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49ers Stadium Inching Closer to Groundbreaking – Final Agreements to be Approved Soon Some Call Financing Plan Sketchy

Santa Clara and the 49ers are sitting a fourth-and-goal from the 1-yard line. Frank Gore is hammering the ball into the end zone for the Touchdown.

Fresh off claiming the NFC West division championship and securing their first playoff berth in nine years, the 49ers and Santa Clara are closing in on finalizing the details for breaking ground on a 68,500-seat stadium in Santa Clara.

After reviewing the Disposition and Development Agreement (DDA), which is the overall legal structure of the Stadium Project at study sessions on December 6 and 8, the Santa Clara Stadium Authority and City Council will consider approving the DDA at their December 13 meeting.

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Included in the DDA are crucial details on the stadium lease (providing the general framework for stadium operations once construction is complete) and a preliminary finance plan.

“This is an important milestone regarding the new stadium for the 49ers,” said 49ers President and CEO Jed York. “The Santa Clara Stadium Authority and the 49ers have been working tirelessly to secure this construction loan for the new stadium. We still have to tackle some logistical and contractual challenges ahead, but this is an important step to putting shovels in the ground.”

Commitments for construction financing from Goldman, Sachs & Co., Bank of America/Merrill Lynch and U.S. Bank totaling up to $850 million (which will be in the range of $450 million from the construction lenders and $400 million as a subordinated loan from StadCo.) will be presented.

Some community members, including those at Santa Clara Plays Fair, claim the DDA places a severe financial burden on the City, with their Web site stating “The DDA is a bad deal for Santa Clarans. Its costs/debt/risks are far worse than the Term Sheet. Santa Clarans, this is exactly why the Santa Clara Stadium Authority was never subject to any limitations by the Stadium Ballot Measure on June 8, 2010, and why the true costs of the stadium were not included on the ballot.”

Despite this, protections are included in the stadium lease summary to “ensure that the Stadium Authority has sufficient funds to pay its financial obligations, with a requirement that a 49ers affiliate provide the Stadium Authority with a line of credit if needed,” noting that Stadium Authority revenues, including naming rights, stadium builder licenses (SBLs), suites and additional sources will be used to repay the loan. However, those funding sources cannot be completed until construction commences.

Make-ready work for the project site is expected to begin in January 2012. StadCo’s (a 49ers affiliate) annual rent is estimated to have risen to $30 million per year, as compared to the original estimate of $5 million per year.

As expected, and noted in the term sheet, the cost of the stadium has risen – to $1.02 billion, due to inflation since the project was originally envisioned, also taking into account further project refinements, including many environmentally-friendly elements.

The 1.85 million square foot facility will feature 165 luxury suites and 9,000 club seats and will be designed with multi-purpose flexibility to host a wide range of events including international soccer, motocross, concerts, civic events, and is expandable for major events such as the Super Bowl. The stadium is also slated to be the most environmentally friendly stadium in the country.

Reports can be found on the website on the City and Stadium Authority Agendas at: http://www.santaclaraca.gov/councilmeetings. The City has a portal specific to the 49ers stadium at http://www.santaclaraca.gov/49ers.

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