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March 11, 2011
City of Santa Clara tries 49ers RDA money grab
The city of San Jose wasn't the only one to attempt a grab of RDA money on Tuesday: nearby Santa Clara's city council also voted on Tuesday to transfer $140 million plus 178 acres of property from its development authorities to the city. About $40 million of the money is earmarked for a new San Francisco 49ers stadium.
It's not entirely clear whether these moves are legal: The state legislature is set to enact budget language that prevents cities from raiding their RDAs' bank accounts before the authorities are folded, but as Marianne O'Malley of the state Legislative Analyst's Office told the Sacramento Bee, "Whether it's going to work completely is not entirely clear."
In any case, 49ers president Jed York insisted that he had "alternative plans" that would fill the $40 million gap if the RDA money weren't available. Which you'd think would raise the question of why the city of Santa Clara is being asked for the money if the 49ers don't need it, but perhaps that's not the sort of thing that's raised in polite company.
When one breaks down the balled-up $40M, one finds that it's an even worse rip-off of Santa Clara than we found in Measure J last June:
$21M in RDA bonds
$4M in RDA cash
$15M in cash advances FROM THE $9ers them selves (The $'s intentional.).
In Measure J, we got these solemn 'best possible estimates' that the RDA was good for $7M in cash and $21M in bonds, and that we'd "only" be saddling the RDA with $12M in cash notes denominated in Niner Dollars. Less than a year later, we're in worse shape than we were then.
Like the "won't hurt your General Fund" promise, the promise on our RDA's encumbrance was obviously meant to be broken by this City Council.
If Jed York has other plans for us - namely, advancing the whole $40M and then squeezing any RDA successor for priority payback - our city is going to find itself in real trouble.
We also got some soothing assurances last Tuesday that 49ers wouldn't pursue payments for a debt for which an Agency could no longer legally collect tax money, but they weren't very persuasive: If the RDA is phased out, the Stadium Authority will be responsible for ALL of that debt.
But we're only members of the tax-paying public, and we're not entitled to any of the truth behind this: Since May 1, 2007, our City Council has met IN SECRET with the 49ers and Cedar Fair over 85 times. Both team and Council continue to conceal those dealings from Santa Clarans.
Rgds,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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The $15 M in cash advances from the 49ers comes with an 8.5% interest rate that Santa Clarans will be paying off.
The RDA bonds will also come with plenty of interest. The city only reports the principal, not the interest. The actual amounts spend in property tax dollars on the stadium are higher.
And the hotel Mello Roos taxes that will be collected for the stadium will be fronted by the 49ers cash advance too - at 8.5% interest.
With the transfer of RDA $$ to the city and the Stadium Authority - what happened to the firewall that's supposed to be between the city/RDA and city/Stadium Authority?
Both the Santa Clara and the San Jose RDAs siphon off property tax dollars away from the school district - the loss was $35 million this year, one quarter of the school district's budget.
Posted by SantaClaraTaxpayer on March 11, 2011 02:32 PM
8.5% interest? Who negotiated this, Patricia "Doable" Mahan?
In contrast, last year I received about close to 0.00% interest on my cash deposits. (If it's priority debt maybe I'd like to get on this deal.)
I guess the rate reflects the $9ers opinion of either the city's creditworthiness or gullibility.
After discussions with representatives from CashCall, Pink Slip Loans and the Russian guy who plays Peggy from the Discover Card commercial, our former Mayor Mahan advised other city officials that 8.5% was the best interest rate the city could borrow at.
Posted by santaclaragetsscrewed on March 11, 2011 10:52 PM
That 8.5% is a cap. But it's still the truth.
Monies advanced by the 49ers are repayable at rate of the lesser of corporate bonds rated BB or at 8.5%.
Oh, but that's no problem: We Santa Clarans knew that already. All we have to do is to open up our Measure J ballots from June 8, 2010. See 7.4(c) in that ballot, or in the Term Sheet.
If there are any Santa Clarans still denying the FACT of the public subsidy for the San Fransisco 49ers, they are kidding themselves.
The repayment of those team advances are precisely those subsidies.
Best regards,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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More on how the 8.5% interest works here:
www.sacbee.com/2011/03/11/3469100/redevelopment-agencies-take-on.html
PFA: Pretty Amazing (you figure out the "F").
Posted by MikeM on March 12, 2011 12:34 AM
The article explains how with the flood of RDA bonds hitting the market interest rates have increased two to three hundred basis points in just a year.
We will pay 8.5% interest to help build the $9ers their (oops, former madam mayor, I mean "our") stadium.
I'm sure this is all going to work out great.
Please council person Lisa G., tell me about the wonderful alternative events where the city is going to make "all that money."
Crickets...
Posted by santa clara jay on March 12, 2011 02:33 AM
Unfortunately, that's not how it works.
The Sac Bee coverage was strictly about the RDA bonds themselves - it says not one word about the 49ers cash advances.
Servicing the debt on the *cash advances* will be at up to 8.5% cap.
This is how the San Francisco 49ers are turning our City's agencies into their personal ATM - not even counting the bonded debt.
Best regards,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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We can't place blame soley on our elected officials. Its obvious a few of them are owned by the Yorks. Much of the blame falls on the laps of the voters, who were foolish & naive enough to believe in this stadium fantasy.
Posted by Andrew S. on March 12, 2011 01:36 PM
Sorry, Santa Clara Jay, that last one was for Mike M. Looks we were aiming in the same direction.
And I'm forced to agree with Andrew S. Measure J gets thrown in our faces all the time, with the stadium boosters telling us that we somehow lost our right to speak out just because J passed.
In the end, there's nothing stopping this City Council from fixing the really larcenous parts of Measure J, other than lacking the political will to do so.
Thx/rgds,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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Posted by Bill Bailey on March 12, 2011 02:35 PM
The sad fact is that the reason Santa Clara has to put up some money is so the whole reason they are supposed to own it can be disguised. If the 49ers pay all of the cost and Santa Clara owns it, people might see that the deal is made to shield the 49ers from property taxes which would start at 10 million per year and go up from there with inflation.
Santa Clara owns it so that the 49ers don't have to pay extra property tax money to government agencies like the County of Santa Clara, the Santa Clara Unified School District and the State of California.
Posted by PattyMahanFanClub on March 12, 2011 03:21 PM
That's quite right.
The Santa Clara Stadium Authority will be forced to hold title to the stadium, making it fully responsible for the stadium's operation. The 49ers are making NO guarantees that they'll cover any operating shortfalls.
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The basis of any tax paid by the the 49ers is merely the 10 days out of 365 that the team will be playing games in it.
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Anyway you slice it, the 49ers are getting a free ride. They'll take well over $100 million out of a stadium here every year.
Note that Santa Clara's General Fund will get a stinking $180,000 from the 49ers in the first year.
Best regards,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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Bill,
Isn't it $180K rent a year for the first 10 years?
You also gotta love the fact that County Assessor Larry Stone (a Sunnyvale resident a guy who hangs out in the York's box) was featured prominently in "Yes on J" advertisements.
I assume that the $9ers will 10/365 of the property tax and the city will be responsible for 355/365 of the tax.
I still don't blame the $9ers for any of this really. There's something really wrong with a system that allows this to happen w/o proper supervision. The council is simply football nuts.
Posted by santa clara jay on March 12, 2011 04:21 PM
The Ground Rent payable to the city is on a graduated payment schedule, heavily back-loaded. It's $180K the first year, and it does not rise even to a million dollars until the year 2024.
See Part 4.3(a) of the Term Sheet - city website, 49ers Past Reports, June 2, 2009.
Or your Measure J Sample Ballot!
If you take $1M in 2024, and calculate its value in 2010 dollars, derating at 6% per year - EXACTLY the way city staff made its own calculations - you'll find that that million is easily worth less than $130K this year.
Do the same calculations for the Great America theme park, and you'll find that over the initial stadium lease...
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...Cedar Fair will pay us nearly ten times as much for the theme park lease as the 49ers will pay us for the stadium lease.
It's an utter disgrace.
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Contact me at info at santaclaraplaysfair dot org, and I'll send you those results. I've presented them before our City Council, too.
It's not only the paltry, measly returns from a subsidized stadium for the 49ers - it's also the gross inequities we're seeing in the Ground Leases we do have.
Best regards,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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Voters were not told what the true costs of the Santa Clara 49ers stadium would be in Measure J. There is no legal requirement in California for city-wide ballot measures to disclose costs to taxpayers. (Unlike county-wide or state-wide ballot measures, in which there is a requirement for a legislative analyst to provide a fiscal impact statement to be included in ballot materials.) Santa Clara's city attorney actually argued in court in April 2010 that there is no legal requirement to have cost disclosure on the stadium ballot Measure J because it's not required by state code. Nevermind that it would have been the ethical thing to do to tell voters that Santa Clara's share is going to be $444 million plus a General Fund loss plus another couple hundred million in interest.
There is also no 'truth in advertising' requirement in campaigning because of freedom of speech. The pro-stadium campaign backed financially by the 49ers to the tune of almost $5 million of course did not disclose the $114 million direct subsidy costs, the decades of debt and interest on loans/bonds, the risk to Santa Clara's Stadium Authority of being on the hook for $330 million to be raised from selling personal seat licenses and naming rights, the loss to our General Fund because of the extension of the redevelopment agency in time, and the loopholes in the Term Sheet which will cost us in terms of operations/maintenance/public safety costs.
Put the 2 together - no legal requirement for cost disclosure plus no truth required in campaign materials and !!viola!! you have a $5 million campaign to convince voters they will get a Billion dollar stadium for just about free.
Oh- and let's not forget SB43, the special interest legislation written just for the 49ers so that they could override our city charter and bypass the competitive bid requirement. Santa Clara voters were promised that we would get to vote on that override - it would have taken 2/3 of voters to achieve the override. That also helped them pass Measure J, because it wasn't partnered with a charter override measure as originally promised.
Posted by SantaClaraTaxpayer on March 12, 2011 06:44 PM
Well, now that there's a lockout, I think that they can kiss a stadium in the Bay Area goodbye.
Posted by John on March 13, 2011 12:04 AM
Well, now that there's a lockout, I think that they can kiss a stadium in the Bay Area goodbye.
Posted by John on March 13, 2011 12:05 AM
Sorry. Double post.
Posted by John on March 13, 2011 12:07 AM
Well the lockout is certainly good news.
I hope it's a long one. People should take a break from pro-sports. How did this country ever survive w/o them?
Posted by santa clara jay on March 13, 2011 01:26 AM
Unfortunately, the lockout can't prevent our City Council from spending the stadium subsidy money anyway.
The RDA extension contained in the SB 211 amendment - needed in order to issue the 49ers' their Stadium Subsidy Bonds - is an IRREVERSIBLE act. It was passed on an emergency vote last Tuesday evening, it will likely be bulldozed through what was supposed to be a "Public Hearing" this Tuesday evening, March 15th.
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That Council action robs our City's General Fund
of nearly $20,000,000 over time.
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Now: Imagine this same walkout in 2016 or 2021, and imagine absolutely nothing happening in an NFL season in Santa Clara. That's nothing going on in a subsidized stadium for which we've paid and raised a total of $444,000,000.
The 49ers are only giving our city peanuts and crumbs, anyway. But a lockout or walkout in that future season will still be a disaster for the Santa Clara Stadium Authority - and therefore for our city as well.
Best regards,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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Posted by Bill Bailey on March 13, 2011 01:16 PM
Santa Clara voters approved the stadium, but only after being inundated with 49ers propaganda that included false and misleading statements supported by the 5 Santa Clara politicians and various "Silicon Valley community leaders" who were shilling for the 49ers.
The ballot measure "question" they voted on was as biased as anything that the 49ers owner would have written. It contained no cost and falsely claimed no impact to the city's General Fund.
A year before the vote the majority of Santa Clara voters were against the stadium subsidy. 7 months before the vote the majority of Santa Clara voters were still against the stadium subsidy, and this was a month into the 49ers propaganda campaign.
Santa Clarans wanted the stadium, but only after a majority of their politicians told them over and over again via 49ers propaganda that it was a fantastic deal. Were Santa Clara to have 7 honest politicians, there would not have been a majority of Santa Clarans voting for it.
Posted by PattyMahanFanClub on March 14, 2011 12:16 AM
Right, but people shouldn't trust politicians on stadium issues.
Unfortunately people don't understand the import of what a city council can do to a city that has some $$ to spend and a large, disinterested and not overly educated population (with a high % of rental or transient residents).
Isn't acting asst. CM Carol McCarthy the one responsible for writing the actual ballot language-that doesn't disclose cost-that people voted on?
I've been profoundly disappointed in the highly paid professional staff of the city. Ron Garrett, the format asst. CM, last year totally downplayed the possibility of the SA ever running into financial trouble.
Carol McCarthy is certainly acting like it's her holy mission to act in the interests of the 49ers.
The whole cabel running the city reminds me much of the Bushies in the run-up to Iraq.
Posted by santa clara jay on March 14, 2011 02:38 AM
You guys all think that the City of Santa Clara got a raw deal because the Stadium Authority is on the hook for $333M with any shortfall coming from the General Fund.
Did you guys ever think that if they were able to sell naming rights, PSLs, Suites, and advertising that the excess would go the General fund?
That is why the City of Santa Clara Council agreed to this.
$333M is a far cry from the possibilities.
Look at Farmer's Field in LA that just signed a 30 year 700M naming rights deal with Farmers Insurance for a ONE team NFL stadium.
That 700M contract can be taken to the bank for a lump upfront sum to build the stadium and in turn the bank would make money back on the interest.
With Farmers Insurance being such a solvent company the banks would be foolish not to loan out that money considering the interest they would make in return....Hence Cisco putting in $120M for the A's naming rights.
If a 2nd NFL team moves in the stadium then its 30 years 1 Billion dollars.
It is obvious you guys are terrible at math.
If Santa Clara can get a 30 year $350M naming rights deal for the stadium then all the suites, PSLs,and advertising sales goes straight to the General Fund.
That is the sole reason why the City of Santa Clara took this project on. They know full well they will be able to sell of it at a premium in an area that is full of corporations and wealthy fans.
If a 2nd team (Raiders) move in then that $350M becomes a conservative figure and considering what LA got it is already a very conservative figure.
That excess does not go to the stadium itself it goes to the General Fund of the City of Santa Clara.
Shortfall comes from the General Fund but the excess goes there as well.....It is a 2-way street guys.
Silicon Valley is full of corporations who can pay that kind of money without a blink an eye.
This plus the fact the 49ers are the most popular team in the Bay Area over their existence.
If the City got the naming rights deal and then got an excess of 75M into their General Fund how does that not help the taxpayers or the city itself?
For 40M in RDA funds that are about to go away real fast by that rat Jerry Brown this is in fact a great deal for the City of Santa Clara.
333M is a wash as the naming rights will crush that # and the excess will provide SC residents money for schools, police, fire-fighters, libraries, and public services.
You guys think the 49ers are the ones getting a deal? Its the City of Santa Clara that is....
Posted by Sid on March 16, 2011 05:26 PM
"If Santa Clara can get a 30 year $350M naming rights deal for the stadium then all the suites, PSLs,and advertising sales goes straight to the General Fund."
Leaving aside whether Santa Clara could get such a deal, the math isn't correct here. Naming-rights payments of $350 million spread over 30 years would only be enough to pay off about $120 million worth of upfront stadium costs (give or take, depending on the interest rate). So the other revenue streams would still be needed as well.
Posted by Neil deMause on March 16, 2011 06:41 PM
Wrong again, Sid - multiple times, in fact. Read the Term Sheet:
Naming Rights revenue goes STRICTLY to the Stadium Authority, which is doing to have enough trouble selling the rights to begin with. It will be issuing bonds - and paying very high coupon on them - against what it *prays* it's going to make by selling those rights.
That's in addition to selling PSLs to fans who want nothing to do with them.
The Farmers Insurance deal has NOTHING to do with Santa Clara. Not only are Farmers conditions (50 events, 40,000 spectators each) completely unrealistic for Santa Clara - breathless 49ers' boosters cannot even answer this basic question:
How much of the $700 million even goes into the stadium construction itself - and how much goes into the pockets of the NFL millionaire who gets persuaded to move in? Betcha it'll 4 or 5 to 1 in favor of that team owner.
Otherwise, they wouldn't need L.A. to float another $350M to tear down their own Convention Center, would they?
L.A.'s got nothing to do with it. Instead, think Monster Park - which only paid S.F.'s stadium authority a miserable $1.5M a year.
We do far more accurate math than you do, Sid:
___It's not $333M, it's $330M.
___It's not 1 billion for a second team anywhere - not Los Angeles, and most certainly not Santa Clara.
___Neither team in Santa Clara (assuming we get a second team) will pay more than $5M a year to the Santa Clara Stadium Authority.
___The 49ers won't even pay our General Fund $9 MILLION over FORTY years. Again, that's in the Term Sheet. Not a single billion in there, I'm afraid.
___Your $350 million figure for the Raiders is completely absurd. No way that a Davis will ever pay a York (or our city) anywhere near that amount of money.
The 49ers -- ALONE -- control the second-team sublease, NOT any Agency in Santa Clara. Again, read the Term Sheet - it's right there.
The excess DOES NOT go to our General Fund - totally false, Sid.
The City DOESN'T get the Naming Rights - the Santa Clara Stadium Authority does. And your $75 million dollar figure is total fantasy.
Sum up --- It's a lousy deal for the City of Santa Clara:
First year alone, Jed York walks away with over...
*** $135,000,000 *** in TV rights, luxury box and club seat proceeds.
The city of Santa Clara gets
*** a stinking $180,000 *** into its General Fund.
Try getting the facts before you post - you really don't understand a thing about the Santa Clara Stadium Subsidy.
And you just proved as much.
Always a pleasure,
Bill Bailey, Treasurer,
Santa Clara Plays Fair dot Org
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It's ok Neil,
Our mayor Patricia Mahan doesn't understand the concept of PV either.
I've heard variations on Sid's riff before.
I invite him to let me know which cities have had a positive return from their NFL stadium.
Seems to me that they're nothing but trouble for whomever owns them--which is why the teams don't want to own them.
Posted by santa clara jay on March 16, 2011 06:49 PM
Naming rights won't be cure-all for stadium debts. They haven't been for other NFL stadiums. Reliant Stadium in Houston, which has one of the most lucrative stadium naming rights deals in all sports, still needed an taxpayer bailout this past year to pay its debt obligiations.
Posted by Andrew S. on March 16, 2011 11:38 PM
The sad thing is that "Sid" may be the nom de plume of any one of five Santa Clara council members.
I mean, it's seems about their level of logic.
This is what people in the city who can reason and think are up against...
Posted by SANTA CLARA JAY on March 17, 2011 01:09 AM
Check the Merc and Chronicle today. The city wants to give $5 million to the team directly.
There's not even a final agreement. The leadership of santa clara is going totally insane.