Stop the Bleeding -- Vote No on J!

With this year's $13.5 Million deficit (expected to grow further next year) the City of Santa Clara is sinking from the ranks of fiscally sound, well-managed cities. It's saddening that we may lose yet another guaranteed $5 Million per year in rent from our fabled theme park, Great America.

Saddening, but not surprising. We already provide an annual give-away of $2.5 Million to the San Francisco 49ers' in the form of below-market rent on their training center.

Measure J extends that deal and expands the loss. The San Francisco 49ers would rent a brand new, state-of-the-art stadium for 25% of fair market value of the land it sits on!

Worse, they'd pay only 14% of the land's fair market value during the first 10 years of operation. Over the next two years, as our deficits sky-rocket, they'd pay nothing.

"Net Present Value" vs. "Actual Dollars"

Mayor Mahan & Councilmember Matthews have revolutionized the housing market with their discovery that "net present value figures ... are based on outdated economic assumptions" and that we should focus on "actual dollars" paid over 40 years!

Madam Mayor, I'll buy your home for $1 million -- a good $100,000 over the current market price. I'll pay you in 2050. Do we have a deal? Can you vacate by next Tuesday?

Fair Market Rent for the proposed stadium site is currently over $1.8 million per year. Even with the new Mahan-Matthews Math, that should be worth over $72 million in "actual dollars." Too bad the 49ers LLC only signed up for $40 million.

This is a bad deal -- with or without the lies the Mayor is spreading.

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.

From the Inbox

It's Wednesday, so it's time once again to open up our email inbox and see what our readers have to say.

Today's letter comes from Santa Clara resident Steve B. and his family. They are 49er fans, but they don't want a stadium in Santa Clara. Steve writes:

No 49er stadium in Santa Clara
We are football fans.
In fact we are 49er fans.
But we are not in favor of paying for their stadium.
We are residents of the City of Santa Clara.
This is were we own our homes.
This is where we send our children and grandchildren to school.
This is where we shop.
This is where we pay our taxes.
These are our utility funds that you are talking about.
We do not want to pay one penny to the 49ers and their Stadium.
We love the 49ers but we cannot afford to pay for their wealth.
Don't be mislead.
We will not even get a sniff of a stadium seat.
Their are others out there who feel like me.
Who and where are you.
We want to join together and let our options be heard.
Don't give me the blah blah blah, more taxes for the city more revenue, more jobs.
Yeah, seasonal minimum wage jobs.
We do not want or need your stadium traffic and crime.
We do not want the extra cost of policing the area and events.
There will be more that just 8 football games a year.
There is talk about using the stadium for soccer. A whole different crowd and can of worms.
There has to be concerts, monster trucks, tractor pulls, dirt bikes and many other events to please and satisfy the many assorted interest groups.
No 49er stadium in Santa Clara

Thank you,
Steve B. and Family

I don't have much to add — Steve presents his perspective clearly and persuasively. As more and more residents hear about the costs of this proposal, I'm sure the City Council will start to hear from more people like Steve and his family — citizens who want the city to focus on providing services to residents, not contributing to and operating a billion dollar stadium.

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

From the Inbox — Special Edition

Because we expect the volume of mail to increase in response to the next City Council meeting (the one where city staff will return with their analysis of the San Francisco 49ers' economic impact report), we thought we'd run a special "From the Inbox" post today.

Our letter today comes from Bill B. of Santa Clara. He wrote to us about a leaflet entitled "The Real 49ers Stadium Story That the Citizens of Santa Clara Need to Hear" that was distributed at the last City Council meeting.

I haven't seen this leaflet, but Bill responded to a number of the issues identified in it. With his permission, I'm excerpting portions of his response here. The statements in bold italics are from the original leaflet.

"Are the 49ers going to take money from the cities [sic] General Fund?"

This is a diversionary tactic by pro-stadium pressure groups, and it's designed to fool people into thinking that 'no one is asking for public support for a football stadium.'

Make no mistake, that is exactly what the 49ers' front office is asking for.

To see why, let's play "The Devil's Advocate": If we were to pay for our $160,000,000.00 share in a stadium, how COULD we do it?
. . .
[One possibility is to issue bonds] That's a debt backed by the City of Santa Clara - so you better settle in for ten, fifteen or twenty years of principal and interest payments. The interest we'll owe on the bonds will be determined by a bond rating service. They'll look at how much we're borrowing, how much we owe - and how much we have. Compare the obligation - the $160 MILLION - with our yearly budget turnover - that's about $500M - and add the fact that we have NO reserves, NOTHING set aside for emergencies, NO slack at all. THAT will determine the likelihood, however small, that we'd default on our obligation - and it will determine the interest we will pay on $160,000,000.00.

Bill also examined a couple of other scenarios — including taking money from the utility reserve fund — but the San Francisco 49ers have already clearly stated that they will expect the Stadium Authority to issue bonds, and the city is likely to propose bonds for part of their funding too, so Bill's concerns about bonds are well founded.

Since there is no plan for financing yet, it is premature for anyone to say that funding for the stadium will have no impact on the general fund. Certainly, that was one of the guiding principles for the city, but unless some generous soul is planning on donating the cash the city would need for this project, any of the financing options mentioned to date COULD impact the city's general fund either directly or indirectly.

"Will the City of Santa Clara get a return on their investment?"

The claim of $440M in lease and expense payments is pure nonsense - the best we'd ever be able to do is probably is the numbers presented to the City Council by Larry MacNeil back on April 24th - $21M per year in revenues. Which we pray will match the $21M in expenses that first year.

If the author of the leaflet claims that the lease and expense payments would go to the city, then he or she needs to re-examine the 49ers' proposal. These payments, according to the proposal, are going to the Stadium Authority. While the Stadium Authority would be formed by the city, the lease and expense payments DO NOT go to the city's general fund. As far I can tell, the only way the city receives any direct cash under the current proposal is if the Stadium Authority NETS a profit of over $1 million a year.

"Will the residents have to fork over $1,400 to $4,300 for each family member?"

If stadium supporters don't believe these numbers, then they are obligated to come forward with how they'll get $160,000,000.00 - and how they'll pay it back.

Personally, I'm not quite as cynical as Bill. I think we'd see a citizen revolt if the City Council voted to request $1,400 to $4,300 in cash from every single resident.

But there's no such thing as free money. If the City Council decides to subsidize this project, the money will have to come from somewhere, and there will be a cost. If they are lucky, they'll be able to hide the real costs. If not, residents will pay in some way — whether directly via a special assessment or indirectly through higher fees and/or reduced services.

"The Naysayers are saying that the jobs that would be created would be minimum wage jobs, most without health benefits"

Absolutely, and this stadium opponent stands by that claim - there is no way that a stadium will create any kind of decent jobs, save for the trades that will be paid union-scale for the their labors.

. . . [W]hen the union labor has left the site - you'll be left with low-wage concessionaires selling five-dollar hot-dogs, three-dollar Dasanis, six-dollar plastic helmets. For eight game days per year. You just try and prove that those people will earn anything like a living wage, much less be assured of any kind of medical insurance. There's just no way.

On this point, I'm just as cynical as Bill. During the construction phase, the union jobs will certainly have good pay and benefits, but after that, there won't be many full-time jobs at all. Remember, the most optimistic projections include fewer than 30 event days a year. Worst case is just 10 games (or perhaps even none if the players were to go on strike.) The vast majority of the jobs during the operation phase will be part-time, low-wage, no benefit positions.

Bill concluded his letter by noting that the leaflet "had NO contact info, NO Website, NO telephone numbers."

In other words, no way to know who was presenting this information.

We do want to offer the best possible analysis of this proposal here, and we recognize that reasonable people can take different positions on this issue. In that spirit, we would welcome the author(s) of the leaflet Bill referenced to send us their analysis and evidence so that we could see for ourselves how they reached their conclusions. Our goal is to provide impartial analysis of this proposal.

Our only concerns are the financial health of Santa Clara, well-managed development within the city, and potential burdens on the residents.

From our email inbox

It's Wednesday, and that means it's time once again to open up the Stadium Facts inbox and see what our readers have to say!

Today's letter comes from Santa Clara resident Daniel L.

He writes . . .

I have enjoyed working with several Niner players and staff, particularly those from the Walsh era that came from Stanford. Many have been a big positive for the community. Yet this stadium will only bring pain to the residents.

I grew up living in Palo Alto just a couple blocks from the Stanford football stadium. On game day our streets were barricaded to keep traffic out... and us in. The major streets were gridlock with police directing traffic at the intersections. So called "special events" (such as the Olympics and World Cup Soccer) were even worse. Police and military helicopters would circle the area for days (and nights) in advance. Areas of interest to terrorists would feature police with automatic weapons along with bomb sniffing dogs.

Meanwhile, drunks and lowly individuals would wander through the neighborhoods looking for crimes of opportunity since the police were busy directing traffic and handling crowd control. The same thing occurs in Oakland, South San Francisco, Berkeley, etc.

Have you ever noticed how football stadiums are seldom ever in [the] nice part of town???

If owning a stadium is such a great financial opportunity then why are not Alviso and East Palo Alto fighting to get a stadium?

Considering that Santa Clara cannot afford to repair the streets in several neighborhoods, staff a library east of highway 101, repair the international swim center, fill 30 or so vacant city positions... and has been reducing services by cutting library and police station hours... we clearly cannot afford to be in the stadium business.

Daniel raises an important issue that we haven't yet discussed in great detail here at Stadium Facts — how the stadium will impact the residential and commercial areas near the stadium. From the information the San Francisco 49ers have presented to the City Council, Santa Clara residents who live near the stadium can expect the same traffic congestion and controls Daniel experienced living near the Stanford stadium.

In their presentation to the City Council on April 24, Larry MacNeil, the 49ers CFO, addressed the issue of traffic controls around the stadium on event days. According to their plans (please see their report for the full details) traffic on all of the streets surrounding this area would be severely limited on game days. In fact, a portion of Tasman Drive would be completely closed, and other surrounding streets would be closed post-game. (Unless you live in those areas, in which case you'll have to get permission from a police officer to pass into your own neighborhood.)

And these traffic restrictions aren't just an issue for residents living near the stadium. Who would brave the stadium traffic to go to a movie at the AMC Mercado on an event day? Unless you live close enough to Rivermark Plaza to walk there, would you even consider trying to shop there on an event day?

And, of course, there's the continuing issue of misplaced priorities. Daniel identifies several more pressing concerns he sees for the city — street repairs, library services, swim center improvements, a hiring freeze — and we all may have ideas on how the city should spend that money. Or NOT spend it, for that matter.

How would you like the city to invest $180 million?

From the mailbag

It's Wednesday, and we have a whole one-week-old tradition of posting a letter from a reader on Wednesdays!

Today's letter is from a Santa Clara resident who asked us to withhold his name if we published his letter. It is a letter he first sent to the Mayor and City Council.

He writes . . .

Mayor Mahan and Council,

“Political Theater”. Those exact words were used by Councilmember Caserta to describe the polite, well researched efforts of our fellow citizens of the City to recommend that before the seven of you vote to spend ~$180 Million of the City’s money on a new 49ers stadium, it be put to a vote by the citizens. Gasp! Shocking suggestion, isn’t it? “Political Theater”- kind of a thought stopper isn’t it? Prevents any further discussion or consideration when such labeling is used. But I forget, that was Councilmember Caserta’s intent all along, right? And of course you are aware that this is now a matter of public record. Let the chips fall where they may.

But I digress. I wanted to mention I enjoyed in a sad sort of way the bit of political theater staged by the City Council regarding the SOFNA street and sidewalk repair issue. I thought it curious that when “Champion Of The People” Coucilmember McLeod proposed the motion to complete the study of street repair within five long years (when all of you will conveniently have moved on to future political horizons), there were no opposing motions, and when it came time for a vote, the motion was speedily passed. Great political theater!

And great selective ineptitude, as well, when compared to the falling-all-over-yourselves-to-comply three month deadline on the stadium project. Let’s see, five years to address a sustandard street issue by the citizens of the City, who helped buy the seats in which you imperiously sit, and two to three quick months to address a stadium proposal by a family that has more money and influence than it knows what to do with…Hmmmm, an interesting comparison to be sure. Musn’t keep the rich and powerful waiting, mustn’t we? After all, if the York family were told by “Champion Of The People” McLeod that it would be five years before a resolution was reached on The Brand New Stadium, I think they’d go elsewhere, don’t you?

Perhaps you read this, silently declaring, “What umbrage, what cynicism! How dare he challenge the ethics of our Council!”. Well you now have my email address. I invite each of you to kindly prove me wrong on any of the points implied and stated in my letter to you.

PS My views do not in any way reflect the views of the SOFNA members. I only live here in Santa Clara, as I have for the last 11 years, and pay taxes…

Regards,

[name withheld by request]

Santa Clara

As with last week's writer, this week's writer raises some good points that we haven't yet discussed here at Stadium Facts.

I agree with him that the May 15th City Council meeting provided a number of interesting juxtapositions.

First the City Manager offered an overview of the budget for the 2007-08 Fiscal Year. During the presentation, she referenced a number of items that have been cut back or frozen in the continuing efforts to keep the city from operating at a deficit. Things like cutbacks to library hours, delays in opening a new library, and a hiring freeze on 30 positions. [According to the numbers she presented, that last item saves the city $3 million a year.]

Overall, the presentation demonstrated that Santa Clara has usually been concerned with fiscal responsibility.

The next major topic of the meeting was the excellent presentation by the SOFNA regarding the terrible condition of their streets and sidewalks. We presented excerpts from their presentation last week in this post: Priorities? Duh! What priorities?

I’ll disagree slightly with the letter writer in that I had the impression from the council’s discussion that all of the Councilmembers and the Mayor would prefer the city to pay the entire bill – an estimated total of just under $15 million – for the repairs. But that was just my impression.

The problem, however, was that none of them had a plan to pay for all of it, so the only motion that was proposed was for the staff to come back in three weeks (at the June 5th meeting) with a projection of both when it could be placed into the budget sometime in the next five years and how much of the cost the city could cover.

To be very clear, I agree that this is the type of project on which the city should be using its resources, and as long as there is a fiscally responsible plan, then I hope the city will pay the full cost of this project and complete it as quickly as possible.

And then came the petition to council requesting a commitment to put any proposal for a stadium to a vote of the people (and if there is no proposal, then there would be no election.)

So here’s another interesting juxtaposition. As the writer notes, the Council needs three weeks to develop just a plan for a $15 million project in a 5 year timeframe, but the San Francisco 49ers ask for $180 million, plus a parking garage, land, bond issue, etc., to be delivered in 2-3 years, and they expect an agreement 12 weeks or so from the date of their proposal.

Among the many things I don’t like about this whole proposal is the speed at which the San Francisco 49ers are looking for an answer. It shouldn’t be Santa Clara’s problem that they came to us at such a late date with this plan.

But as the writer says, the Council to date has shown no willingness to push back on these timeline demands from the San Francisco 49ers. Sort of makes you wonder for whom they’re really working?

Letters, We get letters . . .

Well, maybe not lots and lots of letters like David Letterman, but we did get a great letter today from William B. of Santa Clara.

He writes . . .

It's gratifying to find that there are other Santa Clara residents who are seriously questioning the need, the use, and especially the real costs of a football stadium in our City. Thank you for creating your site.

I hope that this doesn't put me in too-small a minority, but I oppose any stadium even if the 49ers/NFL pay 100%, own the stadium and keep it up—the traffic congestion and the police overtime, the fire and paramedic on-call support are down to us as residents no matter who "operates" the stadium.

In essence, we're being "offered" ownership of a billion-dollar boondoggle as residents, but we're not going to be given much CONTROL.

By that I mean: The yet-unreleased details of who, exactly, will be seated on the so-called Santa Clara Stadium Authority. That body, I firmly believe, will be the vehicle by which the 49ers front office generally and the York Family in particular will control any decision-making on any finished stadium. Having learned from their dealings with San Francisco, I firmly believe that the team management is looking for a far more "unequal" partnership than the one they now have at Monster Park.

Anyway, please count me in as a supporter.

Sincerely,

Bill B.
Santa Clara

Bill raises some great points that we haven't even gotten to yet here at Stadium Facts, in particular the whole issue of the Stadium Authority. While the San Francisco 49ers claim that this would be a separate entity, formed by the city, but with firewalls in place to protect the city’s finances from risk, we have no details yet about how this would function in practice.

In fact, when one Councilmember asked the San Francisco 49ers about what would happen if the Stadium Authority did not generate enough revenue to cover expenses, the spokesman’s answer was simply that the Authority could “push back the cost on the tenants.”

Sounds like a good answer?

Well, maybe, until you consider that the stadium’s main (and perhaps only) tenant will be the San Francisco 49ers, who are asking, of course, for a long-term fixed lease of $5 million a year. [And just to be clear, that money would go to the Stadium Authority—not to the City of Santa Clara.] If you have a lease agreement, the landlord can’t just come back and raise the rent. That’s why you sign a contract.

There might be other tenants in the building, but they will probably have leases too, and from a simple economic standpoint, there is a limit to what the Stadium Authority can charge for rent. If the rent for stadium office or retail space jumps too sharply in response to Stadium Authority budget shortfalls, these other tenants will simply move.

Moreover, under the current plan, the team won’t even be covering its own game day costs. [As Bill notes, those policemen on overtime aren’t going to be volunteers.] The 49ers' budget estimates for the Stadium Authority are on page 14 of the San Francisco 49ers' plan, and you can see that the NFL Game Day Expenses alone are higher than the 49ers' expense reimbursements to the Stadium Authority.

As I’ve urged before, please read the San Francisco 49ers plan yourself. And while the Mayor may cut off your microphone if you talk a few seconds past the buzzer (while allowing non-resident pro-stadium speakers to continue well past their alloted time), please come to meetings and ask the City Council serious questions about this proposal.

It’s clear that they’ve had a largely pro-stadium audience at meetings until now, and they need to hear from the other side.