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Misleading Language May Doom Stadium Agreements Challenge

If you’ve been to a Santa Clara supermarket recently you may have seen the anti-stadium group Santa Clara Plays Fair (www.santaclaraplaysfair.org) asking for petition signatures.

The group aims to force the City Council to either repeal recent actions approving the proposed 49ers stadium project and its financing, or submit these agreements to a second citywide vote. In June 2010, a clear majority (58%) of Santa Clara voters approved Measure J, which specified the terms under which the city would enter into an agreement with the NFL team to build a Santa Clara stadium.

The stadium opponents have until January 19, 2012 to collect 4,479 signatures from registered Santa Clara voters in favor of the referendum.

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While some have questioned whether the contracts – Disposition and Development (DDA) and Joinder Agreements – can be subject to a referendum, state law makes it clear that any legislative action can be subject to a referendum. (CA Code 9235-9247).

But, even if stadium opponents get the signatures they need, it’s not a given that there will be a revote on the stadium. In fact, the current situation is similar to the one that provoked the 1999 California Appeals Court decision, San Francisco Forty-Niners v. Nishioka, in which the court ruled that an initiative can be removed from the ballot before an election if the petition circulated to qualify it contained false or misleading information.

The initiatives in question were to repeal Propositions D and F, approved by San Francisco voters in June 1997, authorizing zoning changes and $100 million plan to build a 49ers football stadium at Candlestick Point. In late 1997, stadium opponent Douglas Comstock filed an election contest alleging the special election had been “fundamentally” flawed.

In early 1998, Comstock was joined by Joel Ventresca and Barbara Meskunas to form the Committee to Stop the Giveaway, which began an initiative drive to repeal the Candlestick stadium propositions. In June, NFL team sued to stop the circulation of the initiative petition, claiming that it contained false and misleading statements to induce voters to sign the petition.

The court found in the 49ers’ favor in 1999, saying that Comstock’s group had “circulated an initiative petition essentially to reverse a democratic election…To convince voters there was a need to repeal these measures and thus induce them to sign their petition,” the anti-stadium group “falsely represented the purported invalidity of the propositions and their enactment, as well as their purported adverse impact on the City.”

These included telling prospective signers that the previous election resulted in a denial of the secrecy, “when it did not;” that the real stadium cost estimates exceeded the upper limit of $100 million, “when that was the absolute ceiling under Proposition D;” and that there were unresolved legal issues about the majority needed to pass bonds when, in fact, Proposition 218 “was not applicable.”

The court noted that while “errors of opinion must be exposed by the clash of public debate,” the discussion “should not be distorted by deliberate and demonstrable acts of fraud,” and that no one has “a First Amendment right to include false and misleading information in their initiative petition.”

SCPF is asserting that Measure J, passed by city voters in 2010, set the cost of stadium construction at $925 million. In fact, the term sheet – the amendment to the City Code (Chapter 17.20) that specified the terms under which Santa Clara would permit stadium development and operation – nowhere states that number.

Further, the group’s website alleges that the 49ers have “$ZERO” financial obligation for the stadium according to the agreement approved unanimously on Dec. 21, 2011 by the Santa Clara City Council. Such a literalistic interpretation of project documents is, some would say, questionable. The $850 million in loans will be borrowed by Stadium Funding Trust, and the Forty Niners Stadium, LLC (“StadCo”) – both are 49ers legal entities.

The agreement further makes it clear that the collateral for the loan is the 49ers football team itself: “StadCo’s obligations…are supported by a requirement to make a capital call on the Team. In the event that StadCo fails to perform its obligations, it is expected that the NFL will be involved in working out a resolution of any loan defaults pursuant to the NFL Consent Letter.” Required by the lenders, the consent letter “permits the NFL under certain circumstances to seek a purchaser of all of the assets of the Team and StadCo.”

The documents pertaining to the stadium project can be found at www.santaclaraca.gov/index.aspx?page=1197. You can find the City Code www.codepublishing.com/ca/santaclara. Section 17, Development, includes the stadium project specifications. You can read the 1999 San Francisco Forty-Niners v. Nishioka decision at www.lawlink.com/research/caselevel3/76572.

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