Sunday, May 22, 2011

The 49ers' Subsidies: "They're a bad idea, so let's do 'em anyway!"

Dear Santa Clarans,

We link to Neil deMause's "Field of Schemes" website from our homepage because the guy really gets it.  Today, with this essay, he proved that once again.

You'll see some brief but straight-on-point paragraphs on the inane waste of public money that goes into sports palaces - and the illogical thought processes of journalists and Councilmembers who think they understand the issue but who really don't:

  • "When newspaper columnists (and, presumably, elected officials) are able to think to themselves, "Sure, virtually every economist agrees that public sports facilities are a terrible deal, but this is a public-private partnership, so that's a totally different thing!" then there's really no reasoning with them. And as recent events have shown, when people really want to believe in something, they have an amazing capacity for cognitive dissonance. "
If you're still under the illusion that subsidizing a stadium for the San Francisco 49ers in Santa Clara is any kind of 'public/private partnership':  Ask yourself why the 49ers will walk out the door with over $130,000,000 in broadcast, luxury box and club seat revenues the first year - and why our city's General Fund gets only a stinking $180 thousand.  That's what Measure J really does to our city.

The principle is the same here as it is for any arena in Sacramento - only here in Santa Clara, we'll pay many times more per capita for the exorbitantly overpriced entertainment being served up by the San Francisco 49ers.  That's a massive public subsidy of $444,000,000 - all so that we can get jobs paying less than $7,000 a year. 

We're blowing a lot of public wealth on nothing but bragging rights.  Santa Clara Plays Fair urges residents to demand more - much more - from this City Council and from the San Francisco 49ers.

Thanks for all of your support, 
Bill Bailey, Treasurer,


Sunday, May 15, 2011

The 49ers' Subsidies and Truth-in-Borrowing

Dear Santa Clarans,

On April 19th, the City Council, Joint Financing Authority and Redevelopment Agency approved the sale of bonds for ten-some "refurbishment" projects in our city's North of Bayshore Redevelopment Area. It's anticipated that this bond sale will raise up to $35 million, and that at minimum, $25 million will go toward fixing stuff up - but that any remainder will go directly to subsidize the San Francisco 49ers.

You can see all of that here by clicking on "POST MEETING MATERIAL." The "refurbishment" means just that. NO new projects are in fact being constructed.

In fact, you'll find in this "carve-out" an unspecified sum for the "refurbishment" of a North Side Library not even yet built! The cost of building the North Side Library itself will be an additional $19.7 million. Not one shovel has turned any dirt for that Library, for the reason that our City's General Fund cannot afford the approximately $800K to $1M every year it will cost to pay librarians and to put books on its shelves.

In other words: There's enough in our General Fund to suffer $67 million in losses over time in order to subsidize the San Francisco 49ers - but not enough to hire a Trainer for our Senior Center and not enough for a fireworks display in Central Park this 4th of July (voted down at this same City Council meeting, in fact). There's not enough money to pay any additional Librarians - or to keep our Central Library open for the 64 hours a week it was open only one fiscal year ago.

Just as troubling: On April 19th, one of the bond consultants for the city acknowledged verbally that the 2003 Tax Allocation Bonds are being serviced at a cost to the RDA of about 5% per year - but that the 2011 'Refurbishment and Stadium Subsidy' Bonds will have a cap of 8.5%. This greatly increases our debt service costs - either to the RDA or to any successor Agency. That candid admission didn't make it into any of the written records I've examined.

In fact, this rather begs the question of what our Santa Clara Stadium Authority will face when it issues nearly four times this face amount in bonds. Some $120M to $150M in Stadium Authority paper must not only be insured - it will not even be tax-exempt.

We better pray that the 49ers get us some decent Naming Rights proceeds, even as they violate their own Term Sheet by doing so. In particular, we better pray that every last one of those Personal Seat Licenses, or PSLs, gets sold... $5,000 to $20,000 apiece, by the way.
Can you hear us, "stadium boosters"?

Anyway you slice it: Forty-Niners' stadium debt, paid for by Santa Clarans through their Agencies, is going to be a killer.

Thanks for your ongoing support,
Bill Bailey, Treasurer