING PEDESTRIAN BRIDGES HOTEL PARKING TAILGATE PARKING PARKING ROADWAYS RETAIL OFFICE RIVER TRAIL TROLLEY OFFICE POLICE & FIRE TAILGATE PARKING PUBLIC SAN DIEGO RIVER PARK TRAIL EXTENSION & BRIDGES

TAILGATE PARKING TROLLEY

PARK FENTON PARKWAY EXTENSION & BRIDGE

DEVELOPMENT OVERVIEW COMMERCIAL SPACE OVERVIEW

STADIUM 65,600 SEATS +/- 1,550,000 SF OFFICE – CLASS “A” – 60 Floors Total +/- 1,400,000 SF ARENA 20,000 SEATS +/- 600,000 SF OFFICE – CLASS “B” - 25 Floors Total +/- 450,000 SF CONVENTION CENTER 8,000 PERSONS +/- 320,000 SF MEDICAL – CLASS “A” - 6 Floors Total +/- 200,000 SF

PUBLIC PARKS +/- 18 Acres RESTAURANTS / BARS +/- 250,000 SF 30% RETAIL SHOPS +/- 450,000 SF 50% TOTAL SPACE +/- 5,500,000 SF THEATER (10-12 Screens) +/- 50,000 SF 5% RETAIL +/- 850,000 SF BOWLING / AMUSEMENT / ARCADE +/- 40,000 SF 4% OFFICE +/- 2,050,000 SF MARKET +/- 30,000 SF 3% APARTMENTS +/- 1,850 Units = +/- 1,400,000 SF DRUG STORE +/- 30,000 SF 3% HOTEL ROOMS +/- 1,160 Rooms = +/- 1,125,000 SF FITNESS CENTER +/- 25,000 SF 3% PARKING +/- 18,570 Spaces (Structured & Surface AUTO SERVICE +/- 10,000 SF 1% +/- 4,800,000 SF (+/- 1,600 Grass Parking) ENTERTAINMENT CENTER +/- 320,000 SF 37% TOTAL BUILDING AREA +/- 12,350,000 SF LIFESTYLE CENTER +/- 110,000 SF 13% NEIGHBORHOOD CENTERS +/- 395,000 SF 50% PARKING OVERVIEW FULL SERVICE CONVENTION HOTEL 15 FLOORS +/- 380 ROOMS 3 MID-RISE PARKING GARAGES: +/-15,500 Parking Spaces LIMITED SERVICE HOTELS 5 FLOORS +/- 600 ROOMS 3 PARKING LOTS & STREET PARKING: +/-1,500 Parking Spaces EXTENDED STAY HOTEL 4 FLOORS +/- 180 ROOMS PUBLIC PARK: +/-1,500 Parking Spaces on Lawn – (Stadium Only) CONVENTION & MEETING AREAS +/- 380,000 SF

OFFICE PARKING +/- 7,900 3.8 / 1000 SF LAND USE RETAIL PARKING +/- 7,500 9.4 / 1000 SF CONVENTION PARKING +/- 2,250 7.0 / 1000 SF TOTAL SITE AREA +/- 140 ACRES RESIDENTIAL +/- 12 ACRES 10% 3 PHASES - 20 SEPARATE DEVELOPMENT PROJECTS COMMERCIAL +/- 26 ACRES 22% MIXED-RESIDENTIAL/COMMERCIAL +/- 11 ACRES 9% 4 HIGH-RISE OFFICE TOWERS (15-20 Floors) STADIUM +/- 17 ACRES 14% 1 HIGH-RISE HOTEL (16-18 Floors) ARENA / CONVENTION CENTER +/- 17 ACRES 14% 3 MID-RISE OFFICE BUILDINGS (4-6 Floors) PARKING +/- 22 ACRES 18% 8 MIXED-USE OFFICE & RETAIL BUILDINGS (3-4 Floors) PUBLIC PARK +/- 15 ACRES 12% ROADS & SIDEWALKS +/- 18 ACRES 15% 7 RETAIL BUILDINGS (2-3 Floors) 8 RETAIL & APARTMENT BUILDINGS (4-5 Floors) DENSITY SUMMARY

5 APARTMENT COMPLEXES (OVER PARKING) (4 -5 Floors) RESIDENTIAL DENSITY 72 UNITS/ ACRE COMMERCIAL FLOOR/AREA RATIO 1.6 3 LOW-RISE HOTELS (OVER PARKING) (4 - 5 Floors) TOTAL FLOOR/AREA RATIO 2.8 PROJECT FLOOR/AREA RATIO 1.9

FRIARS ROAD SAN DIEGO MISSION ROAD

MISSION CITY PARKWAY

RANCHO MISSION ROAD

TROLLEY

FENTON PARKWAY

TROLLEY SAN DIEGO RIVER

INTERSTATE 8

CAMINO DEL RIO NORTH

PROJECT COSTS & CAPITAL SOURCES SOURCES OF FUNDING

SUMMARY Infrastructure $60 Million Stadium $600 Million SANDAG-TransNet 37% $22 Million Arena / Events Center $190 Million Master Developer 30% $18 Million Convention Center $75 Million Stadium/Arena Developers 8% $5 Million Parking Garages $305 Million Parcel Developers 25% $15 Million Commercial & Residential $1,200 Million Infrastructure $35 Million Parking Facilities $305 Million TOTAL $2,255 Million Developer Equity 25% $75 Million Debt 75% $230 Million

CAPITAL INVESTMENT Stadium $600 Million Permanent Seat License Sales 34% $200 Million Government $172 Million Owner / Developer Equity 20% $120 Million City of San Diego – (Stadium & Arena Bonds) $100 Million Long-term Permanent Debt 30% $175 Million County of San Diego- (Stadium Bonds) $50 Million Public Debt 16% $100 Million SANDAG-TransNet $22 Million Arena/Convention Center $265 Million Master Developer $95 Million Public Debt 19% $50 Million AG Spanos $7.5 Million Long-term Permanent Debt 73% $195 Million Hahn Arena Group $5 Million Permanent Seat License Sales 3% $8.5 Million Development Partner $7.5 Million Owner / Developer Equity 5% $10 Million Parcel Developers $75 Million Development Projects $1,200 Million Stadium Developer/Owner $120 Million Equity 25% $350 Million Chargers $85 Million Debt 75% $1050 Million Soccer Franchise $35 Million

Arena Developer/Owner $10 Million Hahn Arena Group $5 Million Financial Partners $5 Million

Total Private Equity $225 Million AG Spanos / Chargers $92.5 Million Parcel Developers $75 Million Soccer Franchise $35 Million Master Developer $7.5 Million Hahn Arena Group $5 Million Arena Partners $5 Million

PROJECT TIMELINE

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 APPROVAL PROCESS

Negotiations & Agreement

Design & Processing

Public Meetings & Vote Subdivision & Entitlements Ground Lease & Financing

PHASE I Infrastructure Construction Entertainment Center Pre Construction Stabilization Office/Lifestyle Center Pre Construction Stabilization Mixed-Use Retail & Pre Construction Stabilization Apartments Apartments Construction Stabilization Parking Garage Const Const Hotel Const Stabilization Office Towers 1 & 2 Pre Construction Stabilization Pre Construction Stabilization

PHASE II Environmental Mitigation Clean-up & Mitigation Gas Tank Relocation Relocation Infrastructure Construction Stadium PSL Pre-Sales Construction Parking Garage Const Mixed-Use Retail & Office Pre Construction Stabilization Mixed-Use Retail & Residential Pre Construction Stabilization Office Tower Pre Construction Stabilization Hotel Const Stabilization Auto Service Retail Center Const Stab

PHASE III Arena & Convention Center PSL Pre-Sales Construction Stabilization Parking Garage Const Stabilization Hotel Construction Stabilization High Rise Office Pre Construction Stabilization Office & Retail Pre Const Stab Public Park Construction

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

ECONOMICS OF THE DEAL

CURRENT STADIUM OPERATING COSTS MARKET VALUE OF LAND 166 Gross Acres REVENUE - 16 Acre Public Park & Open Space Charger Rent $2.5 Million - 20 Acres of Road/ROW & Utility Easements Aztec Rent $300 Thousand = 130 Net Usable Acres (5.66 Million SF) - 78% Net Yield Special Events $3.1 Million Concessions $300 Thousand “As-is” No Zoning or Density Entitlement Rights Transfer from TOT Funds $3.0 Million No Subdivision Map - No Street or Utility Infrastructure Sports Arena Ground Lease $3.3 Million Total Revenue $12.5 Million Mission Valley Community Plan Zoning Guidelines Development Limited to 4 Stories & Surface Parking EXPENSES 80% Commercial – 104 Acres = 2.1 Million SF Stadium Operating Expense ($7.5 Million) 20% Residential/Lodging – 26 Acres = 930 Units & Rooms 1997 Stadium – Series A Bond Payments ($5.7 Million) Financing Costs ($1.6 Million) Land Use Allocation Capital Expenditures ($750 Thousand) Office: 30% 39 Acres 800,000 SF $30/SF Total Operating & Financing Expenses ($15.6 Million) Retail: 30% 39 Acres 650,000 SF $35/SF Industrial: 20% 26 Acres 620,000 SF $19/SF Total Operating Loss ($3.1 Million) Residential 15% 19 Acres 550,000 SF $33/SF - 620 Units Lodging/Hotel 5% 6 Acres 230,000 SF $40/SF - 310 Rooms Deduct TOT Transfer Funds ($3.0 Million) Average $30/SF Deduct Sports Arena Lease Income ($3.3 Million) Effective Operating Loss ($9.4 Million) Commercial Density: FAR: 0.5 ($30-$35/SF as Improved)

Residential Density: 35 Units/Acre – 0.66 FAR ($35-$40/SF) = $45,000/Unit Balance of 1997 Stadium Series A Bonds: $57 Million 7.40% Due in 2027 Semi-Annual Payments Entitled, Subdivided, Improved & Rough Graded Lots Market Value: Payable at Par in 2009 Average $30/SF = $170 Million

City Receives No Property Taxes from Stadium Site “AS-IS” MARKET VALUE CALCULATION City Receives No Transient Occupancy Taxes from Stadium Site Gross Land Value = $170 Million ($30/SF) City Receives Minimal Sales Tax Revenue from Stadium Site Land Sale & Legal Cost (3%) - $ 3 Million Engineering, Entitlement & Subdivision - $ 5 Million Demolition & Site Clearing Costs - $ 4 Million Infrastructure & Utility Costs - $ 22 Million Public Park - $ 3 Million Financing & Carrying Costs (70% LTC) - $ 15 Million Developer Overhead & Profit (10%) - $ 17 Million Net Market Value “As-is” = $100 Million ($17/SF)

SCENARIO COMPARISON PRESENT VALUE ANALYSIS

Three Scenarios were Modeled over a 40 Year Period to Project the Assumptions: Future Cash Flows and Evaluate the Present Value of the Outcomes. Expense Inflation/CPI = 3.0% Annually Property Tax Increases = 2% Annually Scenario 1: Status Quo All Cash Flows are Discounted at 6.50% for 41 Years. • The City continues to incur the current operating loss until expiration Terminal Values for Cash Flows are Capitalized at 6.50% of existing Occupancy & Use Agreement in 2020; Future Property Value is calculated by Appreciation at 3% Annually • City continues Payments for 1997 LRB-A Stadium Bonds until 2027; Residual Land Value is 20% of Future Property Value • City receives no property tax or hotel tax from Stadium Site; • City receives nominal sales tax revenue from Stadium Events; • City receives no income from Practice Facility. Scenario 1: Status Quo Present Value: (Loss of $73.8 Million) Scenario 2: Stadium & Arena/Convention Center Development • City Ground Leases the Stadium Site to a Master Developer for 99 Years for the Development of a Sports & Entertainment Anchored Scenario 2: Stadium & Arena/Convention Center Development Transit Oriented Urban Village Development; Present Value: Gain of $373.3 Million • City receives Ground Rent equal to Stadium Bond Payments;

• City renegotiates Charger Lease to more favorable terms; Scenario 3: Chargers Relocate & Development Stadium Site • City leases Practice Facility to Chargers for 30 years; Present Value: Gain of $186.8 Million • City receives Property Taxes, Sales Taxes and Hotel Taxes from development of Project; • City provides $100 Million in Public Debt Financing to the Project: CONCLUSION • Developers Purchase Land from City in 40 Years at Market Value. Development of a New Stadium & New Arena/Convention Center Scenario 3: Chargers Relocate & Development Stadium Site Complex with a Sports & Entertainment Anchored Transit Oriented • The City continues to incur the current operating loss until 2012; Urban Village on the Stadium Site Produces the Highest Present • Chargers Terminate Occupancy & Use Agreement in 2012, and pay Value for the City when Compared to the Status Quo Situation or Termination Fee of $23.9 Million in 2012; the Chargers Relocating and Developing the Site. • City refinances 1997 LRB-A Stadium Bonds and continues Payments for 20 Years; Whether a New Stadium is Built or not, the Mission Valley Stadium Site • City receives no property tax or hotel tax and nominal sales tax is going to be Developed in the Future. The Value to the City Depends revenue from Stadium Site until 2016; upon the Timing and Intensity of the Future Development • Upon Charger Termination, City Ground Leases the Stadium Site to Developers for 99 Years for the Development of Stadium Site; The Proposed Stadium & Arena/Convention Center Project will • Ground Rent equal to 5% of Land Value as 20% of Property Value; Generate Nearly Twice as much Value for the City as Allowing the • City receives Property Taxes, Sales Taxes and Hotel Taxes from Chargers to Relocate and Developing the Stadium Site in the development of Project after 2016; Future and More than Five Times as much Value as Continuing the • Zoning & Density based upon Mission Valley Community Plan Status Quo. • Developers purchase Land from City in 40 Years at Market Value.

FINANCIAL BENEFITS TO CITY RETURN ON INVESTMENT FOR CITY

City is Not Giving Away Land for Free Market Value of Land: “As-is” $100 Million City Eliminates Annual Obligation of Stadium Debt ($5.7 Million) Net Income $7.6 Million City Phases Out the Cost of Operating Stadium (>$5 Million / Year) Yield on Land Value 7.6% City will earn Tax Revenue as Follows: Phase I Phase II Phase III Property Tax 1,750,000 575,000 690,000 PUBLIC ASSETS Sales Tax 1,450,000 395,000 280,000 Hotel Tax 1,000,000 720,000 1,690,000 Value of New Stadium $600 Million Total Revenue 4,210,000 1,690,000 2,660,000 Value of New Arena/Convention Center $265 Million - City Debt Obligations ($100 Million) Cumulative 4,210,000 5,900,0008,560,000 Total Value of New Facilities to Public $765 Million

StadiumArena + Future Economic Impact & Financial Benefit to the San Diego Region Property Tax 900,000 280,000 of hosting Future Super Bowls, MLS All-Star Games, Holiday Bowls, Sales Tax 160,000 155,000 Poinsettia Bowls, NCAA Tournaments, Major Sporting Events & Music Events. Total 1,060,000435,000

Cumulative Total 4,210,000 6,960,000 8,995,000

FUTURE LAND SALE PROCEEDS NEW CITY DEBT OBLIGATIONS (2014)

Market Value of Land: “As-is” $100 Million Stadium $50 Million $3.75 Million / Year

Arena/Convention Center $50 Million $3.75 Million / Year Market Value of Land: “As-If Developed” $317 Million Total $100 Million $7.5 Million / Year

Future Market Value of Land $1.035 Billion

Annual 3% Appreciation for 40 Years NET INCOME

Present Value of Future Land Sale Proceeds $180 Million Ground Rent $4.7 Million “As-If Developed” Discounted at 6.50% for 40 Years Tax Revenue $9.0 Million

Reduction in Stadium Operating Losses $6.1 Million

Total Revenue 19.8 Million

Refinanced 1997 Stadium Bonds ($4.7 Million) New Stadium & Arena Bonds ($7.5 Million) Total Expenses ($12.20 Million)

Net Income $7.6 Million

MISSION VALLEY PLANNING & IMPROVEMENTS TRAFFIC FLOW & CONGESTION

PROPOSED DENSITY & BUILDING HEIGHTS TROLLEY & TRANSIT: The Trolley Stations at the Stadium, Fenton Parkway and San Diego Mission will be Fully Integrated with Bus The Density and Building Heights of the Proposed Stadium & Arena Routes to Improve Access & Increase Ridership to Reduce Traffic. Development Project are Similar to and Representative of Several Existing Properties in Mission Valley: FREEWAY ACCESS: A Direct On-Ramp & Off-Ramp to Interstate 15 will Substantially Reduce the Traffic Volume during Major Events. HIGH RISE OFFICE Centerside I; Centerside II; Hazard Center; Pacific Center I & II FRIARS ROAD: A Signalized Intersection to the West Garage will Manage & Control Daily Traffic Flow & Volume during Major Events. LOW-RISE OFFICE Mission City; Rio Vista; Camino del Rio North; Camino del Rio South MISSION VILLAGE DRIVE: The Mission Village Drive Intersection with Friars Road and San Diego Mission Road will be Realigned & HIGH RISE HOTEL Signalized to Improve Circulation, Traffic Flow and Reduce Congestion. Marriott; Hilton; Sheraton; Doubletree; Town & Country RANCHO MISSION ROAD: The Roadway will be Extended Westward LOW-RISE HOTEL Across the Stadium Site Connecting to Fenton Parkway. Doubletree Club; Ramada; Extended Stay; Residence Inn; Holiday Inn SAN DIEGO MISSION ROAD: The Existing Roadway will be Relocated APARTMENTS and Realigned to Improve Freeway Access, The Signalized Intersection Promenade; Villa Dorado; Archstone; Presidio Place at Mission Village Drive will Improve Circulation, Reduce Congestions & Increase Traffic Flow; The Road will be Extended Westward Around the Arena and Southward to Connect with Rancho Mission Road. PARKING FENTON PARKWAY: The Construction of the Fenton Parkway Bridge STRUCTURED PARKING: 15,500 Parking Spaces will be Provided in Across the San Diego River will Substantially Change the Traffic Flow & the Three 6-Story Parking Structures for Stadium & Arena Events as Circulation in the Area by Providing Access to Camino Del Rio North, well as Daily Parking Requirements for the Commercial Properties; Camino Del Rio South, Stadium Way, Mission Gorge Road & I-8. Parking will Exceed the City’s Requirements for Transit Oriented Developments. Apartment & Hotel Parking will be provided on their own Property and Not Require Parking within the Parking Structures. PUBLIC PARKS

SURFACE PARKING & TAILGATE AREAS: Over 900 Surface Parking The Project will include a 15 Acre Public park along the San Diego River Spaces will be provided Along Rancho San Diego Road and Stadium will provide OMBAC Rugby Field Youth Soccer/Football Fields; Road which will allow for Tailgate Parties on the Grass; A 250 Space Lot Basketball Courts; Sand Volleyball Courts; Tennis Courts; Playground; will be Built under I-15; A 300 Space Tailgate & Special Events Lot will Skateboard Park; Picnic Tables & BBQ’s; Community Center; Grass be Built Adjacent to the Stadium. Play Areas; Dog Park; Public Restrooms; and River-walk.

GRASS PARKING: For Major Events, the Public Park will be Utilized for A Children’s Park with Child Care Facilities and Playground will be 1,500 Surface Parking Spaces & Tailgate Events. provided at the Fenton Parkway Trolley Station. A Local Neighborhood Park with Children’s Playground is provided in the Residential Area.

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

STADIUM DESIGN

MULTI-USE STADIUM STADIUM SIZE

Football: NFL: Chargers & NFL Super Bowl / Pro Bowl Service Level 270,000 SF NCAA: Aztecs; Holiday Bowl; Poinsettia Bowl; BCS Lower Bowl 166,000 SF CIF: San Diego County Playoffs & Championships Main Concourse 234,000 SF Lower Suite Level 91,000 SF Soccer: MLS Soccer Franchise; FIFA Events; Premier League Club Bowl 70,000 SF NCAA: Men’s & Women’s Tournaments & Playoffs Club Level 130,000 SF Upper Suite Level 91,000 SF Rugby: IRB-NA/USR US National Team & USR Rugby Upper Concourse 121,000 SF Upper Bowl 126,000 SF Lacrosse: MLL Team & NCAA Tournaments Ramps/Plaza 245,000 SF Total 1,550,000 SF Entertainment: Concerts, Music Festivals, SuperCross, Monster Trucks, Rodeo, Bull Riding, Motor Sports; Movies SPECIAL FEATURES

Retractable Seating Sections for Concert Stage & Expanded Field Area STADIUM USAGE PROJECTIONS DD GrassMaster – Nylon reinforced Natural Grass Surface EventDeck – Portable Surface Protection NFL Chargers & NFL Events 10 -12 Games NCAA Aztecs - Mountain West 6 - 8 Games NCAA Holiday & Poinsettia Bowls 2 Games BENEFITS OF NEW STADIUM CIF Football 2 - 4 Games MLS-FIFA / NCAA Soccer 18 - 24 Games • Better View Angles & Seating Closer to Field Concerts & Music Festival 5 - 10 Events • Larger Concourse Areas & Increased Facility Capacity Sporting Events (Rugby& Lacrosse) 1 - 6 Events • Larger & More Spacious Suites & Club Level Dirt/Thrill & Motor Sport Events 1- 4 Events • Additional Suites & Club Seating Private, Religious, Convention 1 - 4 Events • State-of-the-art Video & Audio Systems & LED Display Systems Total 45 – 75 Events • 80% of Seating along Sidelines – 20% of Seating in End Zones • Seats 40’ – 50’ Closer to Field Surface

• Seats 8’ – 10’ Higher STADIUM CAPACITY • Steeper Seat Rake/Angle to Field

Field Level 35,500 Seats +17% Increase • Increased Number of Seats in Lower Bowl by 2,260 (+17%) Lower Suites 724 Seats – 60 Suites • Increased Suites from 113 to 120 (+6%) Club Level 8,660 Seats • Increased Suite Level from 100,800 SF to 182,000 SF (+80%) Upper Suites 916 Seats – 60 Suites • Increased Club Seating from 7,660 to 8,660 (+12%) Upper Level 19,800 Seats - 2% Decrease • Increased Club Level from 112,600 SF to 130,000 SF (+15%) Total 65,600 Seats + Expansion Seating • Increased Concourse Areas from 294,000 SF to 355,000 SF (+20%)

STADIUM DESIGN SOURCE: HOK SPORTS RETRACTABLE SEATING SUBM ITTED TO CONCERT STAGE AREA CHARGERS TASK FORCE

HOK SPORTS – CHARGER STADIUM LOWER BOWL & MAIN CONCOURSE PLAZA

SERVICE LEVEL LOWER SUITE LEVEL

STADIUM DESIGN

CLUB LEVEL UPPER CONCOURSE

UPPER SUITE LEVEL UPPER BOWL

STADIUM OVERVIEW

STADIUM CONSTRUCTION COSTS STADIUM FINANCING

Dallas Cowboys $1.0 Billion Sources of Funding NY Giants & NY Jets $1.2 Billion Permanent Seat License Sales 33% $200 Million Indianapolis Colts $625 Million Owner / Developer Equity 20% $120 Million San Francisco 49ers (Proposed) $800 Million Public Debt (City & County) 17% $100 Million Long-term Permanent Debt 30% $180 Million Proposed Charger Stadium Cost (2002) = $400 Million ($6,100 / Seat) Total 100% $600 Million Current Charger Stadium Cost (2007) = $500 Million ($7,600 / Seat) Future Charger Stadium Cost (2014) = $600 Million ($9,150 / Seat) PSL Sale Procceds Location PSL Price Range % Sold Proceeds Field Level $3,500 - $10,000 80% $140 Million CONSTRUCTION BUDGET Club Level $3,500 - $7,500 90% $40 Million Upper Level $2,000 - $3,500 80% $40 Million HARD COSTS (Less 10% Commissions & Marketing) ($20 Million) Site Work & Infrastructure 7,700,000 Net Proceeds $200 Million Excavation & Foundation 35,900,000 Structural Frame 133,200,000 Developer/Owner Equity Plumbing 20,500,000 Chargers & NFL 80% $96Million Electrical 46,100,000 MLS & Soccer Franchise 20% $24 Million HVAC 25,600,000 Total Equity $120 Million Elevators/Life Safety 12,800,000 Seating 12,500,000 STADIUM OPERATIONS Interior Improvements 107,600,000 Playing Field 2,600,000 Revenue Scoreboards/Video/Audio 28,200,000 Stadium Rent & Reimbursements $8.5 Million FF&E / Equipment 30,700,000 Stadium Naming Rights $4.5 Million Landscaping & Hardscape 12,800,000 Facility & Other Naming Rights $3 Million TOTAL HARD COSTS 476,400,000 Advertising & Signage $2 Million Annual PSL Admin Fees $5 Million SOFT COSTS Concessions, Tours & Miscellaneous $3 Million Architectural/Engineering 57,200,000 Total Revenue $26 Million Fees/Permits/Contingency 23,800,000 Financing Costs 37,100,000 Expenses TOTAL SOFT COSTS 118,100,000 Property Taxes & Insurance $6 Million Stadium Operations $7 Million TOTAL COST 594,500,000 Total Expenses $13 Million +/- $600 Million ______Net Income $13 Million Construction Loan 60% Loan-to-Cost $360 Million Debt Service $12.5 Million The information contained herein has been obtained from sources deemed believable. While we do not doubt it accuracy, we have not verified it and make no guaranty, warranty or representation about it. It is your responsibility to independently confirm its accuracy or completeness. Any projections, opinions, assumptions or estimates are used for example only and do not represent the current or future STADIUM & ARENA performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct DEVELOPMENT PROPOSAL a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

ARENA & CONVENTION CENTER OVERVIEW CONVENTION CENTER USES

ARENA USES Specialize in Small to Mid-Size Event Market Complement & Supplement to San Diego Convention Center Stage: Concerts; Theater; Performances Basketball: NBA; NBA-D; NCAA; CIF Exhibition Areas: Exhibitions; Conventions; Trade Shows; Ice Rink: NHL; WHL Hockey & Ice Events Conferences; Public Events. Center Floor: Sporting Events; Family Events; Thrill Events Meeting Rooms: Seminars; Corporate Meetings; Special Events; Main Floor: Trade Shows/Exhibitions; Motor Sports Weddings; Reunions; Parties; Social Events. Assembly: Main Stage Auditorium: Theater; Performances; Concerts; Public Meetings; Forums/Debates; Seminars. Pavilion: Small Venue Concerts & Performers Arena Suites: Private Parties; Family Events; Corporate Events.

ARENA USAGE PROJECTIONS SOUTHERN CALIFORNIA CONVENTION CENTER COMPETITION Major Concerts & Music Festivals 24 - 36 Events Minor Concerts & Music Festivals 24 - 36 Events Long Beach 224,000 SF Family Events, Circus 24 - 36 Events Palm Springs 92,500 SF Basketball Events – NBA, NCAA, CIF 15 - 20 Games Anaheim 670,100 SF Arena Football 6 - 8 Games San Diego 525,900 SF Hockey & Ice Events 6 - 12 Games/Events Theatrical & Musical Performances 1- 4 Productions PROPOSED FACILITY SIZE Sporting Events (Rugby & Lacrosse) 1- 6 Events Thrill Events (Wrestling, UFC, Boxing) 2 - 8 Events Exhibition Areas: 70,000 SF – 140,000 SF Trade Shows/Exhibitions 8 - 10 Events Meeting Areas: 5,000 SF – 75,000 SF Private, Corporate, Religious, Convention 2 - 8 Events Reception Areas: 5,000 SF – 30,000 SF Total 110 - 180 Events Auditorium: 1,000 Seats

SAN DIEGO CONCERT VENUE COMPETITION CONVENTION CENTER USAGE Days/Week Days/Year Major Venues >10,000 Capacity Main Exhibition Area 2.5 130 Coors Amphitheater – Chula Vista (Outdoor- Summer/Fall) Upper Exhibition Area 2 110 Open Air Theater – SDSU (Outdoor- Summer/Fall) Meeting/Ballrooms 3 150 Cox Arena – SDSU (Indoor –Year Round) Rooftop Reception Deck 2.5 130 Reception Rooms 2.5 130 Smaller Venues >1,000 Capacity Auditorium/Theater 1.5 75 House of Blues – Downtown (Indoor –Year Round) Arena Event Suites 1 50 4th & B – Downtown (Indoor –Year Round) Total 2.5 150 Days Concerts on Bay – Embarcadero Park (Outdoor- Summer/Fall) Casinos – Viejas; Pala; (Outdoor- Summer/Fall) Projected Occupancy 40% - 50% Humphreys – San Diego Harbor (Outdoor- Summer) Average Attendance/Event 3,500 Casinos –Harrah’s; Sycuan (Indoor –Year Round) Total Annual Attendance 650,000

ARENA & CONVENTION CENTER DESIGN

COMPARISON OF STADIUM COMPARISON OF STADIUM TO ARENAS & AMPITHEATERS TO CONVENTION CENTERS

The Exterior Dimensions of the Regional Arenas & Amphitheaters will fit The Widths and Half of the Lengths of the Regional Convention Centers within Qualcomm Stadium will fit within Qualcomm Stadium

ARENA & CONVENTION CENTER DESIGN CONVENTION CENTER

CONCEPTUAL DESIGN Auditorium / Theater / Stage ARENA & EVENTS CENTER Convention Arena Suites

PREMIER SEATING & SERVICES Meeting & Event Suites/Boxes Reception Rooms

Private Suites/Boxes Exhibition Hall – Lower

Club Restaurants & Bars Exhibition Hall - Upper

Club Seating & Suites Rooftop Pavilion

Loge Seating & Event Suites

Loge Restaurants & Bars

SEATING SECTIONS Floor Seating FULL SERVICE CONVENTION HOTEL Plaza Seating – Concert Plaza Seating - Full Hotel Arena Suites

Upper View Seating Hotel Tower

Concert / Theatrical Stage Meeting & Reception Rooms Retractable Seating Sections Restaurants & Bars

AMPITHEATER Hotel Lobby Concert & Performance Pavilion Ballrooms

Boutique Shops & Spa

ARENA & EVENTS CENTER DESIGN

SCORE UPPER LEVEL BOARD UPPER LEVEL

SUITES SUITES CLUB LEVEL – LOGE LEVEL LOGE LEVEL - CLUB LEVEL ICE RINK PLAZA LEVEL BASKETBALL COURT PLAZA LEVEL FLOOR LEVEL FLOOR FLOOR LEVEL STAGE

ARENA NORTH-SOUTH CROSS-SECTION

CONVENTION CENTER

OUTDOOR PAVILLION

UPPER LEVEL SCORE UPPER BOARD EXHIBITION HALL SUITES RETRACTABLE LOWER CLUB LEVEL – LOGE LEVEL ICE RINK SEATING EXHIBITION HALL COURT PLAZA LEVEL FLOOR FLOOR LEVEL LOADING & STAGING AREA STAGE

ARENA EAST-WEST CROSS-SECTION

SOURCE: NBBJ STADIUM RENOVATION SUBM ITTED TO CHARGERS TASK FORCE

ARENA / CONVENTION CENTER OVERVIEW

ARENA SUMMARY ARENA / CONVENTION CENTER CONSTRUCTION COSTS

Floor Level 5,100 Seats 25% 127,500 SF Arena Size = 600,000 SF Plaza Level 7,600 Seats 38% 190,000 SF Convention Center Size = 320,000 SF Club Level 1,500 Seats 7% 60,000 SF Total Project Size = 920,000 SF Suites 800 Seats 4% 48,000 SF Loge Level 1,900 Seats 9% 48,000 SF Average Cost of New Arena: $250 Million - $350 Million Upper Level 3,600 Seats 18% 90,000 SF Total 20,500 Seats 600,000 SF Projected Arena Cost: $190 Million $310/SF $9,270 / Seat Luxury Suites 12 16 Seats 200 Private Suites 24 16 Seats 400 Projected Convention Center Cost: $75 Million $230/SF Club Suites 12 16 Seats 200 Hotel Suites 12 15 Seats 180 Projected Total Cost: $265 Million $288/SF Convention Suites 12 15 Seats 180 Total Suites 72 1,160 Seats Maximum Capacity 21,500 Seats & Suites ARENA & CONVENTION CENTER FINANCING

ARENA OPERATIONS Sources of Funding Public Debt – City 20% $50 Million Revenue Permanent Debt -Arena 50% $135 Million Arena Naming Rights $3 Million Permanent Debt -Convention Center 22% $60 Million Facility Naming Rights $1.5 Million Developer/ Equity 5% $12 Million Advertising & Signage $1 Million Permanent Seat License Sales 3% $8 Million Event Rent $6 Million Total 100% $265 Million Suites & Club Section $1 Million Event Reimbursements $1 Million Construction Loan 80% LTC $210 Million Parking & Sublease Income $2 Million Concessions (Net) $3 Million Total Revenue $18 Million Arena PSL Sale Procceds Location PSL Range/ Seat % Sold Proceeds Expenses Floor & Plaza $1,000 - $2,500 50% $7 Million Property Taxes (Mills Act Abatement) $1 Million Club Level $1,500 - $3,000 70% $2 Million Arena Operations $6 Million (Less 10% Commissions & Marketing) ($1 Million) Total Expenses $7 Million Total Proceeds $8 Million ______Net Income $11 Million

Debt Service $11 Million Debt Service Coverage 1.00X

I EXECUTIVE SUMMARY

II PROPOSAL OVERVIEW

III PROCESS & RESPONSIBILITY OVERVIEW

IV DEVELOPMENT OVERVIEW

V ECONOMIC BENEFIT ANALYSIS

VI STADIUM OVERVIEW & DESIGN

VII ARENA/CONVENTION CENTER OVERVIEW & DESIGN

VIII MIXED-USE SPORTS DEVELOPMENT PROJECTS

SPORTS & ENTERTAINMENT ANCHORED DEVELOPMENTS

ENTERTAINMENT RETAIL CENTERS STADIUM / ARENA / CONVENTION CENTER PROJECTS & MIXED-USE DEVELOPMENTS SOUTHERN CALIFORNIA NATIONWIDE Universal City Walk Universal Studios: Hollywood Dallas: Texas Stadium (Cowboys) & (Rangers) – GloryPark: Ground-up New Mixed-Use Suburban Development Downtown Disney – Community Retail Center, Hotel & Office Disneyland: Anaheim Cincinnati: Paul Brown Stadium (Bengals) & Great American (Reds) Hollywood & Highland – The Banks: Mixed-Use Urban Redevelopment Fox Theatre & Chinese Theatre: Hollywood – Office, Retail, Residential

The Grove LA Kansas City: Sprint Center (Future NBA or NHL) West Hollywood: – Power & Light District: Mixed-Use Urban Redevelopment – Office, Retail, Residential

St. Louis: Busch Stadium (Cardinals) STADIUM / ARENA PROJECTS & MIXED-USE DEVELOPMENTS – Ballpark Village: Mixed-Use Urban Redevelopment – Mixed-Use Development –Office, Retail, Residential CALIFORNIA Louisville: Downtown Arena (Cardinals) Los Angeles: Staples Center (Lakers, Clippers, Kings) – Center City: Mixed-Use Urban Redevelopment – LA Live: Mixed-Use Urban Redevelopment – Office, Retail, Residential – Hotel, Theater, Retail, Office & Residential Washington DC: Baseball Park (Nationals) Ontario: Citizens Bank Arena – Ballpark Village: Mixed-Use Urban Redevelopment – Piemonte: Ground-up New Mixed-Use Suburban Development – Residential & Retail – Retail, Office & Industrial Indianapolis: Lucas Oil Stadium (Colts) Fremont: Cisco Park (Oakland A’s) – Convention Center Expansion & Mixed-Use Urban Development – Ballpark Village: Mixed-Use Urban Redevelopment – Retail, Residential & Office New Jersey: Meadlowlands (Giants & Jets) Continental Airlines Arena – Xanadu: Ground-up New Mixed-Use Suburban Development Santa Clara: Proposed Football Stadium (San Francisco 49er’s) – Hotel, Office, Retail – Mixed-Use Suburban Development – Office, Retail & Residential Rosemont: Allstate Arena, Convention Center & Rosemont Theatre – Mixed-Use Suburban Development – Hotel, Office, Retail

ENTERTAINMENT RETAIL CENTER DEVELOPMENTS

SOUTHERN CALIFORNIA

Universal City Walk – Universal Studios Hollywood & Highland – Fox Theatre

Downtown Disney – Disneyland The Grove – Los Angeles

STADIUM-ARENA PROJECTS WITH MIXED-USE DEVELOPMENTS - CALIFORNIA

LOS ANGELES, CALIFORNIA ONTARIO, CALIFORNIA Staples Center – LA Live Citizen’s Bank Arena Piemonte at Ontario Center

STADIUM-ARENA PROJECTS WITH MIXED-USE DEVELOPMENTS - CALIFORNIA

FREMONT, CALIFORNIA SANTA CLARA, CALIFORNIA Oakland A’s Cisco Field San Francisco 49er’s Ballpark Village Stadium Village

STADIUM-ARENA PROJECTS WITH MIXED-USE DEVELOPMENTS - NATIONWIDE

ARLINGTON, TEXAS KANSAS CITY, MISSOURI Dallas Cowboys Stadium & Texas Rangers Park Sprint Arena & Convention Center GloryPark Power & Light District

STADIUM-ARENA PROJECTS WITH MIXED-USE DEVELOPMENTS - NATIONWIDE

CINCINNATI, OHIO MEADOWLANDS, NEW JERSEY Paul Brown Stadium & Great American Ballpark NY Giants & NY Jets Stadium & Continental Airlines Arena The Banks Xanadu

STADIUM-ARENA PROJECTS WITH MIXED-USE DEVELOPMENTS – NATIONWIDE

WASHINGTON, D.C. ST. LOUIS, MISSOURI Washington National’s Ballpark Busch Stadium – St. Louis Cardinals Ballpark District – Half Street Ballpark Village

STADIUM-ARENA PROJECTS WITH MIXED-USE DEVELOPMENTS – NATIONWIDE

LOUISVILLE, KENTUCKY COLUMBUS, OHIO Downtown Arena - University of Louisville Nationwide Insurance Arena - Columbus Blue Jackets Center City Arena District

ROSEMONT, ILLINOIS Allstate Arena - Rosemont Theater & Stephens Convention Center Rosemont Walk

IMAGINE THE FUTURE OF THE MISSION VALLEY STADIUM SITE

AS A WORLD CLASS SPORTS & ENTERTAINMENT VENUE

SOURCE: HOK SPORTS SUBM ITTED TO CHARGERS TASK FORCE