49ers Sue Santa Clara for Stadium Money

     SACRAMENTO (CN) – The San Francisco 49ers sued Santa Clara city and county agencies to keep them from backing out of a deal to fund a new stadium.


     The Forty Niners SC Stadium Co.’s request for writ of mandate in Superior Court follows a June 22 decision by the city’s redevelopment agency to back out of the 15-month-old agreement to help 49ers build and finance a new stadium.
     The team claims that the oversight board illegally voted to redirect nearly $13 million to other agencies in Santa Clara County.
     According to the team’s complaint, the story began in 2006, when the 49ers and the city of Santa Clara began discussions to build a stadium. By 2009, the parties had agreed to a term sheet by which petitioner Forty Niners SC Stadium Company LLC – or StadCo, an affiliate of the 49ers – would lease the stadium from the city of Santa Clara and its Redevelopment Agency, a joint powers venture dubbed the Santa Clara Stadium Authority.
     Under the agreement, the city Redevelopment Agency’s share of the $850 million stadium was $41.6 million in tax increment revenue. Santa Clara city voters approved the expenditure in June 2010.
     The parties also agreed to a convoluted set of terms for predevelopment costs, by which StadCo advanced the Santa Clara Stadium Authority more than $68 million, of which $41.6 million was to be paid by Santa Clara’s Redevelopment Agency. The football team and the Stadium Authority secured $850 million in additional financing, and groundbreaking for the new arena took place in April this year.
     In the meantime, ABx1 26 passed in the Legislature, banning all redevelopment agencies in the state. A successor agency to the Santa Clara Redevelopment Agency took over and its oversight board was tasked with expeditiously winding down the business of its predecessor.
     The lead defendant in the 49ers complaint is the Oversight Board of the Successor Agency to the City of Santa Clara Redevelopment Agency.
     The team claims that the new law required that enforceable obligations of the old agency had to be honored, and the successor agency had to periodically create Recognized Obligation Payments Schedules (ROPS) and file them with California’s Department of Finance. The stadium agreements are enforceable obligations of the old redevelopment agency, the 49ers say.
     At a June 22 meeting of the successor agency’s oversight board, member George Putris moved to terminate Santa Clara’s stadium agreements and not place any stadium-related obligations on the ROPS. The motion passed, but the 49ers say the vote was rigged.
     “Petitioner is informed and believes that two ‘members’ of the Oversight Board who voted in favor of the Putris motion were not, in fact, members but were ‘alternates,'” the complaint states. “The vote of the actual members of the Oversight Board was three to two against the Putris motion, which therefore failed. Petitioner is informed and believes that a majority of the ‘members’ of the Oversight Board, including the two ‘alternates,’ communicated, directly or through intermediaries, to discuss, deliberate or act on the Putris motion outside the June 22 meeting.”
     Communicating or deliberating outside a public meeting violates the Brown Act, as does voting on a resolution without proper public notice and recording the votes of alternates, all of which the defendants did, according to the complaint. The team seeks a court mandate to enforce Santa Clara’s obligations under the law.
     “If the court allows the Putris motion to stand, StadCo will be irreparably harmed because StadCo will be denied the benefits of the stadium agreements, and as the Oversight Board is tasked solely with directing and approving the successor agency’s ‘wind down’ of the business of the Redevelopment Agency, there is no legal remedy that would allow StadCo to recover damages to compensate it for this loss,” the 49ers say in their complaint.
     Team also sued Santa Clara County director of finance and auditor-controller Vinod Sharma, Santa Clara County’s finance agency, and Santa Clara County itself, to protect the more than $12 million already raised for the new stadium.
     “Petitioner is informed and believes, and thereon alleges that on Friday, June 29, 2012 Vinod K. Sharma, Director Finance and Auditor-Controller of the County of Santa Clara, the Finance Agency or the county itself intends … to disburse the sum of $12,803,943 to other public agencies in the County of Santa Clara, notwithstanding the fact that said funds are due and payable to the Stadium Authority. Disbursement of that amount to any agency other than the Stadium Authority will violate respondents’ mandatory ministerial duties,” the team says.
     Forty Niners SC Stadium Co. asked the court to restrain Sharma from distributing the money to any other agency, to overturn the oversight board’s decision and to require the defendants to follow proper procedures for the ROPS regarding the new stadium funding. An emergency hearing on the writ of mandate was scheduled for today (Tuesday).
     StadCo is represented by Jonathan Bass, with Coblentz, Patch, Duffy and Bass in San Francisco.

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