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In RDA Obligation Dispute, County Says Stadium Authority Goal was to “Wash” Money

Last Friday while many Santa Clarans were preparing for a pleasant summer weekend, Santa Clara County officials were preparing to help themselves to $30 million of Santa Clara redevelopment tax revenue.

In what the San Jose Mercury characterized as a “money grab,” the oversight board for the now-defunct Santa Clara Redevelopment Agency (RDA) voted, in the words of a motion written prior to the meeting by board member and current county tax-collector (and former San Francisco tax administrator) George Putris, “to terminate the cooperation agreement between the stadium authority and the Redevelopment Agency…because it is in the best interests of the taxing entities [and] not place any stadium-related obligations on the recognized obligation schedule.”

Voting to nullify the $30 million commitment – approved by city voters in 2010 – were Santa Clara Valley Water District Chair Don Gage, West Valley-Mission Community College District, Vice Chancellor of Administrative Services Ed Maduli, and Jai Singh, a representative of the Santa Clara County Fire Department. The remaining three board members – Santa Clara Mayor Jamie Matthews, Santa Clara Finance Director Gary Ameling, and Santa Clara Unified School District Advisor Kolvira Cheng – opposed the motion, but were outnumbered by the county officials.


Some are calling the vote a violation of California’s open meetings law, the Brown Act, because Putris’ motion wasn’t posted on the agenda in advance of the meeting. One provision of the Brown Act is that public agencies can’t take actions that aren’t on the agenda.

The county’s position is that the Santa Clara Stadium Authority (SCSA, a California Joint Powers Authority) was conceived as a ruse to bypass the requirements of ABx26, the 2012 law shutting down California’s RDAs), and its primary operation was money-laundering, a position that was stated in no uncertain terms by the county’s attorney.

“These agreements were structured in a funky way,” Deputy County Attorney Lizanne Reynolds told the board. “The reason they were structured that way was because the RDA could not have directly given money to the 49ers. So they created this third party in the middle, the stadium authority. The goal was to ‘wash’ the funds through the JPA [Joint Powers Authority].”

Reynolds dismissed the fact that these agreements were made under then-prevailing law. “Things changed.” When the legislature shut down the RDA program, “the overriding public policy was to return the money that had been flowing to those agencies to the taxing entities…like school districts and counties. What the legislature thought was a great public policy in 2009 by 2011 had obviously changed.

“Despite the unresolved questions about whether the agreements should be considered enforceable obligations,” she continued, “there’s no question that this board has the authority to terminate those agreements…because they’re not in the interest of the taxing entities.”

“These contracts are legally enforceable obligations of the successor agency,” replied San Francisco 49ers attorney Harry O’Brien. “The suggestion that these agreements were against public policy later adopted by the legislature is absurd. The public policy of the people of California, as of the date these contracts were signed, was to foster redevelopment in redevelopment areas. That was the law of the land. The fact that the legislature later adopted a different public policy is absolutely irrelevant to the validity of these contracts.

“It’s an entirely circular argument to say that enforceable obligations are unenforceable because the legislature later decided it wanted to capture the tax revenue that had been pledged. That turns the notion of an enforceable obligation on its head,” O’Brien continued, adding that the County’s statement that the SCSA “had been created in order to launder this money and avoid the impact of ABx26 is flatly wrong.”

What happens next? One possibility is that the 49ers will sue the successor agency for the $30 million. If they prevail, they’ll get the money – plus interest – from the same redevelopment funds that county officials are banking on.


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