Some Stadium Facts: It took over two years of secrecy with SIXTY-EIGHT closed-session meetings, not to mention spending $1.1 million of RDA money on consultants' fees.
But your City Council has finally set a date for a public session so that we can see the 49ers' stadium "term sheet".
At last.
This public session will be held on Tuesday evening, June 2, 2009, at 7:00 p.m. in City Council Chambers. Santa Clara Plays Fair urges as many residents as can possibly attend to be there - and that they make themselves heard.
Even if real numbers are going to be hard to come by until that City Council Meeting is held, there is a yardstick by which all Santa Clarans can "measure" the term sheet. That yardstick is the statement of "Guiding Principles", passed by City Council unanimously on January 9, 2007:
http://santaclaraca.gov/pdf/collateral/January_9_Agenda_Report_re_Proposed_49ers_Stadium.pdf
See page 4 and note the very first Guiding Principle: "No use or obligation of General Fund monies of the City of Santa Clara."
That means: There must be NO loss to the General Fund of any kind. Not only must a stadium deal not cause direct debits to the General Fund - but the stadium must not stop payments to the General Fund that we're entitled to.
That's another way of saying: Don't just look at the General Fund; look at the payments it is lawfully entitled to from the Redevelopment Agency, as well as any payments from a Stadium Authority we might choose to create. The General Fund should show only net gains.
Santa Clara Plays Fair urges all Santa Clarans to hold our City Council to the same standards that they agreed to over two years ago, and that they evaluate any "deal" with the San Francisco 49ers against these Guiding Principles.
Owing especially to the serious fiscal challenges that our City - and we ourselves - are facing - we shouldn't be settling for anything less than that.
Thanks for your support,
Bill Bailey, Treasurer,
Santa Clara Plays Fair
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4 comments:
Mr. Bailey,
In regards to the proposed stadium's impact on the city's General Fund, you left out a very key item.
A proposed ticket surcharge, is being placed on non-49er related events at the stadium. This is to act as a safeguard, against any stadium revenue shortfalls that may impact the city's General Fund.
This being the case, its quite clear that evidence exists that shows there are risks to the General Fund. All this, after Mayor Mahan consistently stated there would be no negative impacts on the General Fund.
Mr. Bailey,
I haven't had a chance to go through the term sheet carefully, but I’m confused about the business of Stadium Authority debt being somehow isolated from the general fund.
Is this really true, or is it a ploy to mollify recalcitrant citizens who worry about boring things like fiscal solvency.
It seems to me that, if it was really true, one would wonder who’d want to buy the debt without basically anything backing it up—I’d think that there would have to be more attractive offerings in the market for the average investor/mutual fund.
And also at what rate—this certainly would have to be considered “junk” status bonds and priced accordingly.
What does happen in case of a default? Was that addressed at Tuesday's (June 2) council meeting? It seems to me that most of the trouble in Oakland was caused by wildly optimistic belief in the demand for the team’s season tickets. Is it possible that our good council is repeating the same mistake?
Please excuse me for being late in responding.
Mr. Pardell, I agree that the ticket surcharge (particularly on the non-NFL events) is an admission that the the Santa Clara Stadium Authority is going to need that 'special' support.
As approved, however, The Term Sheet is silent about how much and over how many tickets. I'd like to see real numbers out of our City Staff and their consultants on how much we intend to soak non-NFL eventgoers - but that will likely come only when the details of the Santa Clara Stadium Authority's makeup and financing are made public.
Regards,
Bill Bailey
Please excuse me for being late in responding, Anonymous.
The creation of the Santa Clara Stadium Authority can indeed be made separate from City Government and its finances separate from our General Fund. We call it a "joint powers authority" in the same sense as our Redevelopment Agency.
The SA, or Stadium Authority, would have the power to issue bonds in the municipal bond market. It would pay back bondholders by using the tax-increment gain from the stadium.
But what we learned from a City Staff report from December of 2007: The tax increment is the same pot that the RDA is already using to issue its OWN bonds.
As a consequence, those SA bonds were "estimated" to be Grade BBB, or just a step above junk bonds.
At the same time, the RDA's own bonded debt would probably be rated Grade A.
Note that this report came out BEFORE the meltdown in the muni bond market.
The worse the rating: The higher the coupon that the SA must pay to municipal bond buyers who buy the stadium debt - and the higher the risk to the Stadium Authority. At 7%, you could get somebody to take on the risk, I'm sure.
Shortfalls in the SA's operating budget would be settled in a "dispute resolution" process with the 49ers.
If the Stadium Authority finds itself unable to pay its obligations, and the "dispute resolution" process doesn't force the 49ers to cover those losses: The only real avenue left is for the City which formed the "joint powers authority" to go back to the residents of Santa Clara and to ask them to agree to a bailout.
The issue of a possible Stadium Authority bond default was not touched upon once during the June 2 City Council Meeting.
And the makeup of the Santa Clara Stadium Authority?
The seven members of the Santa Clara City Council...
Please come back if I've failed to answer your questions; the toll-free number for Santa Clara Plays Fair is 1(877)703-4300.
Regards,
Bill Bailey
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