Councilman Says Santa Clara Stands to Lose in 49ers Deal

The building of a $937 million stadium for the 49ers in Santa Clara has gained popular momentum. But City Councilman Will Kennedy has one big reason why his city should not build a new home for the National Football League team.

The city stands to lose more money than it would make.

“The main reasons I went against it are through the findings of a city consultant,” Kennedy said. “The amount we end up with in the general fund with or without the stadium was a difference of $98 million compared to $31 million.

“There would be more money in the general fund if we did not build.”

Kennedy was one of two on the Santa Clara City Council to vote against the stadium proposal in early June. A citywide vote will take place next March to determine whether or not Santa Clara will approve the stadium.

The current plan would include $79 million in the way of a subsidy by the city, with $42 million coming from redevelopment agency funds, $20 million from the city-owned utility district to relocate an electrical substation and $17 million to build a parking garage.

An additional $35 million would be raised through a tax to guests staying in hotels at Santa Clara’s North Bayshore redevelopment area.

All other funding would come from the 49ers organization, the NFL and other sources such as corporate sponsorships.

However, Kennedy claims that instead of using the money towards a project such as a stadium, the money coming from the redevelopment agency can instead be used to pay back the city’s general fund.

He also points out that the hotel tax should be considered public money and that the value of the land should not be omitted.

“I would have no problem putting money into a stadium if I saw our results came back that it would yield more money at the end of the day.”

Kennedy said he’s done the math. After adding everything up, evaluating increased taxes and revenues, it was a negative number for the city.

“There are a lot of discussions about the pros and cons but at some point you have to add it all up and compare the two,” Kennedy said.

Another concern for Kennedy is the current bargain basement pricing the 49ers are receiving on their rent at their 11-acre training center in Santa Clara. Kennedy said the 49ers pay $22,000 a year in rent for the land, while the Hyatt pays $1.4 million per year for five acres.

“Per acre, they are paying one percent of the Hyatt,” Kennedy said. “That’s almost free rent.”

Kennedy said that’s already a done deal, but the current proposal extends that out for as long as 64 years.

Proponents of building the stadium point to a growth in economic activity that will stimulate the city’s economy.  However, Kennedy said it’s important to quantify that and the results showed an increase of just $41 million to the city.

“That ($41 million) may sound like a lot, but that $41 million is 1/1,000th of what we have in the city already,” Kennedy said. “A very small incremental increase. Given that it’s such a small amount, it doesn’t seem worth the big investment.”

James Spencer can be reached at jspencer@publicCEO.com

Other comments on the issue:

In a press conference in early June (video here begins at 22:22), San Francisco Mayor Gavin Newsom talked about the costs of keeping the 49ers in his city.

“I won’t do it subsidizing very wealthy people when we should be spending money on poor people,” Newsom said.

Further, Newsom added, “I’m trying to make sure that public housing has adequate heating this year. I’m less worried about billionaires getting a new stadium … It’s a literal trade-off. These are real dollars.”