When Santa Clara teamed up with the San Francisco 49ers to build Levi’s Stadium, it inked a deal ostensibly designed to avoid the costly pitfalls experienced by so many other municipalities with taxpayer-financed NFL venues.
Yet in the five years since celebrating the opening of the $1.3 billion coliseum, a bitter feud with the Niners over revenue-sharing and management has made the city another cautionary tale about the risks of overhyping pro sports stadiums as public assets.
Now, Santa Clara County Assessor Larry Stone—a decades-long 49ers season ticket-holder and long one of the biggest cheerleaders of the team’s move from Candlestick Park to Levi’s Stadium—has joined the fray.
On Monday, the county’s veteran taxman sued to revoke a ruling that halved property taxes on Levi’s Stadium and forced several public localities to refund $36 million to the billionaire-backed team immediately and lose out on another $6 million a year going forward. That’s a $240 million loss over the four-decade life of the lease.
The writ marks the first time in Stone’s 24 years as assessor that he asked a judge to overturn a settlement by one of the county’s three tax appeals boards.
“This decision must not be allowed to stand,” Stone declared, calling the determination handed down last fall rife with violations of the state constitution. “As assessor I have always been committed to ensuring the property tax roll accurately reflects the value of the property being assessed. Here, the board failed to perform its core responsibility to carefully calculate the full value of the 49ers’ rights in the stadium.”
The team would have paid taxes on the full value of the stadium but challenged the county’s assessment over an arcane legal provision called “possessory interest.” That is, the degree to which a private entity benefits from using a tax-free public property.
Technically speaking, the city and team each “possess” the stadium for half the year, with the Niners, naturally, in charge during football season. Stone argued that the team should pay 100 percent on the possessory interest because “the lion’s share of the stadium’s value lies in professional football uses for which it was custom-designed.”
Though Santa Clara maintains ownership of the venue and leases it to the team, county officials contend that the NFL franchise calls the shots on year-round event bookings and luxury suite rentals, a celebrity-chef restaurant, a store, museum and private clubs. The city, by comparison, “retains no comparable rights or control over the events hosted at the stadium.” Stone likened the uneven distribution of economic benefit to that of a ski resort, where the property is far more valuable during snowfall than in the summer.
A three-member appeals board—comprising renowned property appraisers Richard LaBagh, Wayne Prescott and William Anderson—apparently thought otherwise. In November, it split tax liability 50-50 between the 49ers and the city. The decision essentially deemed the value between football and off-season events as exactly equal.
Stone called the conclusion completely nonsensical.
“Usually, when the assessment board disagrees with us, it’s close,” he said. “We’re arguing around the edges of value. But I’ve never seen anything like this. It’s really bizarre how they could arrive at a value that’s precisely at 50-50. It doesn’t make sense.”
The refund resulting from last year’s ruling siphoned $13 million from the coffers of Santa Clara Unified School District, $3 million from West Valley Community College, $3 million from the city of Santa Clara and upward of $5 million from the county’s general fund. NFL officials have said they accepted the outcome; a spokesman for the team didn’t respond to a request for comment by press time. Stone, on the other hand, hammered home his point about the result being shocking and “totally arbitrary.”
“The board’s decision ignores many of the 49ers’ valuable rights and instead simply splits the value of the stadium exactly in half between the 49ers and the public authority—a position for which neither side argued, that no data supported and that no lawful valuation method can justify,” he explained.
County Counsel James Williams echoed Stone’s condemnation. “This decision sets a troubling precedent that is legally incorrect and must be reversed,” he said in a statement earlier this week. “But when the owners of these teams fail to pay their fair share of property taxes, they are taking away money from local schools, police and firefighters, and other valuable services that our communities need.”
In a phone call earlier this week, Stone went on to say that the appeals board—though appointed with members widely considered among the top experts in their field—seemed to be in over their heads. “I think one of the problems that the appeals board had is they couldn’t figure it out,” he told San Jose Inside. “This was so complex, and so convoluted that I think they threw up their hands and said, ‘Fine, make it 50-50.’
“They split the baby in half.”
Members of the appeals board reached for comment declined to weigh in.
Stone’s top staffer, David Ginsborg, said the county had to sue lest other companies feel emboldened to strategically overwhelm the appeals boards.
“Whether it was by design, I don’t know,” Stone said. “But it would have helped if the agreements [between the city and team] were simpler and more direct.”
There’s little doubt that in a region like Silicon Valley, which some of the biggest companies in the world call home, it’s increasingly likely for the county’s volunteer boards to get outgunned by ever more sophisticated corporate giants.
Though the 49ers’ petition was by no means the largest to take the county to task—Apple is contesting a $10 billion appraisal—it was hands-down the most demanding. Ginsborg said it dragged on for 21 full days, summoned 10 witnesses and generated 8,000 pages of records. The second-longest such hearing in county history lasted for just six days.
Santa Clara leaders applauded the decision to sue.
“While city officials were prepared to take similar legal actions, we are satisfied that Assessor Stone’s actions demonstrate his understanding of the seriousness of the situation as well as his commitment to objective assessments based on facts and data,” Santa Clara spokeswoman Lenka Wright wrote on behalf of the city.
Stone said he hoped to review the board’s findings of fact before turning to the courts for help, but he never received any such justification. That’s highly unusual, he said: Normally, the boards promptly explain their rationale in a detailed summary. In this case, the board offered to hand it over by July—well past the six-month statute of limitations for the county to file a lawsuit.
“I was uncomfortable filing this appeal without the findings of fact, but the deadline is next week,” Stone said. “So we’re in the unusual situation of having to appeal a decision without seeing the factual reasoning behind it. This is just really stunning.”
Who is to blame for this?
DAVE CORTESE
Menos from Stone objecting to the nitwits Cortese appointed to the Board exist.
Cortese’s incompetence led to this mess.
> Who is to blame for this?
> DAVE CORTESE
It was a group effort:
Include the NFL, Roger Goodell, the Yorks, Colin Kaepernick, the NFL Players Association, and many, many others,
Stupidity and incompetence are contagious.
Even though he didn’t live in Santa Clara and it was an abuse of his role as assessor, no one more vociferously promoted the suppossed benefits of the stadium more than Larry Stone.
Savvy residents of Santa Clara knew it was highy risky to get into bed with the NFL and were mocked and shouted down. At the very least the naysayers were saying all along the “if the stadium is such a stupendously great deal, why don’t the 49ers want to own it outright?”. This is probably part of the anwser.
Sorry Larry, you should have realized that this sort of thing was a strong possibility. You own part of this mess. Thank you for nothing.
WHO is to blame for? DAVE CORTESE WHO NOW HAS HIS EYES ON BECOMING A CALIFORNIA SENATOR. He is not happy with scamming our local community. He now want’s to scam the state. Of course our public officials give tax breaks to influential parties. These are the same people they want to fund their political aspirations. SHAME ON DAVE CÓRTESE!
> WHO is to blame for? DAVE CORTESE WHO NOW HAS HIS EYES ON BECOMING A CALIFORNIA SENATOR.
FEXXY:
I blamed more people than you did.
You Santa Clarans and Santa Clara officials, were warned, but you laughed at and discredited the informed and now you are getting exactly what you deserve! Don’t forget that Mayor Lisa Gillmor was the 49ers’ head cheerleader FOR the deceitful and self-centered Yorks! But she and all her minions spent, literally, millions of dollars to suffocate the outspoken SC tax-paying voters who were armed with facts, history and the real truth.
All this was 100% predictable and no one with half a brain should be surprised. And the contracts should have never been signed and the City Council was begged to not sign them, but oh no! That request was met with a,, “The 49ers’ are our partner and our good neighbor”.
Santa Clara didn’t want to hear the truth … they just wanted to be “on the map.” Well, they are sure on the map .. for being stupid! They signed contracts that gave away the stadium and protected the 49ers and threw the citizens of Santa Clara under the team bus.
Again, Cortese backed unqualified contributors to the Assessment Appeals Board. Cortese led the way to the 49ers pillaging the area to get tax break. He is soliciting York for a 20 grand donation
Cortese also is an investor in large insurance companies with interests in Valley Medical
He is not a simple man of the orchards but a blue state Trumper with a deep desire to support the 49ers taking tax money for schools.
Even if everything you assert is true, it’s almost irrelevant. What the 49ers did is what all NFL teams do to their “host” cities. It’s like dangling a tuna off the end of your boat and blaming the shark for what happens–it’s simply baked into a NFL team’s nature to behave the way the 49ers do. The people who sold out the city of Santa Clara–blinded by their love of pro-football (and that includes big fan Larry Stone) simply didn’t care about whatever might transpire down the road.
Well, if it is true why reward Cortese with a Senate seat? So Delta Dental, his company can get Medi Cal contracts?
> Cortese also is an investor in large insurance companies with interests in Valley Medical
He is not a simple man of the orchards but a blue state Trumper with a deep desire to support the 49ers taking tax money for schools.
CORTESE IS A BLUE STATE TRUMPER ? ! ! ! ! !
STOP THE PRESSES ! ! ! ! !
We need a full investigation.
Get out the butterfly nets and round up Jerry Tuttle and Dave Cortese.
I think this a case where waterboarding is fully justified.
Blame the right people … DAVE CORTESE had absolutely nothing to do with the 49ers, Levi’s Stadium and the stupidity that brought them to Santa Clara!
You may have issues with CORTESE, but put them where they belong and it isn’t on this heap of incompetence and greed. This one is all Gillmore and “Santa Clarans for Economic Development” — something she continues to ignore and hide from. She’s covered in Red ‘n Gold paint but wants to just swallow the crow feathers without recognizing why the City of Santa Clara is covered with the bird crap.
To “Informed SC Voter” – Jerry Tuttle is correct. Those of us in the know in Santa Clara, although we realize that Mayor Gillmore supported the 49ers and Levi’s Stadium in the beginning, we also know that she has lead the charge in trying to make the 49ers toe the line and live up to the promises they made when pushing for the stadium to be built. One has only to remember how hard they worked in the last council campaign to unseat her as mayor. In 2010, when the Santa Clara city council voted to put Measure J on the ballot, Patricia Mahan was mayor and the councillors who voted to approve the ballot measure were Pat Kolstad, Jamie Mathews and Kevin Moore. These are the councillors who sold Santa Clara to the 49ers.
“Santa Clara Voter” … Mayor Gilmore (along with Santa Clara Councilmember who was also a Washington state resident, Kolstad) LED/CHAIRED the 49er backed and paid for “Santa Clarans for Economic Progress”. Jamie Mathews appointed the 49er Gilmore SHILL to his seat when he was anointed Mayor! MAthews left with his tail between his legs and ShillMore slid into the Mayor’s seat … anyone who doesn’t think she was bought and paid for BY the 49ers was living under a rock during Measure J or is now Braindead. She backed all the 49er BS and made sure themvoters believed it despite what the real truth the unpaid public concerned citizens were trying to bring out in the open.
SHiLLMORE/Gillmor along with Kolstad (co-chair) insured that the whole city was thrown under the 49ers’ team bus and we’re absolutely lied to by them and the 49ers. You cannot rewrite the truth and there are no alternate facts either. This whole tax fiasco was instigated by SHillMore and the 49ers … Cortes may have had something to do with the audit, but the problem would have never happened at all if the lies would have never been spread by current Mayor Gilmore and the 49ers.
Cortese appointed the Assesment Appeals Board members who voted to grant the appeal. I doubt anyone in Sants Clara thinks Gillmor is a shill for the 49ers.
They don’t have to ‘think’ it … they KNOW it if they remember who did,what to,whom on Measure J!
SHillMore and Kolstad lead the charge that delivered this debacle to the City of Santa Clara … all paid for by over $5 million from, none other than, the 49ers!
Having the Yorks and Niners take the City, County or anyone else to the cleaners, is right up their goal line and how they acted in San Francisco for decades!
How quickly people want to rewrite history and spout off ‘alternate facts’. This tax fiasco should.not be a surprise to anyone with, like I’ve said, a half-a-brain!
LOL, What a bunch of BLUE STATE DUMBYS. Just think of the extra money that could have been generated if it had housed the Raiders as well, or made it big enough for baseball, or soccer. Had to build another stadium for that.
No sympathy here. Eat it.