Judge Rules: Dissolution Law Did Not Invalidate The Stadium Agreements

"Before redevelopment agencies were dissolved, the Forty Niners contracted with the City of Santa Clara's Stadium Authority and redevelopment agency to finance construction of a new stadium to be owned by the City and used by the Forty Niners. Do those contracts survive dissolution of the redevelopment agencies? The court concludes they do."

Read Judge Alan Sumner's ruling at https://services.saccourt.ca.gov/publicdms/Search.aspx and search for case # 34-2012-80001192. 

First Look at Santa Clara's Super Bowl Bid

Tuesday night Santa Clarans get their first look at what cities are expected to ante up for a Super Bowl bid. The City Council called a special meeting for Tuesday night to adopt a series of resolutions about government services – especially public safety – and tax and fee exemptions for the NFL during a Super Bowl.

Basically, the City of Santa Clara will the provide government services – including public safety, fire, emergency medical services to support the Super Bowl and related events held in Santa Clara at no cost to the NFL or to the teams playing in the Super Bowl. Instead, the San Francisco Super Bowl committee will reimburse Santa Clara for these costs – paying the city for pre-event services within 60 days of invoicing, and 50 percent of the anticipated Super Bowl event costs 30 days before the game.

Other accommodations concern city taxes and fees. One is that employees of the NFL and their affiliates will be exempt from Santa Clara hotel taxes and parking permit fees -- the estimate is this applies to around 350 people. The other is that Super Bowl tickets will be exempt from the Santa Clara's $0.35 per ticket surcharge. This is capped at $250,000 and the city estimates that most of that will be collected from regular season games.

The Council is working from estimates that a Super Bowl carries with it an economic boost for a region of $300 million. This is likely based on a Williams College study of Super Bowl economic impacts from 1970 to 2001, which posited the $300 million as the best case. The study also cautioned against confusing gross returns with net returns. 

The New Orleans Super Bowl Host Committee reported $434 million in total overall economic activity tied to the 2013 Super Bowl, according to a report in New Orleans Times Picayune. The question is, of course: How much of that activity will be in the City of Santa Clara -- or even in Santa Clara County? San Francisco clearly anticipates that it's going to get a big boost. 

All this being said, a Super Bowl would be a tremendous boost for Santa Clara both in terms of civic prestige and city visibility. These are intangibles whose effects cannot be measured in the short term, yet pay dividends for the city decade after decade in many ways. 

Here's a link to read the agenda report and the text of the resolutions.

Shell Game or Prudent Planning? The latest Santa Clara RDA money shuffle

Despite the ostensible urgency that demanded an emergency meeting of the Santa Clara RDA/Stadium Authority Monday to transfer $4.5 million to a SF 49ers business entity called Stadco, no one seems to know who called the emergency. 


"[I] Can't pinpoint exactly who was the driving force," is how one member of the City staff -- who have been working on the details of the resolution round-the-clock since Thursday -- answered a direct question from Jamie McLeod. Details of the 26-page proposal -- plus about 50, mostly critical, emails -- were not made public until 5:10 p.m. Monday afternoon. 

Despite the fact that no one is quite clear whose idea it was, the City Council was crystal clear in approving it; with Council Members Lisa Gillmor, Pat Kolstad, Pat Mahan, Jamie Matthews, and Kevin Moore voting in favor, and Will Kennedy and Jamie McLeod opposing. "This is an excellent document," said Council Member Kolstad in his ringing endorsement of the proposal.



Predevelopment Agreement for Stadium Site Infrastructure

The move is the latest in a series of efforts to shield money that the City has allocated to redevelopment agency (RDA) projects. Like many other RDAs, Santa Clara is attempting to protect control over RDA assets by transferring them to city government. However, as the legislation continues to evolve, some fear that transfers between municipal agencies may not secure the assets. Their logic is that the only way to protect RDA money may be to put it in private -- not public -- hands. 

The proposal currently on the table in Sacramento moves control of redevelopment assets to currently unspecified local "successor agencies." And those successor agencies are not necessarily city governments. This raises the specter of successor agencies selling parks, libraries and fire stations to private owners.

Further, it's difficult to pinpoint just how the tax increment pie will be sliced, should the RDAs shut down. (Tax increments are the central funding mechanism for redevelopment, and divert the increase in tax revenues resulting from redevelopment back to the RDA). Presumably, after the first year -- where money will flow back to the state to close the budget deficit -- any revenue above what's needed to pay off debt will be divided by the same formula that is used for distributing other tax revenue. 

What won't happen is that all the RDA assets will flow into municipal coffers, although school districts will see more revenue. Combined with California's zany school district boundaries, this fans the fires of  a zero-sum competition between school districts and municipal governments as each vies for a bigger slice of a diminishing pie. 

For example, if the San Jose RDA is abolished, Santa Clara Unified School District will receive its proportional share of north San Jose property taxes. Currently, those property taxes are diverted by the San Jose RDA, leaving SCUSD to deal with a potential doubling of its student population with no additional revenue. Either SCUSD loses or San Jose 

Santa Clara voters approved a ballot measure last June to go forward with a 49ers stadium project. However, the Stadium Authority and Stadco are still negotiating the project's terms and conditions and  the complex financing plan for construction has yet to be completed or approved. Should the project fall through, "the advanced funds that are spent for makeready work will not be recoverable," explains City staff analysis of the measure.

The "predevelopment funding" aims "to ensure that the $4 million previously earmarked for this project, as well as the project tax increment are protected and are used for the purposes which the Council has identified and the voters have confirmed," said Deputy City Manager Carol McCarthy, in presenting the proposed resolution.

The $4.5 million that the Santa Clara Stadium Authority (SA) will advance to Stadco will pay for "make ready" infrastructure such as demolition, clearing and grading, design, relocating high voltage transmission lines, and regulatory compliance on city-owned land. This infrastructure would be needed for any development on the city-owned land, according to McCarthy. The site is currently leased by Great America for overflow parking.

"It is expected that the City, as owner of the Stadium site, will benefit from the work installed on and adjacent to the site," continues the analysis, "however it is possible that the work may not have value for future development, depending upon the nature of future development on the site."

All of this presents unacceptable risk for Santa Clara say opponents of the measure."The 49ers LLC is an entertainment business operating in our city," Santa Clara resident Clysta McLemore told the City Council. "It is not a bank. Our property tax dollars belong in a public agency to be used for the public good. Tonight's proposal opens the city to absorbing more front-end risk while our city services are being cut, city employees are being furloughed, and school budgets are being decimated," adding that "Measure J didn't discuss predevelopment costs."

"What it looks like from the outside … [is that] you are acting in parochial interests to sequester funds that are ours, not the team's," City resident William Ray warned the Council. "And in doing so you are acting against the interests of the people of California, of which we are members. The idea of racing the clock ahead of the governor and legislature is unconscionable," adding that in his previous home of Palm Beach County, FL, three recent county commissioners -- Tony Masilotti, Mary McCarty, and Warren Newell – are currently serving federal prison sentences for corruption and bribery.

Summary of pre-development funds transfer:

Stadco Predevelopment Costs

• Stadco has incurred a lot of predevelopment costs to date
• Stadco will advance the sa the $40 million for the benefits of SA
• Predevelopment costs includes SA operating costs

Payment of Initial Make-Ready Funds:

• SA advances $4 million to Stadco upon execution of agreement
• Kept in separate account along with any interest earned
• May be used only for make-ready work and SA operating costs in accordance with appropriated budget
• SA will hold RDA potion of development fees in separate account
• Funds returned/retained by SA if stadium is not built

Stadium Follies

After the Oct. 23 City Council meeting, I can only assume the Santa Clara Plays Fair advocacy group intends the word 'play' in its theatrical sense. In which case, its troupe might do better to tour its act on the comedy club circuit rather than at City Hall.

Its show bombed when the anti-49ers stadium group flung its fanfold computer paper petition across the width of the Council Chambers in streamer after streamer. It reminded me of the Marx Brothers in A Night at the Opera when Groucho, Chico and Harpo all try to get through customs with Maurice Chevalier's passport.

The performance wasn't improved by a spontaneous encore from the city's reigning municipal rage-monger, a guy with comedian Lewis Black's psycho delivery but none of Black's cleverness or wit.

Perhaps you shouldn't judge the message by the messenger. On the other hand, as Marshall McLuhan famously said, the medium is the message.

Belligerence, confrontation, adolescent antics, clumsy sarcasm, and snide -- and not-so-snide – insults all telegraph a clear message, although probably not the one SCPF intended.

The message that came through is a zero-sum power play: I win, you lose. It denies compromise and consensus. It's the Bush-Cheney modus operandi. It leads to waterboarding, not fair play.

And tactically, it makes no sense to alienate people right out of the box. Take me, for example.

I have no opinion about the proposed 49ers stadium project. I'm not a football fan. I will probably never set foot in the stadium. If anyone has no horse in this race, it's me.

But after last week's meeting, although I remain undecided about the stadium, I sure do have an opinion about SCPF.

And that's a lose-lose. I didn't gain any more insight into the question and they lost the opportunity to gain a vote.

There are other ways to do things. In fact, there's someone right here in town whose name is synonymous with win-win politics: retired State Senator John Vasconcellos.

The senator was a master at finding consensus with people of widely disparate views. In the process he racked up significant legislative achievements. Since retiring, he's been actively advancing his approach through his non-profit Politics of Trust foundation.

Its guiding principal is simple: "Human beings are innately inclined toward becoming affirming and constructive, responsible and trustworthy." So far the organization has launched three projects to coach and mentor elected officials and advocacy groups in the art of influencing and governing through building common ground.

What does that have to do with the price of a 21st century sports stadium?

Vasconcellos' approach suggests, for a start, assuming that those who disagree with us are honest and want the best for Santa Clara, just as we do. That precludes last week's sideshow.

Second, let's keep the discussion on the issue facing us: Is it a prudent investment for the City? Asking why the Yorks don't ante up to fill the $200 million funding gap is specious. Cities have revenue streams that private businesses don't – taxes.

How does tax revenue look 10, 20, 50 years into the future? Can the stadium help the City reduce its vulnerability to the boom and bust cycles of technology and real estate? Because this would be a regional asset – and a regional sales tax generator -- shouldn't the rest of the region contribute?

These are some of the questions I look forward to hearing answers to as analysis goes forward. However, I'm not likely to tune in to reruns of the Santa Clara Plays Fair show any time soon. Maybe TV Land will air them, right after All in the Family.