Stadium Authority Codifies Settlement With 49ers

Contract restructuring at Levi’s Stadium has brought closure to a long-standing dispute between the City and the 49ers, but it comes at a cost for stadium goers.

After much negotiation, the Santa Clara Stadium Authority Board and the 49ers have finally settled their dispute over costs at Levi’s Stadium. However, part of that agreement saddles those attending non-NFL events at the stadium with double the fees, increasing them by an additional $4 a ticket.

At its Tuesday meeting, the Santa Clara Stadium Authority codified the settlement. Although the issues between the team and the Stadium Authority have been put to bed, there was no shortage of fireworks among the Board.

The contract dispute surrounded who should foot the bill for buffet and police costs. The agreement, released last week, takes a healthy bite out of how much money the Santa Clara Stadium Authority owes the team, reducing the total by $7.5 million.

Last week, the Board approved the settlement in a 5-2 vote, with Mayor Lisa Gillmor and Council Member Kathy Watanabe in opposition. Gillmor subsequently took to X, formerly known as Twitter, calling the settlement a “loan-shark type deal.”

Gillmor opposed the re-negotiation of the disputed police costs, saying the public is on the hook for too high a proportion of those costs. As she often does, Gillmor did not miss an opportunity to point fingers at her Council colleagues whose campaigns the 49ers’ PAC supported, intimating that such support was responsible for the settlement.

“These numbers should have been closer to what the actuals are … having the public subsidize [police costs] is not something I can support,” Gillmor said Tuesday. “I don’t want to settle things on our back.”

Vice Mayor Anthony Becker punched back, saying Gillmor is a “master of gaslighting.” He said Gillmor was responsible for bringing the stadium to Santa Clara but never bothered reading the agreements and is now calling foul on what those agreements say.

City Manager Jovan Grogan estimated that the settlement will funnel $20 million into the City’s general fund over the next two years.

Even if the issues had gone to court, Grogan said, the City would have missed out on many things contained in the settlement. Among those were a cap on buffet costs, the increased ticket surcharge and the increase in youth and senior fees.

Grogan was also clear that the settlement does not alter the 49ers obligation to pay for police costs or the police department’s ability to determine how to keep the stadium safe.

“No matter how this issue ended, the Stadium Authority would owe StadCo, the 49ers, money,” said City Manager Jovan Grogan.

In addition to whittling how much the Stadium Authority owes the team to $14.8 million, the settlement also injects $7.1 million in performance rent into the City’s general fund. Further, the agreement ups the police-cost threshold — the amount the team pays for NFL games — increasing it by $108,000 per game.

Originally, the cap was set at $170,000 per game with a 4% annual increase. Even in the stadium’s first season, police costs exceeded thresholds by $75,514. Since then, costs have exceeded the threshold every year except for the 2020-21 season, which was hampered by the pandemic. Estimates for the 2023-24 season are $521,494 per game, $299,531 over the threshold.

“Costs exceeding the contractual threshold are reimbursed by the stadium authority through payments out of the authority’s discretionary fund or as credits against what would otherwise be StadCo’s facility rent obligation,” said City Attorney Glen Googins.

In a season with 10 home games, that means the City would be on the hook for roughly $3 million in police costs.

Police costs have ballooned in recent years. Last year, the City was taken aback to be on the hook for $100,000 in overtime police costs for a Christmas game at Levi’s Stadium. The 49ers had paid overtime costs for such games in previous years but declined to do so last year, much to the chagrin of Gillmor and Watanabe.

“These public safety costs are high because we are trying to keep the stadium safe and the neighborhood safe and parking lot safe and other things, and as events happen and as incidents happen, it is constantly changing,” Gillmor said.

Given that police costs are the lion’s share of the dispute between the team and the City, the non-NFL events surcharge increase is particularly telling. With Santa Clara officers among the highest paid in the country, the surcharge uptick illuminates how even the 49ers agreeing to increase how much of police cost it is are willing to cover is insufficient to address the issue.

Watanabe spoke out against the surcharge, calling the settlement “not equitable.”

“It seems like the NFL should be bearing the brunt of their own costs because they make a heck of a lot more money than the non-NFL events,” she said. “I don’t think it is fair that the stadium authority is bearing the brunt of these costs.”

During public comments, frequent commenter John Haggerty compared Police Chief Pat Nikolai to someone who orders a meal at a restaurant when they aren’t the one paying for it. The setup invites conflicts, he said, especially since Nikolai has made it known that “no expenses will be spared.”

“Unfortunately, that kind of approach can be sort of like a head surgeon saying, ‘Oh, why don’t we hire two extra doctors to make extra sure that the operation will go extra well,’ or a head attorney saying, ‘Oh, why don’t we have two extra attorneys because that will increase our chances of winning,’ but it is very expensive and prohibitive at a certain point,” Haggerty said.

Another frequent Council commenter, San Jose resident and special advisor to the mayor Kirk Vartan, called into question the transparency of the settlement, saying discussion on the item shows a “basic contempt for democracy” calling the lack of public engagement “unfortunate.” He called into question the integrity of Becker as well as his Council colleagues for allowing him to partake in the discussion.

The settlement is the last of a series of legal battles ranging from violations of the curfew and financial management. The City even attempted to revoke ManCo’s management of the stadium, something for which ManCo sued the City and settled in August 2022.

Much ado has been made regarding money the City has held in legal contingency should the dispute go against the Stadium Authority. However, the settlement unlocks that money.

The Board approved putting the settlement’s provisions in place in a 5-2 vote. Gillmor and Watanabe opposed the motion.

Water and Sewer Rates Increase

The Council also approved the new water and sewer rates. The average Santa Claran will see their water bill increase by $15.25 or $14.59 per month, depending on whether they live in a single-family or multi-family home.

Grogan said residents could have seen an even steeper hike had the City opted to be more aggressive in pursuing its reserve needs.

Gary Welling, director of water and sewer, told the Council that increases in wholesale water rates, construction and material costs and environmental cleanup all contributed to the spike in water rates.

Further, he said although Santa Clara’s population is growing, demand for water is decreasing, which is good for sustainability but less-than-ideal for revenue.

Over the next five years, the City plans $25.7 million in capital improvements for the water utility, with water main replacement and well rehabilitation on the docket in the next two years.

On the sewer side of capital improvements, Welling said $132.6 million — $86 million is the City’s share of upkeep on the Regional Wastewater Facility — is earmarked for the next five years. The remainder of those improvements will focus on system and capacity improvements.

The Council seemed pleased with the effort.

“Our tap water is often safer than bottled water,” Council Member Suds Jain said.

The Council unanimously approved the new rates. Those rates go into effect July 1.

Consent Calendar Spending

• A five-year $1.1 million purchase order with Canon Solutions America Inc. for Citywide leases and maintenance services for copier/multifunction devices.
• A $15 million increase to work for an emergency transformer replacement at the Juliette substation.
• A three-year $350,000 agreement with CRMOrbit, Inc. for rebate processing.
• A two-year $556,536 agreement with Kimley-Horn and Associates, Inc. for professional services for the Santa Clara Vision Zero Plan.
• $500,000 in amendments to existing contracts for “unanticipated internal inspections, and re-rate engineering studies” related to Kifer and Scott receiving stations.
• $17.4 million for four three-year agreements/purchase orders with two-year warranties: (a) high voltage disconnect switches (b) station service voltage transformers (c) voltage transformers and capacitive voltage transformers (d) combination revenue metering transformers. This item allows for a 15% “contingency” increase, which, if exercised, would put the cost at $20.1 million.
• A $100,000 amendment to a contract with KPMG LLP for audit and consulting services, increasing the total to $854,554.

The next regularly scheduled meeting is Tuesday, June 4 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.

Members of the public can participate in the City Council meetings on Zoom at https://santaclaraca.zoom.us/j/99706759306; Meeting ID: 997-0675-9306 or call 1 (669) 900-6833, via the City’s eComment (available during the meeting) or by email to PublicComment@santaclaraca.gov.