How the 49ers and Pro-Stadium Council members won the stadium vote in Santa Clara.
The 49ers won the '49ers Measure J' stadium vote with the help of five pro-stadium Santa Clara City Council members (Mahan, Matthews, Moore, Caserta, and Kornder) and two former Santa Clara City Council members (Gillmor and Kolstad, who served as spokespersons at the helm of the '49ers Measure J', and are now both back on the council.) To get '49ers Measure J' to pass, numerous steps were taken by Santa Clara's pro-stadium council members, and about $5 million of the 49ers money was spent to hide the stadium costs/debt/risk, saturate the city with misinformation, manipulate the ballot language to sound like an advertisement for the stadium, minimize just how bad the parking and traffic problems will be, and take away Santa Clarans' right to vote on a change to our city charter. Here's the story no news outlet would report, about what really happened in Santa Clara to get the '49ers Measure J' to pass. This article also serves as documentation of what Santa Clarans went through during the 49ers Measure J campaign.
See our series of 'Timeline' articles for a month by month description of how Santa Clara was manipulated into passing a stadium ballot measure. This article includes the misleading mailers sent into Santa Clarans' homes:
1) Background: 1988-Santa Clara grants sweetheart lease for the 49ers training facility; 2006-Stealth election to elect pro-stadium majority; 49ers campaign contributions to SC council members 2006, 2008, 2010
In 1988, the 49ers built their 11-acre training facility in Santa Clara on city-owned land. They were given a sweetheart deal on their lease which resulted in rent payments from the 49ers to the city of about $2000 - $2200/month, lower than many Santa Clarans' mortgage payments. The 'sweetheart lease' is so named because the rent paid to the city by other tenants is much, much higher per acre.
Contrary to what Mayor Patricia Mahan claimed in a May 2010 debate on the stadium - that the 49ers paid "hundreds of millions of dollars" for the infrastructure around the training facility - the facility lease states that the city of Santa Clara paid for infrastructure improvements leading up to the 49ers training facility boundary. Here's Mayor Mahan on youtube at the debate, telling voters the 49ers paid for improvements for which the city actually paid.
During the 2006 campaign for Santa Clara council/mayor 49ers owner John York and 49ers VP Larry McNeil each donated $500 to Mayor Patricia Mahan's 2006 re-election campaign. Prior to the November 2006 election, the stadium wasn't presented to voters as a possibility or an upcoming issue, hence the 2006 election has been dubbed the 'stealth' election. The stadium should have been discussed with voters, because within days after Santa Clarans unknowingly elected a pro-stadium majority of five on the city council who would vote 'yes' on every stadium issue and campaign heavily on behalf of the '49ers Measure J', the 49ers announced their intention to obtain a stadium in Santa Clara. (The pro-stadium five were Mahan, Caserta, Kornder, Moore, and Kolstad, with Mahan and Caserta re-elected in 2006, Kornder newly elected in 2006, and Moore and Kolstad already serving on the council).
In November 2008, Council members Jamie McLeod, Will Kennedy, and Kevin Moore were re-elected. Pat Kolstad was termed out and replaced by former council member Jamie Matthews to continue the pro-stadium majority of five on the council (Mahan, Matthews, Moore, Caserta, Kornder). FPPC forms show that in 2006, 2008, and 2010 the 49ers, their contractors, and other parties which will make money off of the stadium donated to the campaigns of pro-stadium city council members. You can read about campaign donations from the 49ers owners and their stadium contractors to pro-stadium Santa Clara city council members here.
2) In closed door sessions, a non-binding Term Sheet was developed which showed that $444 Million for stadium construction would be required from Santa Clara and its agencies.
On June 2, 2009 the first poll showed that Santa Clarans were 62% against the use of public funds to build a new stadium for the 49ers.
June 2, 2009 Poll by Survey USA, sponsored by KPIX-TV
"Do you think it's a good idea or a bad idea to use public funds to build a new stadium for the San Francisco 49ers?"
500 Santa Clara voters
30% for spending public funds on a stadium.
62% against spending public funds on a stadium.
Later that same day (June 2, 2009) a Term Sheet was signed between the 49ers and the city. The term sheet consists of text plus numerous 'exhibits' (the figures and tables).
Here are pertinent components of the Term Sheet dealing with costs:
**Important** The Term Sheet Text does not list the stadium costs or reference any of the Term Sheet figures or tables (such as the table of costs Exhibit 14). It's highly unusual for the text of a technical document to not include references (call outs) to associated tables and figures. The lack of citation of the table of costs within the Term Sheet text became very important later when the stadium went to the ballot with only the Term Sheet text appended but without the table of costs.
The Term Sheet table of costs lists the breakdown of a $937 Million stadium as follows:
($444 Million (47%) from Santa Clara and its agencies, $493 Million (53%) from the 49ers):
- $114 Million in a direct public subsidy from Santa Clara, from the following sources:
- $42 Million in Redevelopment agency bonds (our property tax $)
- $20 Million to move an election substation (our electric utility funds)
- $35 Million from a 2% increase in hotel occupancy tax (our city's hotels)
- $17 Million in RDA bonds for a new parking garage (our property tax $)
- $330 Million to be raised by our new agency, the Stadium Authority
- $493 Million from the 49ers
- There was no contribution specified from the NFL.
The Term Sheet table of costs did not discuss the additional estimated >$200 Million in interest that would need to be paid by the Stadium Authority on the stadium bond debt.
On the day after the Term Sheet was signed, the San Jose Mercury News put out a correct pie chart of the Term Sheet stadium construction costs using numbers from Term Sheet Exhibit 14:
This correct pie chart was printed in the SJ Mercury News on June 3, 2009. The Mercury News did not print this correct pie chart again until the day after the stadium election (chart was reprinted on June 9, 2010). Santa Clara Plays Fair also put out a correct pie chart based on the Term Sheet table of costs which contained numbers identical to the SJ Mercury News pie chart:
Also on the day after the Term Sheet was signed (June 3, 2009) Jed York (49ers CEO and son of the owners) appeared on Comcast Chronicle Live in front of a large pie chart of the stadium costs, which were listed correctly: $114 Million direct subsidy from Santa Clara, $330 Million from Santa Clara's agency the Stadium Authority, and $493 Million from the 49ers. Here's the link to Jed York's Chronicle Live interview:
Here's the correct pie chart shown by Jed York on June 3, 2009, which has the same numbers as does Santa Clara Plays Fair's pie chart:
That's the last time Jed York and the Yes on the 49ers Stadium campaign showed Santa Clarans the true stadium construction costs or acknowledged the Stadium Authority's contribution. (Note that the center of the pie chart is not really centered - it is shifted to the right to make it look like Santa Clara's portion is smaller than 47%, and the 49ers portion is larger than 53%.)
**Important** The City of Santa Clara never put forth a pie chart of the stadium construction costs to accompany The Term Sheet, which allowed the 49ers stadium campaign to put out a false pie chart which was used by pro-stadium city council members during the campaign.
3) The 49ers Measure J campaign put forth a false pie chart of the stadium costs which hid the Stadium Authority and its costs/debt and high-risk fundraising mechanisms.
Shortly after Jed York's June 3, 2009 appearance on TV with the correct pie chart, the 49ers Measure J campaign put out a new pie chart that hid the existence of the Stadium Authority. The new pie chart lumped the Stadium Authority's $330 million contribution in with the 49ers share to hide the costs/debt/risks to the Stadium Authority and purposefully understate the contribution from Santa Clara and its agencies:
Note that as of December 2, 2011, when the draft Disposition and Development Agreement (DDA) was released, the 49ers share has been reduced to $150 million, while Santa Clara's Stadium Authority is now supposed to carry $850 Million in high interest rate loans for the stadium. The Stadium Authority was hidden from view during the campaign.
Santa Clarans were inundated with mailers showing the false pie chart which did not disclose Stadium Authority debt, and shown the false pie chart on the 49ers Measure J website and in pro-stadium campaign talks/debates. The false pie chart was displayed in talks by 49ers Measure J leader and spokesman, former council member Pat Kolstad (now current council member), as well as by then-Mayor Patricia Mahan (now council member), then-Council Member Jamie Matthews (now mayor), and by 49ers CEO Jed York when he spoke in front of Santa Clara Unified School District's School Board. Pro-stadium city council members posed with the false pie chart in 49ers stadium mailers. Our former elected Chief of Police, Steve Lodge (now retired and double dipping as a high paid stadium security consultant), appeared on the 'pro' side of a stadium debate with then-Mayor Mahan and then-Council Member Matthews where the false pie chart was displayed.
A 49ers Measure J front group was formed (funded almost exclusively by the 49ers to the tune of about $5 million), Santa Clarans for Economic Progress (SCEP), which also covered up the existence of the Stadium Authority and its high-risk fundraising in all of its campaign mailers/ads.
Why hide the Stadium Authority (SA)?
- To minimize Santa Clara's share in the eyes of voters so that taxpayers would vote 'yes', not knowing the true costs. The DDA now shows that behind closed doors, pro-stadium city council members and the 49ers have heaped $850 million in debt upon the SA, with hundreds of millions more in interest.
- To not disclose the possibility of the Stadium Authority becoming insolvent and in need of a taxpayer bailout, like stadiums in other cities.
- To prevent discussion of the high risk nature of Stadium Authority financing mechanisms, primarily selling personal seat licenses and naming rights.
- To avoid discussion of the hundreds of millions in interest on stadium construction bonds that will be owed by Santa Clara's agencies.
- To avoid discussion of stadium operational costs, which are often $20 million/year to $30 million/year.
- To hide the costs/debt/risks of other stadiums and stadium authorities to their host cities and taxpayers.
Throughout the year leading up to the June 2010 election, the 49ers Measure J campaign saturated Santa Clara with false information about the stadium construction costs in the media. The news media, having picked up on the stadium campaign false pie chart and Santa Clara's pro-stadium city council members' support of the false pie chart numbers, repeatedly told the public (incorrectly) that the 49ers were paying $823 million (88%) of the stadium construction costs, or even as much as 92% of the costs.
Here are examples of how the media and pro-stadium Santa Clara council members distorted the stadium construction costs to not disclose the Stadium Authority's costs/debt/risks:
1) Ray Ratto, SF Chronicle, 7/15/2009, "The idea that Santa Clara has 100 million some-odd dollars to toss at the 49ers is weird enough. Trusting the Yorks to come up with the other $800 million needed to build takes the guts of a bomb disposal unit."
2) SF Chronicle 10/28/2009 "The remaining $823 million would come from the team, hoped-for NFL funding, the sale of naming rights and concession licenses, and other sources." http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/10/28/MNIK1ABH20.DTL#ixzz0mobTYiwP
3) In a May 20th, 2010 KTVU Channel 2 report on the 10 o'clock news, Lloyd LaCuesta echoed the false pie chart of costs put forth by the 49ers and pro-stadium council members by saying: the city of Santa Clara puts up $114 million, "and the 49ers would pay the rest."
4) Former Mayor (now Council Member) Patricia Mahan went further, when she appeared on ABC 7 television on 4/6/2010:
"The mayor of Santa Clara insists the 49ers will end up paying close to 92 percent of the costs."
5) Former Santa Clara Mayor Patricia Mahan (now Council Member) and Former Council Member (now Mayor) Jamie Matthews wrote in an editorial in the Santa Clara Weekly 5/5/2009: "Over 92% of this project is paid for by the NFL, the 49ers, and other stadium revenues."
6) In its May 12-May 18, 2010 issue, the Santa Clara Weekly stated that the $444 million contribution to stadium construction from Santa Clara and its agencies (Redevelopment and Stadium Authority) would be 'paid by the 49ers'.
The bottom line: Santa Clarans were saturated with a falsely positive picture of stadium construction costs from the 49ers Measure J stadium campaign, five pro-stadium city council members, and the two former council members (now back on the council) at the helm of the front group SCEP. The media reproduced the falsely positive picture of costs. The DDA now shows that since the 49ers Measure J passed in June 2010, behind closed doors the pro-stadium council members worked with the 49ers to heap $850 million in debt upon the Stadium Authority. This is not what Santa Clarans were told about the stadium costs, or the costs we voted on.
4) To make it easier to pass the 49ers Measure J, the 49ers, with the help of Santa Clara's pro-stadium city council members and a state senator, went to Sacramento to take away our right to vote on a change to our city charter.
As far back as Dec. 1, 2007, The SJ Mercury News warned that the 49ers didn't want to abide by Santa Clara's Charter requirement for competitive bidding when public funds are used. "The 49ers, however, say they are not willing to change the three primary firms they have been working with since early 2006 to design and build the 68,500-seat stadium."
In the spring of 2009, prior to the signing of the Term Sheet, there was polling of Santa Clarans on the city charter issue (the pollster, when asked who was paying for the poll, said the 49ers were paying). One question of concern was, 'Would you support or oppose allowing the 49ers to bypass Santa Clara's city charter requirement for competitive bidding?' The results of that poll were never made public.
The June 2, 2009 Term Sheet promised us two votes: a vote on the stadium itself, and a vote on whether or not the 49ers could override our city charter requirement for competitive bidding when public funds are used.
- The first vote from Term Sheet Section 1.1: "The Stadium will not be constructed unless and until the voters of the City approve a ballot measure endorsing the development of the stadium consistent with the essential elements set forth in this Term Sheet."
- The second vote from Term Sheet Section 6.3: "The City will form a Charter Review Committee to review and make recommendations to the council to consider possible amendment to Section 13.10 of the City Charter (Contracts on Public Works), and if Council approves, to submit a proposed Charter amendment to the voters for approval." While the vote on the stadium would be a simple majority vote, a two-thirds vote of Santa Clarans is required for a charter override.
Unbeknownst to Santa Clarans, for two years prior to the signing of the Term Sheet the 49ers had been talking with Santa Clara city staff about going to Sacramento to override our charter requirement for competitive bidding. This plan to go to Sacramento was not made public until after the Term Sheet was signed.
Less than one month after signing the Term Sheet, State Senator Elaine Alquist gutted and re-wrote an existing bill, Senate Bill 43 (SB43), solely in favor of the 49ers. This bill allowed the 49ers to bypass our city charter without a vote of the people and violated the constitutional rights of Santa Clarans. Three of our pro-stadium council members went to Sacramento (Mahan, Moore, Matthews), together with the 49ers and other entities that stand to financially benefit from a stadium, to lobby the Senate and Assembly Local Government Committees to pass SB43.
In August 2009, after SB43 was well on its way through the legislature, the Santa Clara City Council appointed a Charter Review Committee to study the issue of allowing the 49ers to override our charter. The Committee contained a large majority of members who later would be very actively involved in the 49ers Measure J campaign front group, Santa Clarans for Economic Progress (SCEP). On the Charter Review Committee were the three people who became signatories for the 49ers ballot initiative (Gillmor, Kolstad, Parle), two who would also be at the helm of the 49ers campaign committee (Gillmor, Kolstad), two people who would later become co-chairs of the Yes on J campaign, two people who would later become signatories on the pro-stadium ballot arguments, and a total of at least eleven out of the eighteen committee members who would later be highly identifiable members of the pro-stadium 49ers campaign front group (such as, allowed their photos to be used for the pro-stadium campaign). With one exception, the Charter Review Committee voted to rubberstamp SB43 and take away our right to vote.
On October 27, 2009, after SB43 was voted into law, Santa Clara's City Manager admitted under questioning at a City Council Meeting that the 49ers had been talking for two years about going to Sacramento to override our charter: http://www.youtube.com/user/SCvoter#p/u/2/smVoRaEJA4E
10/27/2009 SJ Mercury news: "In making the recommendation, the charter committee noted that adopting SB43 would create less confusion at the ballot and avoid the necessity of placing two measures on the issue before voters. Santa Clara voters must still decide whether to approve a stadium."
"But not everyone was game for the idea, and some council members questioned whether the use of the Alquist bill was an end run around the city charter. "It's inappropriate for others to override our charter," said Councilwoman Jamie McLeod, who voted against the recommendation, along with Councilman Will Kennedy. "I think we should defer to the voters. They should be making the decision on both these issues," she said. "
As later reported in the San Jose Mercury News after the stadium election was over, 7/10/2010 "How Our Laws in California are Really Made"
"The team was frustrated that the city's charter required them to put the contract to build the stadium out for competitive bid. Alquist's bill exempted the stadium from the bid mandate." "Alquist said she came up with the idea herself. That surprised some local officials: "It's hard for me to believe the 49ers didn't go in and ask for this bill," said Santa Clara Councilman William Kennedy, a stadium opponent. What's more, city staff said the team had mentioned during negotiations that it might turn to the Legislature for help."
Unbeknownst to Santa Clarans, but revealed after the stadium election in a SJ Mercury News (7/10/2010) study of sponsored legislation, "The team spent $73,779 on lobbyists who schmoozed the governor and the Legislature on the bill" to get SB43 to pass.
The Bottom Line: The vote on a charter change to allow the 49ers to override our charter's competitive bid clause was unlikely to pass with the required two-thirds majority. By taking away our right to vote on a change to our city's charter, and leaving only one vote on the ballot instead of two, the 49ers, our pro-stadium city council members, and the CA State Legislature not only disenfranchised 46,000 Santa Clara voters, they made it easier for the 49ers to pass 49ers Measure J.
5) Pro-stadium council members and the 49ers Measure J campaign denied the loss to Santa Clara's General Fund and ignored the city's negative return on investment shown by city staff and city consultants:
The General Fund Loss due to the stadium. This loss was shown by city staff in its June 2, 2009 Term Sheet Presentation (Slide 48).
Council members Jamie McLeod and Will Kennedy published an editorial in the Santa Clara Weekly on May 5, 2010 in which they explained the loss:
"Our General Fund will lose $67 million (city staff reports that $98 million will be redirected from the General Fund to the stadium, and the stadium will generate just $31 million in General Fund revenue). The stadium project was supposed to increase our General Fund, but it does just the opposite." Note that: $98 million minus $31 million equals $67 million.
The Yes on Measure J campaign and five pro-stadium city council members (Mahan, Matthews, Moore, Caserta, and Kornder) appeared in campaign mailers which repeatedly denied the report by city staff and its consultant that shows the stadium will cause a loss to Santa Clara's General Fund of $67 million. Patricia Mahan and Jamie Matthews wrote an editorial in the SC Weekly (4/15/2010) that stated: " Foes of the project have recently claimed that the stadium will cause a loss of city revenue….. City staff clearly explains on our Web site (santaclaraca.gov) that the city's general fund will be paid in full by our redevelopment agency for any past obligations." Note that they did not address the issue, which is $67 million fewer dollars flowing into our General Fund with a stadium than without a stadium.
In addition, in the Term Sheet Presentation of June 2, 2009, the City's consultant concluded that Santa Clara would sustain a two to one loss on its direct subsidy of $114 million in public funds for the stadium, but the Yes on The Stadium vote campaign and our pro-stadium city council members did not present that information to the public. Instead, they focused on a study paid for by the 49ers consultant, which concluded that the region would benefit from the stadium. Note: The region isn't paying for the stadium. Not one other city in Santa Clara County nor Santa Clara County government itself stepped up to the plate to help financially with the stadium construction costs. The City of Santa Clara alone is subsidizing the stadium, and taking the losses and risk; the region pays nothing.
City staff gave a Term Sheet Presentation which showed that the city's consultant estimated Santa Clara would take a two to one loss on its direct subsidy of the stadium. Staff also presented information showing that an extension in time of the North Bayshore Redevelopment Agency to fund stadium construction bonds would cause a $67 million loss to Santa Clara's General Fund. The Term Sheet was developed with terms favorable to the team (such as the team gets all NFL revenue and 1/2 of the non-NFL revenue, and there will be a threshold on how much the 49ers have to pay for public safety costs at NFL games.)
Council members Jamie McLeod and Will Kennedy explained why the city would be taking a negative return on investment on our stadium subsidy in an editorial in the Santa Clara Weekly on May 5, 2010 http://scw.tearn.com/2010/05/vote-no-on-measure-j.html:
"The problem is that the 49ers won't be paying us enough rent. According to city staff, the value in today’s dollars of all the rent the 49ers will pay over their 40 year lease is only $8 million -- less than they paid their Defensive End for 2009. If you add up everything that the city will get, in direct and indirect revenue over the 40 year lease, it is half of what we are putting into the stadium."
For more information on the General Fund loss, click here.
The Bottom Line: If Santa Clarans knew about the $67 million General Fund loss and negative return on investment, would they have been more likely to vote 'no'? We think so.
There's more coming, including how the ballot language was manipulated to leave off the costs (except for the $42 million in RDA funds), the loophole in state law which does not require cost disclosure on city-wide ballot measures, and the misleading information put out in the 49ers Measure J campaign.
Here are the links to the 49ers Measure J ballot question and ballot language that show:
The only costs on the ballot were the $40 million in redevelopment monies and the $35 million from a hotel tax.
There is no mention of loans by the Stadium Authority either in the 49ers Measure J ordinance or the Term Sheet text!