Subsidy opponents interviewed on KPFA

This morning KPFA, 94.1 FM, interviewed Byron Fleck, a founding member of our sister organization NotWithMyMoney.org. You can listen to a recording of it here -- fast forward to about the 33'42" mark.

Also on the show was Neil deMause, co-author of the seminal book "Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit," and the wesbite of the same name.

KPFA is listener-sponsored, and has been broadcasting from Berkeley, CA since 1949.

Just barely above junk bonds

The 49ers would like Santa Clara taxpayers to believe that building, owning and operating this stadium will be a fabulous investment of our money. Better than buying Google stock at $100, or Sunpower at $25.

Some members of City Council are all but ready to put on Gold Rush outfits to repeat that chant.

But if it's such a screaming good deal, why haven't the 49ers themselves scooped it up yet? Or the city of San Francisco, which has been looking this over even longer than we have?

Well, one source for impartial opinions turns out to be the bankers, because to build a 68,000 seat stadium, the city will have to borrow a lot of money. The bankers are the ones who will have to take a hard look at the deal and decide how risky it is. The bankers have no personal attachments to this, only their money. And money itself is neutral.

At the November 20 City Council meeting, David Brodsly, the city's own bond consultant struggled to spit out the cold hard facts: the Stadium Authority bonds will be BBB-rated -- just one step above junk bonds!

Besides the bruised egos ("They think our pride and joy is junk!") there is also the practical matter of bond interests. Safe loans have lower interest rates. Risky loans have higher interest rates (think pay-day loan.) Higher interest rates drive up the total cost of borrowing of money. Ultimately this will make it harder for the stadium to break even.

Nobody on City Council batted an eyelash at this. Here we are, mortgaging our future for this white elephant, but nobody even registered a reaction when a disinterested bystander calls it a turkey.

Here's a video clip of the remarks, with a transcript:



Santa Clara resident Don Buchanan: "What kind of a rating do you think this bond will receive?"

David Brodsly, Managing Director, KNN Public Finance (the city's bond consultant): "The two bond issues that are ... umm ... being contemplated by the Stadium Authority ... they would be the [inaudible] ... the ... the admissions bond would probably be in the BBB level which is the bottom of the investment grade range, that's ... it's ... that ... it's the less certain area of the market, but that's ... that's a good guess standing here today."

Tough Love

San Jose Mercury News sports columnist Tim Kawakami comments on an interview with SF 49er owner Denise DeBartolo-York:

HURRY UP SANTA CLARANS! Denise D-Y demands your fealty! You will watch her 2-8 football team and you will LOVE IT. AND HER! AND YOU WILL PAY HER! NOW!!!!

The 49ers are losing 2-8 this year, so far. They were 7-9, 4-12, and 2-14 in the last 3 seasons. And yet they want Santa Clara to subsidize their stadium to the tune of $287,000,000, by our estimates.

Compare and contrast...

The New England Patriots are 10-0 this year, so far. They were 12-4, 10-6, and 14-2 in the last 3 seasons. They built their stadium entirely with private financing. And Patriot fans did not need to buy personal seat licenses, either.

Support our Niners! Make them pay for their own darn stadium!!!

White elephant

white elephant, n. 1. an Indian elephant of a pale color that is sometimes venerated in India, Sri Lanka, Thailand, and [Burma]; 2a. a property requiring much care and expense and yielding little profit; 2b. an object no longer of value to its owner but of value to others; 2c. something of little or no value. Merriam-Webster Online.

White elephants are rare albinos that are highly prized by the kings of Thailand, Burma and other Asian countries. Thanks to their special status, they don't have to work as beasts of burden, like their normally pigmented cousins. However, just like regular elephants, they are large animals with large appetites. Therefore giving someone a white elephant is considered both a gift and a curse.

According to Mahidol University (Thailand,) because of ...

... the inordinate cost of maintaining a white elephant ... [such a] gift could easily induce bankruptcy if not also accompanied by a grant of land. So singular an honor as a white elephant could obviously not be refused, but without land it was subtly barbed -- an indirect criticism which apparently cooled the heels of excessively ambitious minions.

So instead of "Oh boy, we are going to own a billion-dollar stadium, and it will only cost us a couple of hundred millions," maybe we should be asking "Why do we have to pay $222,000,000 to scoop up elephant droppings?"

The cold, cruel truth

These words of wisdom are from Ray Ratto's recent article on the A's stadium — Time to call A's owner for crying wolf on stadium — but the analysis holds just as true for the current San Francisco 49ers' request for a massive public subsidy from the City of Santa Clara . . .

the cold, cruel truth, proven again and again by economists everywhere, is that stadiums have not paid off for anyone except for the team owners.

Starbucks on Mars

The article is almost a year old — A stadium in Santa Clara? You'll be dead before it happens — but every time I read this line . . .

There will be a Starbucks on Mars before there's a 49ers stadium in Santa Clara.

. . I have just a little hope that fiscal sanity will triumph over reckless spending in Santa Clara. [And if it doesn't, maybe the latte run will be just a bit more exciting.]

Thanks Scott Ostler!

A quick thought

If contributing $222,000,000 and 15 acres of land to a project AND assuming the risks of stadium operations were such a great deal, why can't the San Francisco 49ers find private investors willing to invest private money into this project?

The fact that they have turned instead to the City of Santa Clara to ask for a massive public handout for this project is perhaps the best evidence that this enormous gift of public money is a poor investment.

One of Silicon Valley's many claims to fame is its venture capital firms, and if the 49ers can't find private investors in this area (or anywhere else, for that matter) to partner with them, then they should not expect the City to provide the money for them.

The New England Patriots have proven that football stadiums can be built with little to no public assets. The 49ers should take a page from their play book.

Two teams, one stadium

Mercury News sportswriter Ann Killion raised an interesting idea in a recent column — maybe the 49ers and Raiders should build a stadium together, just as the New York Jets and New York Giants are doing.

As Killion writes in her article "A's, 49ers trailing on stadium scoreboard"

Football stadiums are a questionable investment for everyone except a football team. Because of their size, they can be used only for NFL games, the occasional big soccer game, random bowl game or rare mega rock concert. NFL football stadiums are guaranteed for only 10 dates a year. Factor in the handful of other events suitable for such a venue, and you're lucky to push that number to 15 events a year.

And that's worth almost a billion dollars?

If it could be built and operated with private funding, a joint stadium would certainly make much more economic sense. Whether such a stadium — even one funded privately — would fit in Santa Clara, however, is still an open question.

What about the intangibles?

"Your lovin' gives me such a thrill. But your lovin' don't pay my bills."

"Money (That's What I Want)" Written by Berry Gordy and Janie Bradford; made famous by four Englishmen from Liverpool

So far, most of us who are opponents of the stadium subsidy have focused exclusively on the financials, because it is after all our money, and it is a lot of our money -- about $2000 per resident!

At the SCPF press conference, we were asked "What about the intangibles?" In other words, what about the supposed prestige ^* of having an NFL team in our city.

In a nutshell, "Intangibles don't pay my bills!"

But as long as we're examining non-economic impacts, there are are plenty of other issues that we have not looked at. Here are just two:

1. Crime: two weeks ago, there were two shootings in the parking lot of a Bay Area football stadium, one before and one after a game.
   
   Our neighbors in Sunnyvale looked at potential impacts of a stadium, back in February. Their report can be found here. They found that at Monster Park on 49er game days, the police have to deal with
   

   ... drunk in public, fights, and auto burglaries. During an average game, SFPD makes six arrests, issues three misdemeanor and 25 infraction citations, and reports one traffic collision. (page 7)
   

   Is this what we want with a family-oriented amusement park next door? Or in the so-called entertainment district?
   
   
2. Traffic: Sunnyvale's report also found that:
   

   Tasman Drive and Lawrence Expressway ... would likely operate at Level of Service “F” with severe traffic delays... Access between ... side streets and westbound Tasman Drive would be severely congested. (page 6)

   If it's this bad a mile down the road in Sunnyvale, imagine what it will be like at the stadium gates. Forget about coming to or going from Great America, Mission College, the Mercado, or Rivermark.
   

Of course, all this additional crime and traffic will cost money. Sunnyvale concluded that

An increased need for traffic and public safety services is likely. (page 8)

The hit song "Money (That's What I Want)" is an interesting parallel to the stadium subsidy, on a couple of different levels.

1. It neatly sums up the uselessness of intangible benefits.
   
   
2. The people who put the most into it are not the ones who got the most out of it. Berry Gordy and Janie Bradford wrote it. The Beatles got all fame and fortune.
   

--

^* It's arguable there is no prestige because Santa Clara's name will not get top billing. The San Francisco 49ers have already said they will not change their name. This is not surprising -- the Arizona Cardinals and the Dallas Cowboys did not change their names either when they got new stadiums (in Glendale, AZ and Arlington, TX respectively.) If Santa Clara were known for anything then, it would be as a bunch of gullible patsies.

A cynical observer

A few weeks ago, Mercury News sportswriter Tim Kawakami had some interesting observations on the San Francisco 49ers' Santa Clara stadium proposal.

As he wrote in his post "The 49ers’ Ashley Lelie: A weird symbol of a confusing franchise",

The 49ers are asking for about $200M in public money (which I believe will probably be jacked up to $250M at some point), and yet they can just go ahead and say, well, why don’t we just purchase and operate a theme park while we’re at it?

This makes sense? To whom? Perhaps in the near future the Yorks can just ask Santa Clara for $2 billion and then decide to buy SeaWorld, too. Lots of syngery there, I’m sure.

I hope you'll follow the link above and read the post for yourself (the stadium issue is about halfway through the post.)

Going turbothermic...

In 1911, Ambrose Bierce, a San Franciscan journalist, wrote the Devil's Dictionary, a satirical book that lampooned political double-talk. It is fitting that we pay homage to Bierce today, when San Francisco and double-talk are very much in the news.

An updated edition of Devil's Dictionary might have an entry like this:

turbo·thermic, adj. From turbo- (to blow) and -thermic (of or related to heat.)
1. Blowing hot air.
2. Characterized by huffing and puffing, e.g. subsidy supporters trying to blow down Santa Clarans' house of fiscal responsibility.

Have you ever wondered where subsidy opponents get our numbers? The short answer is, they all come directly from reports produced by the city's consultants, or by city staff.

For a slightly longer answer, let's look at the three myths listed in the "Myth Busters" flyer. This flyer was handed out at the Art & Wine Festival by the Santa Clara Plays Fair coalition, of which StadiumFacts is a member.

---

Myth: the stadium project would create thousands of jobs.

Fact: the number of jobs is just over 500. Note the fine print: "FTE = Full Time Equivalent. Per CS&L." Because of the highly seasonal nature of the jobs, many of them will be part-time. Their sum total is equivalent to 515 full time jobs.

Source: report from Keyser Marston Associates (KMA, consultants hired by the city) dated June 1, 2007, page 8.

(Click on this small image for a larger version.)

By the way, KMA is in agreement with CS&L on this. CS&L are the consultants hired by the 49ers themselves. CS&L's job is to make the deal look as good as possible. If all they can come up with is 515, then anybody who tells you "thousands of jobs" is just going turbothermic, i.e. blowing hot air.

---

Myth: the stadium project would make a lot of money for the city.

Fact: the stadium would generate $650,000 of general fund revenue per year, from a city contribution of $222,000,000.

Source: KMA report dated June 1, 2007, page 8, and Implementation Plan and Timeline for the "City of Santa Clara Principles and Priorities for 2007-09," dated July 12, 2007, page 15.

(Click on these small images for larger versions.)

---

Myth: the stadium project will generate a lot of economic activity.

Fact: an office building would generate over 4 times the economic activity, while requiring no subsidy. Besides, if the city is going to "invest" $222,000,000 (assuming a subsidy can ever be called an "investment,") then the return-on-investment is the only bottom line that matters to the city. Keep in mind that the $650,000 annual return to the city discussed above already includes taxes on the $85 million in economic activity. How much revenue other private businesses might gain, or how much salary are being paid to football players, are secondary factors.

Source: KMA report dated June 1, 2007, addendum.

(Click on this small image for a larger version.)

Furthermore, subsidy supporters who cite the $85M as a benefit are being disingenuous because

1. they neglect to mention the comparison to an office building,
2. only $41M of the $85M is actually new benefits; the rest comes from the existing 49ers training center -- the colloquial term for this is "double-dipping." Here is the KMA report again, page 2:

(Click on this small image for a larger version.)

---

Notes:

1. The KMA report can be downloaded from here.
2. The Implementation Plan and Timeline for the "City of Santa Clara Principles & Priorities for 2007-09" can be downloaded from here -- click on REPORT under item 5F.

---

Last week, prominent subsidy supporter and former Councilmember Lisa Gillmor used the term "fuzzy math" to attack KMA's (and CS&L's!) numbers.

This is a curious phrase to use in this context, considering its history.

In the first presidential debate of 2000, George W. Bush repeatedly used the phrase "fuzzy math" to attack statements made by Al Gore, and to defend his own tax cuts for the rich. According to a CNN poll taken immediately after the debate, most people thought Gore won the debate, 48% vs. 41%.

Why are subsidy supporters jumping on this losing bandwagon?

Infinity not as infinite as it used to be

The feasibility study is not done. No contract has been signed. But already the flip-flopping has begun. The issue is cost overruns, both during construction and operation of the stadium.

At a meeting with the community in May this year, SF 49ers Director of Strategic Planning Jed York tried

to convince skeptical Santa Clarans that they would not be exposed to financial risk, either during construction or once the stadium opens.

"The 49ers' risk is infinite," Jed York, son of 49ers owners John and Denise DeBartolo York, told church members and other city residents Wednesday night at a meeting at the Resurrection Lutheran Church. "In your doomsday scenarios, we are taking that risk."

In September, a flyer distributed by the 49ers at the Art & Wine festival says the offer is still good:

No, there are absolutely no hidden costs. The city and its residents will not be responsible for cost overruns or operational shortfalls.

Here is a picture of the flyer. Click on the image to see a close-up of the highlighted part:

Earlier this month, however, York took a giant step back from that claim. In an interview with Mark Purdy, a sportswriter for the Mercury News, York changed his mind about that willingness to assume all risks:

". . . if you're losing money, the 49ers are going to write a check to the city council at the end of the year to the city general fund to make up for any losses that occur at a football game.''

But since the 49ers only play at home 10 days a year, does that mean the city is on the hook for the other 355 days? What about maintenance costs? Will they be apportioned by the same ratio, i.e. the city is responsible for 97% of all maintenance cost overruns?

infinite, adj.

1. Having no boundaries or limits.
2. Immeasurably great or large; boundless.

Interview on KKUP 91.5 FM

This morning Michele was interviewed by Don Cormier and Yolanda Reynolds on the Free and Clear show, KKUP 91.5 FM.

There were a report on our tabling at the Art & Wine Festival, as well as updates about the press conference to announce the formation of the Santa Clara Plays Fair coalition.

Click on the KKUP logo below for a recording (53MB MP3 file.)

"Pay no attention to that man behind the curtain."

Former Mayor Gillmor, the power behind the throne in Santa Clara politics, publicly excoriated Cedar Fair this week. The owner of Great America apparently committed a whipping offense when it raised objections to the proposed stadium. Cedar Fair was "acting in [its] narrow self-interest," according to Mr Gillmor.

Let's draw an analogy.

Imagine you are renting a nice little bungalow. One day the landlord just shows up, unannounced, with a casino operator. They proceed to discuss building a card club, right where your garage is.

Would you be upset? Of course you would. You might even oppose the deal. Is that "acting in [your] narrow self-interest?" Most people would say, no probably not. Certainly nobody could blame you for your objections.

So here's Cedar Fair. The owner-operator of the Great America theme park has been renting land from the City for years. They have a long term lease. They pay a fair rent^*, which is more than their neighbor, the SF 49ers, can say.

Now this neighbor wants to build a stadium where Cedar Fair's parking lot is. Apparently nobody got their agreement in advance. Cedar Fair understandably doesn't think this is such a great idea. Nobody can blame them for that.

Or can they?

Mayor Gillmor thinks he can. But since when does a private business have to act in anybody's interest but their stockholders'? It sounds brutal, but that's capitalism, which Mr Gillmor surely knows a thing or two about.

If this episode says anything, it is that the 49ers stadium deal is on life support. Why else would the éminence grise himself have to come out from behind the scenes to stump for it? The simple fact is that the 49ers are demanding an exorbitant subsidy from Santa Clara taxpayers. Furthermore, they are so fixated on the feeding trough that they forget to say "Pardon me" to their neighbors.

In the words of City Manager Jennifer Sparacino, we Santa Clarans should strive to treat all parties "fairly and equally, without special favors."

--

^* Cedar Fair pays the city "at least $5.3 million annually in rent" for the Great America property. For their training camp next door, the 49ers pay "about $24,000 a year - less than what it costs to rent some two-bedroom apartments nearby."

Truthiness Illustrated

Mark Purdy posted the full transcript of his interview with Jed York yesterday. It makes for very interesting reading.

There is one point in particular that caught my eye. Near the end of the interview, Mr. York made the following comment:

"... with the city's investment of $160 million, not only are they seeing revenue that's occurring from a 49ers game, they're also seeing direct revenue from the ancillary events, the 14 to 20 major events that can happen here. So the city of Santa Clara can see anywhere from $2 million to $10 million a year in net income going to their general fund because of the stadium being here."

Assume for the moment that his figures are correct. Is this a "good investment"?

• $2 million per year over the 30 year life of the stadium would not even repay $160 million.
• $10 million per year is equivalent to the 49ers Corp. making payments on a 30 year mortgage at 4.75%.
  

The really sad news is that the city's consultants and the 49ers' own consultants have yet to show the public how the general fund could net anywhere near $2 million per year. The Keyser Marsten report shows $700,000 per year. (Referenced below.)

Moreover, the initial subsidy from the city is $222 million -- $160 million cash plus $62 million for a new garage and moving the power substation. (Referenced below.)

As an MBA with experience in the finance industry, Mr. York surely realizes what a bad investment this would be.



References:
See the last page of the Keyser Marsten report at the following location:
http://ci.santa-clara.ca.us/pdf/collateral/49ers-20070605-Agenda-Report-Eval-49ers-Economic-and-Fiscal-Benefits-Study.pdf

For reference, see page 15 of the report under agenda item 5F on the July 17th meeting summary at:
http://cityclerkdatabase.ci.santa-clara.ca.us/wx/pubhtml/pubhtml/3010.html#July-17-07Regular

One wild ride

Yesterday I wrote that the City Council should not spend any more money on studying the San Francisco 49ers' stadium subsidy request until the City had a signed agreement from Cedar Fair.

I didn't really expect the City Council to postpone this request for additional money, but today's press release from Cedar Fair — "Cedar Fair opposes proposed 49ers stadium" — is precisely the reason why the City of Santa Clara should have obtained a signed agreement with Cedar Fair before spending a dime of taxpayer money on studying the proposal.

Cedar Fair's opposition isn't a complete roadblock to the stadium proposal — in its press release, Cedar Fair states its willingness to "consider selling the remainder of its lease and all of its interest and assets to the City or 49ers for fair market value" — but its opposition completely changes the circumstances of the proposal. If the City Council still wants to move forward with this proposal, it needs to study the feasibility in light of these new conditions.

The San Francisco 49ers, however, were quick to provide an alternative plan — they'll just buy the theme park.

A couple of problems with this new proposal.

First, as Santa Clara's Deputy City Manager Carol McCarthy told the San Jose Mercury News "Any sale requires the city's approval and is contingent on having a class A theme-park operator . . . with proven financial ability to operate it."

So, to use a baseball metaphor, strike one.

Second, the San Francisco 49ers have asked the city for $222,000,000 in public assets plus 15 acres of land to build the stadium. If they don't have the money to build their own stadium, how can they afford a theme park? And if we the taxpayers are subsidizing their place of business, is our subsidy helping them to acquire more business assets? Should public money be used to help a wealthy team owner buy even more private assets?

Strike two.

Finally, in many of their presentations to city residents, the 49ers have tried to claim that they want the City to operate the stadium because they "are in the football business, not the stadium business." (My previous responses to that claim have been "our city isn't in the stadium business either" and "that's a little like Intel saying its not in the office building business." Intel certainly isn't in the office building business, but it didn't use that argument to try and convince the city to build an office for them.)

But if the 49ers don't want to be in the stadium business, why on earth are they considering a leap into the theme park business? Shouldn't they stick a little closer to their core competencies?

I'll call that strike three.

Is this latest theme park idea just a last-minute desperation strategy? Are the 49ers merely clinging to any shred of hope that this proposal is viable? Do the San Francisco 49ers need to keep up the image that the Santa Clara plan is viable in order to put pressure on San Francisco to complete its proposal? Once the San Francisco proposal is in place, will the 49ers still be talking about venturing into the theme park business?

Time will certainly tell, but until then, be sure your seat belt is fastened and keep your arms and legs inside the car at all times.

It looks like it's going to be a wild ride.


UPDATE:

According to Julie Patel's article in the Mercury News today — Niners eye new spot for possible stadium — there may be another option. The proposed stadium site would be moved to an overflow parking on the other side of San Tomas Creek. But if they used this site, the 49ers would need to resubmit all of their site plans and traffic analysis, and the City would have to develop a plan to replace the parking Cedar Fair would be losing.

So this is yet another reason the City Council should have received Great America's approval in writing before spending any money even studying this proposal. As Ms. Patel writes in her article: "Whatever happens, the shifting debate is bound to cost the city of Santa Clara more time and money, on top of the $500,000 approved to research a stadium."

Back to school

It's been almost three months since the City Council last had any public agenda item related to the San Francisco 49ers' request for the City of Santa Clara to contribute $222,000,000 in public funds for a football stadium (although it seems that they have been having plenty of closed-door meetings.)

Tonight, however, the proposal will be back in public session.

At this evening's meeting, the City Council will consider the request to spend an additional $185,000 in public money to continue to study this proposal.

In case you've lost track of the total to date, this new request will bring the total to an even $500,000. And of course that figure doesn't include all of the staff time that has also been spent on this proposal.

I'm certainly in favor of study and research in general, but before continuing to spend any more money studying this proposal, the City Council needs to get back to the Guiding Principles it established for itself back in January.

One of those principles was a requirement that Cedar Fair agree that they will not assert business interference or negative effects from the feasibility studies and that this agreement needed to be in place "prior to pursuing discussions with the 49ers."

The City does not yet have that agreement.

So, the problem with spending money NOW on a feasibility study is that conditions may change by the time Cedar Fair is willing to agree to moving forward with a stadium without any reduction in their payments to the City or any City agency.

Therefore, we shouldn't be spending money on a study now. We should wait until Cedar Fair has agreed in writing to not assert their own business interests. When Cedar Fair does sign such an agreement -- then we can take up the question of whether additional public funds should be spent studying it.

And there's one more issue.

The cost estimates in the San Francisco 49ers' proposal were based on the City Council approving the project in July 2007.

So once we have Cedar Fair's approval, the City Council needs to ask the San Francisco 49ers to submit a revised construction budget.

Once those two pieces are in place, then and only then should we even consider spending more money studying this proposal. Financial conditions can change, and there's no point determining whether or not the July 2007 estimate is feasible, since we are already well past that approval date.

What can you do?:

1. Attend the City Council meeting on TONIGHT at 7pm and speak out! Speakers will probably be limited to 2 minutes each.

2. Call the Santa Clara City Council at

(408) 615-2250

3. Write a Letter to:

Patricia M. Mahan, Mayor
City Hall
1500 Warburton Avenue
Santa Clara, CA 95050

4. Send an email to:

mailto:MayorandCouncil@ci.santa-clara.ca.us?subject=Concerns%20about%20stadium%20proposal

5. Spread the word! Tell your neighbors and friends and encourage them to get involved!

The rich are different from you and me

Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.

F. Scott Fitzgerald, “The Rich Boy,” All the Sad Young Men (1926).

To which I might add, "The rich are greedier than you and me." Consider this:

When Forbes first analyzed ... the value of NFL teams in 1998, the magazine valued the 49ers at $254 million... A rising economic tide of network television contracts and new stadiums has been raising the NFL's boats ever since... Forbes pegs the 49ers' value at $799 million in 2007.

"New stadiums lift NFL teams' value," Mike Swift, SJ Mercury News, 09/20/2007.

That's more than 3X increase in 9 years, or about 13% per year. Try to find that in your neighborhood bank's CD offerings.

Even the stock market didn't do nearly that well in the same time period: not the Dow, not the S&P500, not even the NASDAQ came close to doubling between January 1998 and 2007.

So what would you call this?

greed, n. An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth.

TheFreeDictionary.com

Commonwealth Club discussion on "The Future of the 49ers"

Two weeks ago, I was invited to be a guest at a Commonwealth Club panel discussion entitled “After Further Review: The Future of the San Francisco 49ers.” The panelists were: Michael Cohen, Director of Base Reuse and Development, City and County of San Francisco; Ann Killion, Sportswriter, San Jose Mercury News; Patricia Mahan, Mayor, Santa Clara; and Carmen Policy, Former President and CEO, San Francisco 49ers and Cleveland Browns. The moderator was Dan Ashley of ABC7 News.

It was a fascinating discussion.

I was most surprised by two issues. First, the San Francisco stadium plan is quite serious and moving ahead quickly. Michael Cohen, who is in charge of the redevelopment efforts at Hunters Point, made it clear that while they were shocked at the Yorks' sudden withdrawal from negotiations last November, they quickly regrouped and developed an aggressive stadium development schedule. They met with the 49ers organization last December to present their new timetable, and to date they have met every one of the benchmarks on that new schedule.

The second surprise was the very strong sentiment expressed by three of the four panelists that the 49ers should stay in San Francisco. While I expected Michael Cohen to be in favor of the site, it was probably Carmen Policy who painted the most vivid picture of the possibilities of the Hunters Point location. Policy was clear in his belief that the 49ers’ first priority is a new stadium, but he was also clear that even if the San Francisco deal is not quite as good, the team should stay in San Francisco. In fact, Policy indicated that “if the NFL had its druthers, the 49ers would stay in San Francisco,” as Mercury News reporter Mike Swift noted in his article about the discussion – “49ers Decision a Year Away.”

Cohen answered many of the objections that I have heard about the site and outlined the plans for transportation improvements in the area.

Ann Killion also expressed strong support for the team staying in San Francisco, and she knocked down many of the myths promoted by stadium supporters in Santa Clara.

While Patricia Mahan talked about an “entertainment district” in Santa Clara, Killion replied that football stadiums are not like other types of professional sports facilities. She said that with a football stadium, 70,000 people come in 10 times a year to see the game, and then they turn around and leave. They don’t stick around and spend money.

She also noted that public subsidies for stadiums are a very hard sell in this area because we have the examples both of what can happen when public subsidy goes wrong (see Raiders, Oakland) and of how stadiums can be built without public subsidies (see Giants, San Francisco.)

Mayor Mahan started reading a list of cities smaller than Santa Clara that host NFL football teams, but the moderator interrupted to say that it wasn’t about the size of the city, it was about the money. [As we’ve discussed here before – "A tale of two cities."]

I would highly recommend tuning in for the broadcast of the discussion. It will be aired this Thursday, September 20, on 1590AM. Here are the full details:

Thursday, Sept. 20, 2007
KLIV-AM 1590 kHz
7:00 PM and 10:00 PM

If you miss the broadcast, you may be able to listen to it or purchase a recording of it at the Commonwealth Club website. It’s not yet available there, but I will update this post with a link as soon as it’s available.

If you want to learn more about the stadium issue, this discussion provides an excellent analysis of the situation and the state of the current proposals.

Three million Benjamins

Photographer Chris Jordan has a new series of works entitled "Running the Numbers: An American Self-Portrait."

He created this portrait of Benjamin Franklin using images of 125,000 $100 bills — $12,500,000 representing "the amount our government spends every hour on the war in Iraq."

To depict the $222,000,000 subsidy that the San Francisco 49ers have requested from the City of Santa Clara to build a football stadium, we'd need about 18 of these expensive portraits. [And if you include the value of the land the City has been asked to donate — for a grand total of about $287,000,000 in subsidy— we'd need 23.]

Either way, that's a lot of Benjamins.

The 700 Pound Gorilla

Funny you should mention Great America, and their parent company Cedar Fair.

Back in January, the Santa Clara Mayor and City Council formally adopted a set of principles for evaluating the 49ers stadium proposal. These included a requirement that Cedar Fair agree in writing to not interfere with the stadium feasibility study, and that this agreement was required prior to pursuing discussions with the 49ers.

Here it is September, with no agreement in sight. The Mayor is saying that Cedar Fair's opposition is "the most substantive" problem delaying the feasibility study. However, "We haven't come up against one obstacle, or one factor, that violates our principles for going forward," Mahan said. (SJMN, Sept 4 2007)

Hmm... I think we have a touch of selective amnesia going on here.

The Odd Couple, or Here We Go Again

It's more than two months old this time and it's getting stale. But in fact, it's just a reprise of the idea that first floated to the surface back in January: A marriage of convenience between Al Davis' Raiders and the York family's 49ers.

Now, the problem isn't the Raiders themselves, but the team's owner, Al Davis, who has been hauling multiple parties into court and suing them since before the Raiders split from Los Angeles. Millions of dollars in legal fees have been squandered by all sides - and that level of litigiousness certainly makes this Santa Claran wonder why the idea is even being proposed - again.

We thought this was properly dealt with back in January by Raiders Chief Executive Amy Trask, who simply said in essence that the Raiders would be concentrating on the current season in a stadium they're simply thrilled with, and that they are not actively seeking out the 49ers as business partners.

But like a zombie, this 'joint stadium' idea has come to life once again, walking the streets by night and claiming more victims, many of them credulous 49er Faithful. This time, on May 29, a columnist from the Sacramento Bee blew some more zombie powder in the creature's face.

True 49ers-Raiders synergy? Not a chance - and to their credit, neither author above really attempts to make such a limp case. Rather, the 'sticker shock' of what will likely be a one-billion-dollar stadium proposed for our City of Santa Clara has some 49ers business-office people looking for more ways to make others feel their pain.

But what the article fails to underscore is that any such partnership of the Yorks and Al Davis makes Davis a partner of the City of Santa Clara as well. Santa Clarans should be looking at any such agreement with deep suspicion, based on Davis' past dealings with the County of Alameda. Such a cooperative venture involving Mr. Davis may turn out to be anything but "cooperative".

In fact, Al Davis' latest lawsuit against the NFL was finally thrown out by the California Supreme Court only on July 2. If all we have to look forward to in any future dealings with Mr. Davis is more frivolous litigation, this Santa Claran strongly suggests that our guest be handed his hat and escorted to the door.

Note also that the Raiders' lease at McAfee Coliseum is over in 2010; they'll have to do some real tap-dancing to keep themselves there year-to-year until 2012. But Alameda County and the City of Oakland are still on the hook for the $200M worth of debt they used to fix up the Coliseum in 1996 - and that debt, on which Oakland and the County pay roughly $11M per year, will not be retired until the year 2025.

The likelihood of the NFL allowing another franchise into McAfee, with two teams just down the road? Just about nil. If Lew Wolff does finally get the green light to move the A's to Fremont, only the Warriors will be left in the smaller Oracle Arena. We note a similar situation from the 1990s, when both the Rams and the Raiders left Los Angeles.

All of this makes one wonder how long the 49ers will commit to staying in Santa Clara. Now, that will be at least until Santa Clara pays off its obligations in the years 2033 or 2038, right? Hello?

You could also ask Oaklanders about their likely reaction to Al Davis and his Raiders skipping out on yet another dinner check in any move to Santa Clara - but you'll probably want your kids out of earshot first.

Now, there is an idea in the latest article that that should get honorable mention: Having Al Davis and the Raiders be full contributing partners in any stadium - as long as that lets the City of Santa Clara completely off the hook.

That's mere speculation on the part of one sportswriter right now. So kindly permit this reader to take his suggestion one step further: If the two teams prove they're serious about this - that they'll (1) finance the entire stadium cost privately, (2) assume total ownership of the stadium, (3) mitigate its use of all City services such as police overtime and (4) waive any and all tax abatements - this stadium opponent might get on board.

But if Al Davis, whose team is in financially worse shape than most of the other NFL franchises, jets down from Oakland demanding the currently-proposed level of corporate welfare from the City of Santa Clara, we residents should be up in arms: If the millionaire owners of the 49ers are not entitled to a public dole of over two hundred million dollars, the Raiders - after the litany of abuses by their owner in Oakland - certainly are not entitled to benefit from that giveaway either.

Al Davis could end up costing the City of Santa Clara a lot more than he's worth. Just ask the Alameda County Board of Supervisors.

Remembering Bill Walsh

First, I’d like to express my condolences to Bill Walsh’s family, the San Francisco 49ers and their fans on the death of this great man.

Bill Walsh was a man I admired. He brought intelligence and creativity to football. Each game was like a carefully planned chess match, but with a difference. He taught his players to adapt quickly to changing situations and to take advantage of opponents’ mistakes. He motivated them to strive to be better than they ever imagined they could be.

In the early 80’s the 49ers under Walsh’s tutelage were truly golden. I know; I was a fan. I saw “The Catch” and couldn’t believe my eyes. My then ten-year-old son and I bonded by planning and hosting a party for Superbowl XVI. I was a single mom and scored major “cool” points with my son and his friends for doing this.

However, we never attended any games; we couldn’t afford to. My salary barely paid the rent and other bills; we lived month-to-month. But we cheered for the team when we watched them on TV.

Now my son has a family of his own. He works in a blue-collar job in the Pacific Northwest. They can’t afford to go to football games either. Ticket prices are too high. Concessions are too expensive. Parking fees prevent them from parking anywhere near the stadium. And the kids get too tired walking long distances to and from the game.

Instead, they attend their local baseball teams’ games. The team offers “family packages” at an affordable price that include four tickets, hot dogs, and drinks. There’s a playground at the stadium for the kids. Parking is free. Players are accessible. There are even fireworks after every game.

So you see I’m not against sports, the 49ers, or football stadiums in general. I just don’t want my city to be burdened by even further debt when by 2012 (according to the city’s own budget projections-see note below) Santa Clara’s general fund will once again show a deficit.

And I want a stadium that is accessible to all, not just a few.

Using the new Arizona Cardinals stadium as an example I did a search for tickets in the “nosebleed” seats for the Cardinals vs. 49ers game in Arizona on Nov. 25, 2007. Single tickets cost $67.00 each. In addition, they add a $10.10 “convenience charge” and a $4.50 “building facility fee” for each ticket. That adds up to $326.40 for four people for one game not counting food or parking.

I understand, of course, that perhaps a ticket for a child may not cost as much, but the Cardinals’ web site doesn’t indicate that. And season ticket holders would pay a bit less per ticket. Still, that’s one heck of a lot of money for one day’s amusement. That would be far beyond the reach of many, many people in our community.

Surely in our pursuit of projects for our “entertainment district” north of Bayshore the city could be smart and creative like Bill Walsh. Let’s be flexible and wise and perhaps we, too, can be better than we could ever have imagined ourselves to be.

Erlinda Anne Estrada

Note: From the table “Twelve Year Resource and Expenditure Trend, General Operating Funds” in City of Santa Clara's Proposed Capital Improvement Project Budget 2007-08

The Primary Fuse - On the OpEd by Mike Swift, SJMN, Aug. 2

Mike Swift's informative piece in this morning's Mercury News is a reminder that any decision on a stadium in Santa Clara for the 49ers won't be made in a vacuum. The politics of primary voter turnout will have an big influence on that question - and on all of us who live in Santa Clara.

I have not a clue of how Santa Clarans would vote on a stadium in February 2008 or next June. But I would urge all City residents: If you live in Santa Clara and you are not registered to vote, please do so with the County Registrar immediately. If you don't vote, others will be making the stadium decision on your behalf - and on behalf of future generations of Santa Clarans.

I appeal to residents North of U.S. 101 in particular. I note that no one from the North Side is seated on our City Council. One way to assure that your neighborhoods are not treated as mere extensions of an overblown entertainment district is massive, all-out participation in any election that is held.

Finally, as to any question of an 'advisory' vote - which would simply permit our City Council to do anything it pleases after merely tolerating the noise and haste of citizen input - please write, email, telephone the City Council, and make abundantly clear that any 'advisory' vote is completely unacceptable:

MayorandCouncil@ci.santa-clara.ca.us

For the sheer size of the commitment on the part of us as Santa Clarans, and due to the several generations of Santa Clarans who will end up paying for our folly today, we have earned nothing less than a BINDING resolution on any billion-dollar public project - a project which includes a $222M sudsidy to a private, profit-making corporation owned by a millionaires. It doesn't matter whether the City Council raids the Utility Reserve Fund or it makes Silicon Valley Power move the Tasman electric substation out of the utility's own pocket - we're absolutely entitled to a binding vote on any expenditure for a stadium.

We can only repeat what we have long held, and what the pro-stadium forces refuse to address: The Yorks should be buying their stadium themselves, and not demanding welfare from the City of Santa Clara merely in order to squeeze more out of the NFL. And if stadium ownership were the generator of jobs and income that they claim, they would have no problems owning and running such a facility themselves. But this they will not do - and Santa Clarans are asking them just why they will not.

Please. Get involved. Register. Join Stadium Facts and our sister organization, Not With My Money. Make your voices - and your votes - heard.

Many thanks.

From the inbox

It's been a few weeks since we've had the opportunity to open up our inbox and post an email from one of our readers, but I'm glad we have the chance to do so this week.

Today's letter comes from Santa Clara resident Susan H., who lives in a neighborhood very close to the location of the proposed stadium. She sent us a copy of the letter she sent to the Mayor and City Council, and we are posting it here with her permission:

Dear Mayor Mahan and Council Members,

We have been living in the area near the proposed stadium site for the past 30 years. We’ve seen changes such as new housing developments in place of where the stable used to be, and erection of the power stations, the Niners training camp and soccer field, as well as improvements to this area, especially the addition of Rivermark Plaza. All was fine and added value to a quality of life to the area residents.

However, I cannot see the benefit of having a stadium near our residential area because facts have always shown that property value will decrease in areas near any stadium, not to mention the noise pollution, environmental pollution, and excess wear and tear on our local roads, not to mention the decrease in the quality of life in our neighborhood. We certainly do not welcome the sound of construction going on for the next few years as well.

Since the City is planning to subsidize this project with public money, then it should be put up for a public vote. You need to allow the public to decide, not just amongst the Council. I urge you to place this up for a public vote for the sake of the residents in Santa Clara, as well as your integrity. This is a republic country and we should have a say so in how our tax dollars are spent. If you do not allow us to vote, then it would be no different from a dictatorship. I urge you to give this much reconsideration and thoughts. I am sure that you would want to leave a positive legacy, not a negative one. Thank you.

Sincerely,
Susan H.

It's no surprise that all of us at Stadium Facts share Susan's concerns about the impact a stadium would have on Santa Clara, and Susan summarizes these concerns well. For those residents who live in the immediate vicinity of the proposed stadium, those impacts are even more significant. The years of construction would be just the start. Once the stadium is opened, anyone who lives anywhere near the stadium will have to contend with street closures and restrictions, increased noise and traffic, and increased crime.

NFL football stadiums are not an asset to a neighborhood, and if property values in these neighborhoods fall, the city will collect less in property taxes. In fact, at least one study suggests that simply announcing plans to build a publicly-subsidized stadium can cause property values in the entire city to decrease.

In their study The Impact of Stadium Announcements on Residential Property Values: Evidence from a Natural Experiment in Dallas-Fort Worth, economists Carolyn A. Dehring, Craig A. Depken, II, Michael R. Ward found that

. . . a series of announcements regarding a new publicly-subsidized stadium in nearby Arlington, Texas, had a deleterious effect on residential property values in Arlington. In aggregate, average property values declined approximately 1.5% relative to the surrounding area before stadium construction commenced.

Every property owner in Santa Clara, especially those who live closest to the proposed stadium, should be concerned about this evidence.

We also support Susan's call for a public vote on any proposal that would require any public financing for or operation of a stadium. The City Council should WANT the support of the residents for any project of this size.

Thanks for writing Susan! I hope you'll continue to contribute to the discussion.

Cities and the stadium business

At his blog Field of Schemes, Neil deMause, co-author of the book Field of Schemes, recently summarized an excellent special report from the Baltimore Sun of the pitfalls of stadium ownership for cities. As he writes in his post Aberdeen: How not to build a stadium deal,

It's an outstanding reminder that when it comes to stadium finance, it's increasingly less about who pays the initial bills than about who reaps the revenues down the road.

The experience of Aberdeen is a cautionary tale for any city considering the possibility of operating a professional sports stadium. As Aberdeen's current mayor said in 2005,

Municipalities, especially this one, shouldn't be in this type of business.

The San Francisco 49ers have requested not just $287,000,000 in public assets for the construction of the stadium. They have also requested that the City of Santa Clara create a Sports Authority, which would both assume an additional $330,464,000 in bond debt and operate the stadium.

And taking on debt and operating the stadium are two additional risks, as the experience of Aberdeen demonstrates.

I hope you'll read the full article at the Baltimore Sun website, but here are a few interesting highlights:

Every game has been a sellout since the 6,000-seat stadium opened in 2002. Companies such as Bank of America have paid to be sponsors. . . .

But even on days like this, when the city-owned stadium is packed, Aberdeen loses money.

This is an important cautionary note — a full stadium does not equal profit for the city.

The Harford County community owes $6.7 million in stadium-related debt, and millions in interest, on a payment schedule stretching to 2022. The city's stadium fund has posted operating losses that total more than $1 million since 2001, forcing Aberdeen to dip into its treasury.

And these debts and operating losses are for a small, minor league stadium. The debt and potential for operating losses will be much bigger for an NFL stadium.

In closed-door negotiations, Aberdeen signed over to the Ripken businesses most of the money to be made from the baseball games. City officials had intended to cover the bills in other ways, including fees, taxes and a deal with Nottingham Properties to develop adjacent land. But the city's contract with Nottingham contained no penalty for delay. The land remains mostly acres of dirt.

Under the current proposal from the San Francisco 49ers, the breakdown of revenue streams is the same, with the notable exception of stadium naming rights, personal seat licenses, concessionaire rights, etc. But these revenue streams are NOT profit for the Stadium Authority — the 49ers' proposal calls for the Stadium Authority to borrow against this expected revenue in order to build the stadium. Like the Aberdeen IronBirds, the San Francisco 49ers will make most of the money from the actual football games.

The city, with a general fund budget at the time of just $7.6 million, pledged $4 million.

Most minor-league stadiums are owned by larger jurisdictions that can spread the costs over bigger budgets - the situation in Prince George's County, where the minor-league stadium is overseen by a multi-jurisdictional authority.

What's particularly interesting to me about these numbers is that even in the case of a minor league baseball team, cities look to spread the cost over a larger region. And Aberdeen pledged a little over half of its annual general fund budget to the project. The current San Francisco 49ers' proposal calls for Santa Clara to take on FOUR AND A HALF TIMES its annual general fund budget for a stadium. The scale of the subsidy request is simply shocking.

The city was counting on a ticket tax and the potential for parking fees, advertising on a billboard and non-baseball events. The tax raised about $140,000 the first season, but the city had little success attracting concerts, banquets or similar functions. In 2002, those events brought in only $2,000.

The trickle-down profit scenario outlined in the 49ers' proposal depends on not simply attracting other events, but making a profit from these events. If there is no profit from outside events, no money will be set aside for capital improvements, and I'm sure we can all guess who will be on the hook for those expenses.

"The Ripken family has put Aberdeen on the map," said [Former Mayor Douglas S.] Wilson, after rattling off the names of major leaguers such as Orioles right fielder Nick Markakis who have passed through Aberdeen. "To create that in a small government, to be able to have a minor-league baseball team, I mean, it's pretty phenomenal."

We've seen the same sort of thinking here in Santa Clara. Instead of addressing the very real financial costs and potential risks, stadium supporters draw on such far-fetched comparisons as the Wright brothers and the moon landing.

Instead of such wishful thinking, we need to focus on the very real financial risks involved in the stadium business.

After all, if there was money to be made in operating a stadium, don't you think the 49ers would want to do that themselves?

What does Cedar Fair want?

Mark Purdy, one of our more thoughtful South Bay sports commentators, wrote a neat essay in the San Jose Mercury early Friday morning on the current rumble between Cedar Fair and the San Francisco 49ers. However, only in his last couple of paragraphs does he touch on the concerns that we Santa Clarans have about subsidizing a billion-dollar stadium with $222 million of public money. We certainly have no such "money" lying around. It will be nearly all public debt which we'll be paying off for many years - all to subsidize a millionaire football team owner.

Getting back to the article itself, Mr. Purdy notes: "Well, what about the opportunity for a theme park corporation to partner with the NFL and one of its most high-visibility franchises?"

I seriously question what kind of partnership that would be, as you'll have a different breed of customers for each venue. The expense of a stadium is so great, it is difficult to imagine that season and individual ticket sales alone will close the gap. Some form of "Personal Seat License" could well be imposed - and Great America visitors won't see the inside of any new stadium unless they shell out for a seat license like everyone else.

Before PSLs for the Oakland Raiders were finally eliminated in late 2005, they ran from $250 to $4000. When 10-game season tickets first took the place of PSLs in Oakland, they ranged from $470 to $910. A current seat map of McAfee Coliseum shows those same ten-game tickets now running from $260 to $1510. How any new "Stadium Builder's Licenses" will be priced for a new stadium in Santa Clara - not to mention the season ticket prices - is the stuff of pure speculation. Simply start with Oakland's example and work your way up from there. In the end, boosters of any stadium in Santa Clara may be in for a rude shock when season ticket - and possibly SBL - prices are finally posted.

Now, Mr. Purdy is right to question Cedar Fair's flip-floppy statements on the stadium proposal. But he appears to be saying that the current agreement on parking spaces for Great America gives Cedar Fair unfair veto power over the stadium. It does not. If Cedar Fair has plans for the future of Great America that would bump up its attendance figures - and fill up a parking area they're contractually entitled to - then they're well within their rights to insist that their needs be honored. Changing that agreement could force the City to accept less in revenue from (or agree to some cash compensation to) Cedar Fair. Either has an immediate negative impact to the City's General Fund - at the same time that compensating revenues from any football stadium are far from guaranteed. In short: A deal's a deal, guys.

Maybe Cedar Fair is as shrewd as Mr. Purdy seems to suspect. With that, here's pure speculation from this writer: Could Cedar Fair also be holding out for televised promotion of Cedar Fair theme parks around the country during 49ers games? It's amusing to contemplate our "roller coaster company" trying to make sense of the NFL's television blackout rules - rules designed to compel local ticket sellouts. In short, sell out your stadium 72 hours in advance of a game - or no game goes on the air for 75 miles. I'm oversimplifying this, I know. But it would sure be a kick if Cedar Fair were to find itself unable to promote Great America on TV in its own city due to poor ticket sales at the football stadium next door.

We could speculate on these corporate intrigues all day.

As a Santa Claran, however, I still oppose the stadium in general - and any corporate welfare for the millionaire Yorks in particular.

Our city - we taxpayers - will incur a debt of approximately $222,000,000.00 in order to hand that tribute over to the 49ers. Our debt service per year on any such amount will certainly wipe out the paltry $5M in rent the 49ers are offering to the Santa Clara Stadium Authority. That, plus those parking tax revenues dangled before our eyes, all accrue to the Stadium Authority - and not to the City's General Fund.

It gets worse: Depleted G-3 Fund or not, the Yorks are squeezing us for money so that they can then squeeze the NFL for more money. They want to use Santa Clara's money to improve their own cash flow and also to make their own private asset - the team - more valuble on the open market. Other NFL owners likely see such a rising tide lifting all boats, and you can be sure that they are delighted at such a prospect. That's still no reason to build a one-billon-dollar stadium in our city, and it's certainly no reason to hand millions in public monies over to a millionaire team owner who should be funding any stadium on his own or with the NFL.

But the worst problem with giving corporate welfare to the San Francisco 49ers is that it sets a dangerous precedent: Once we issue debt - or steal from the City's Utility Reserve - and hand those proceeds over to a private, for-profit sports franchise, we'll never be able to stop future "needy" millionaire welfare clients from doing the same thing. Their rationalization will be that, since we subsidized the York family from the public purse in 2008, we will have to do it again. And again.

We should be as concerned about that precedent as we are about Cedar Fair's parking spaces.

I do urge fellow Santa Clarans to beware - this is not the deal we think it is.

What about housing?

Sunday's Mercury News published a thoughtful and thought-provoking article. The author, John Conover, writes about the continuing and desperate need for more affordable housing in the Silicon Valley. No surprise there. What is of interest is that he writes from a business perspective -- he's a bank CEO. His argument is that more affordable housing is just plain good business:

In a global economy, business must be able to attract and retain top talent to be competitive. Yet with the median home costing $794,000 in Santa Clara County and $840,000 in San Mateo County, many middle-class workers are priced out of our market. Or they make a grueling commute for a few years, and then find jobs closer to where they can afford to live. Call it the "revolving door" of hiring. We've seen the quality of life in our communities erode as teachers, firefighters, police officers, and even our own adult children move away.

Given this obvious need, perhaps housing would be a better use of the land that many on our beloved council want to donate to the indigent York family. Talking just pure dollars and cents, would that benefit the city more than a massive multi-million dollar gift to a private corporation?

Increasingly, various communities have latched onto the idea of "smart growth," which according to Smart Growth Online "has a greater mix of housing, commercial and retail uses" than the sprawl that typifies much of the development of the past half century. By comparison, smart growth development is less costly to maintain, especially when the costs incurred by environmental and social problems are also considered. Some smart growth developments take the form of "infill" development, using underutilized land already serviced by many city services and thereby maximizing the investment of those services.

What would be the long and short term benefits of providing housing in an area surrounded by shopping, entertainment, employment and mass transit? I would think that such benefits could be quantified, especially in relation to our strapped city budget. I'd hope that when the city staff comes out with their recommendations on this plan, that housing was at least considered as an alternative.

Stadium proposal discussion on KKUP 91.5 FM

Tomorrow morning — 7:00 am, Wednesday, July 25 — Don Cormier at KKUP 91.5 FM will be interviewing a couple of people regarding the proposed San Francisco 49ers stadium in Santa Clara.

I hope you'll tune in to the show!

Update: if you missed the show, click on the KKUP logo below for a recording (57MB MP3 file)

"A sense of compassion for the community"

When Santa Clara Mayor Patricia Mahan was interviewed for Santa Clara Magazine (published by Santa Clara University) in 2005, Mahan, who received a law degree from SCU in 1980, had this to say about her alma mater:

“They just imbue you with such a sense of compassion for the community ... the higher values and the better values of why you’re doing what you’re being trained to do. It’s not to make a million dollars a year. It’s to be of service.”

Mahan's actions in recent City Council meetings, however, speak far louder than her words.

On several occasions in City Council meetings over the last few months, Mahan has used her position as Mayor to attempt to silence, demean, and disrespect Santa Clara residents who have taken the initiative to come forward and speak publicly about their concerns regarding the proposal to spend $287,000,000 in public assets on a football stadium for the San Francisco 49ers.

Usually, her biases are quite evident to everyone in attendance.

At the City Council meeting on July 17, however, the Mayor made an additional comment that was not heard in the Council chambers, but was quite audible to those watching from home.

"You're wasting your time."

The comment was directed at a resident who had wanted to speak to a report, but the Mayor rushed through the call for public comment without a pause. Instead of acknowledging that she had missed the resident's request, the Mayor blamed the resident.

You can see the full clip here:




Not only is such a reaction from the Mayor disrespectful, it's also a clear violation of Santa Clara's Code of Ethics & Values, which requires "all elected and appointed officials, City employees, volunteers, and others who participate in the city's government" to agree, in part, that:

3. As a Representative of the City of Santa Clara, I will be service-oriented. . . . :

a. I provide friendly, receptive, courteous service to everyone.
b . I am attuned to, and care about, the needs and issues of citizens, public officials, and city workers.
c. In my interactions with constituents, I am interested, engaged, and responsive.

6. As a Representative of the City of Santa Clara, I will be communicative. . . . :

a. I convey the City's care for and commitment to its citizens.
b. I communicate in various ways that I am approachable, open-minded and willing to participate in dialog.
c. I engage in effective two-way communication, by listening carefully, asking questions, and determining an appropriate response which adds value to conversations.

7. As a Representative of the City of Santa Clara, I will be collaborative.
In practice, this value looks like:

a. I act in a cooperative manner with groups and other individuals, working together in a spirit of tolerance and understanding. . . .

The real test of the City's commitment to ethics will be how they respond to the Mayor's actions, which certainly do not demonstrate "a sense of compassion for the community."

Just $62,000,000 more

Since we started this website, we've consistently said that the actual public subsidy requested by the 49ers in their proposal is nearly $300,000,000 in total public assets. I explained that number in detail in a post entitled Real Money.

Of course, that amount doesn’t cover all the actual and potential costs — things like additional infrastructure improvements, property tax breaks, and lost opportunity costs — but it does include all of assets requested by the 49ers in their proposal.

While the Mayor, certain members of the City Council, and the 49ers have continued to claim that the requested subsidy is a mere $160,000,000, we have insisted that all of the public assets need to be counted.

Here is a video of Mayor Mahan using the incorrect $160,000,000 subsidy request figure on CBS5 TV, as recently as June 19. It's at the 1 minute 27 second mark of the report:



While the Mayor continues to use the incorrect number, the City of Santa Clara is beginning to agree with our estimates.

Buried in a report on the implementation plan and timeline for the "City of Santa Clara Principles & Priorities for 2007-09", which will be presented to the City Council tomorrow, is the City’s estimate of the requested subsidy.

$222,000,000

If you don’t want to do the math, that’s $62,000,000 — or about 39% — more than $160,000,000. This revised estimate of the subsidy includes the projected costs of both moving the electrical substation and the construction of a parking garage on the site, two items that were not included in the 49ers' $853,000,000 construction budget.

The new estimate still doesn't include the value of the land, but at least this number is closer to the true cost of the requested subsidy.

Pocket change, right?

You can view the report yourself from the city's own website:

http://cityclerkdatabase.ci.santa-clara.ca.us/wx/pubhtml/pubhtml/3009.html

It’s the report under Agenda Item 5F - Special Order of Business. The $222,000,000 is on page 15 of the report. Click on the image below for a PDF of the relevant page.



Once again, the City’s staff and consultants have provided a much-needed impartial analysis of this proposal, and we appreciate their hard work.

"Ignorance is Strength"

When is an office development a winner, and when is it a loser?

If you're Councilmember Moore or Casserta, that depends on whether it's a project that competes with the stadium, or a project to make money for building the stadium. The San Jose Mercury News highlighted this Orwellian double-speak today. Here is a quote:

A few weeks ago, consultants said the city of Santa Clara could generate $3.3 million in annual rent if it built office buildings instead of a proposed San Francisco 49ers stadium.

Councilman Dominic Caserta challenged how legitimate the idea was, given the empty office buildings in other parts of the city.

And Councilman Kevin Moore, one of the first to approach the 49ers, joked that a sign advertising a strip of real estate across from the stadium site has been up so long that it's faded.

Last week, the same city consultants researched the idea of developing that very slab across the street and found it could generate as much as $2 million a year to help support the stadium or other city projects.

So why didn't Moore and Caserta have questions this time about how viable the option is?

You can read the full article here.

Note also that Councilmember Moore finally admitted that the stadium will sit empty and unused 300 days a year. Is that really what we want to spend $287 million to subsidize?