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UPDATE 2-Judge denies public vote on 49ers stadium funding
March 5, 2012 / 11:16 PM / in 6 years

UPDATE 2-Judge denies public vote on 49ers stadium funding

By Philipp Gollner

SAN JOSE, Calif., March 5 (Reuters) - A judge on Monday handed a victory to the San Francisco 49ers pro football team and backers of a new billion-dollar stadium in Santa Clara, California, by rejecting a bid to put the project’s complex financing up for a vote by residents.

The ruling by Judge Peter Kirwan of Santa Clara Superior Court clears the way for the start of construction on the 68,500-seat stadium this summer. Opponents of the project argued the stadium’s $850 million debt financing was too risky for the city of 119,000 and had not been approved by residents when they gave the go-ahead for the stadium in 2010.

Kirwan agreed with attorneys for the 49ers that the financing agreements were administrative, rather than legislative, acts, and so not subject to voter approval. Supporters, including a majority of city council members, said the financing was only carrying out the intent of a 2010 initiative, Measure J.

The city has said it is bearing almost none of the project’s financial risk, which is being assumed by the 49ers and the Santa Clara Stadium Authority, an entity whose board is made up of city council members but is legally separate from the city.

The 49ers have long wanted to leave San Francisco’s Candlestick Park, an aging facility that opened in 1960 and has been plagued by parking shortages, game-day traffic jams and few modern amenities. The new $1.02 billion stadium will have 165 luxury suites with about 20 seats each. Much of the financing will come from the sale of seat licenses - some costing $20,000 to $30,000 - that give holders the right to buy tickets.

A residents’ group called Santa Clara Plays Fair gathered enough signatures to put two key stadium financing contracts up for an initiative vote in June, yet the city refused.

Matthew Zinn, attorney for the residents’ group, said he had not decided whether to appeal.

“This is a really unfortunate situation for the voters of Santa Clara,” said Deborah Bress, spokeswoman for Santa Clara Plays Fair. “The risk of these loans does not go away for the citizens of Santa Clara.”

The project, 45 miles south of San Francisco, is being financed with loans from Goldman Sachs Group Inc, Bank of America Corp and U.S. Bancorp to a so-called Stadium Funding Trust, which in turn is lending $450 million to the stadium authority and $400 million to a 49ers-owned entity known as StadCo.

The National Football League is lending $200 million to the 49ers for stadium construction.

The loans would be repaid from revenue sources including naming rights, licenses to buy seat tickets and luxury suites, and non-football events and concession rights. The stadium would be owned by the stadium authority while the 49ers would pay $30 million a year in rent and operate the facility during the football season.

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