City Details Stadium Deal Prior to Council Vote

SANTA CLARA, CA-The only thing on the City Council’s agenda tonight is the city’s potential deal with the San Francisco 49ers for an NFL stadium adjacent to the convention center, the Great America theme park and the team’s existing headquarters and training facility. If the council signs off on the terms the agreement then would go before the voters for final approval in the spring.

The term sheet calls for the city to pay for up to $72 million of the $937-million development, and for eight nearby hotels to put up an additional $35 million by way of a voluntary room tax. The team agreed to pay for any construction cost overruns as well as any operation shortfall, according to the city.

The $72 million includes up to $42 million in tax-increment financing from the city’s redevelopment agency, $20 million to relocate a power substation and $17 million to help build a $42-million 700-space parking garage that would service not only the stadium but also the convention center.

If the redevelopment agency doesn’t have the necessary funds to foot the $40 million for the stadium and the hotel tax doesn’t generate the additional $35 million the 49ers would be responsible for making up the difference. If the economy does not improve and the funds do not eventually become available, the 49ers would simply not be repaid, assistant city manager Ron Garratt tells GlobeSt.com.

“Right now we’re estimating today we have about $28 million in tax increment we could bond against, which would put the 49ers on the hook for the remaining $12 million, and that the hotel tax would not generate $35 million,” he says. “But those numbers will keep moving around and if financial conditions worsen and the state decides to make itself whole by taking from redevelopment agencies, we may have nothing left [to bond against] but our hope is that the economy will recover, new projects will be built [in the redevelopment area] and [the 49ers] can get some of their money back.”

In exchange for being on the hook for all of the stadium’s operational expenses the team would keep all revenue from ticket sales from games, ad revenue from NFL events, ticket premium fees for suite and club room use for for non-NFL events, and revenue from the team store.

The newly formed Santa Clara Stadium Authority would get revenue from naming rights; net revenue from concession sales and parking lots; and annual rent payments from the team that would total roughly $40 million over the life of the contract, which has an initial lease term of 40 years that may be extended by an additional 20 years.

If the city or its voters reject the plan, the 49ers attention may shift back to San Francisco where the city, in partnership with Lennar, wants a new 49ers stadium at Hunter’s Point to replace Candlestick Park. Either way, the goal is to have the stadium ready for the 2014 NFL season. The team’s Candlestick initial lease term at Candlestick runs through this season but the team holds three five-year extension options such that it could continue to play in the stadium through 2023.