Chapter 17.20
PROFESSIONAL FOOTBALL STADIUM GROUND LEASE

Sections:

17.20.010    Purpose.

17.20.020    Required terms for a ground lease for a stadium.

17.20.030    Council determinations.

17.20.010 Purpose.

This chapter is intended to further the City’s goal of creating an enhanced entertainment destination in the Bayshore North Redevelopment Project Area by providing for the development and operation of a stadium suitable for professional football and other events (the “stadium”) in a manner that will provide a long-term revenue stream to the City. (Measure J § 3, 6-8-10).

17.20.020 Required terms for a ground lease for a stadium.

Any ground lease by the City of Santa Clara (“City”) of City property for the development and operation of a stadium shall be consistent with all of the following minimum requirements:

(a) Any ground lease of City property for development and operation of a stadium (“ground lease”) shall be to a joint powers authority created by the City and the Redevelopment Agency of the City of Santa Clara (the “Agency”) to be known as the Santa Clara Stadium Authority (the “Stadium Authority”), so that the City maintains ownership of the fee interest in the site.

(b) The City shall not use or pledge any money from the City’s general fund or enterprise funds for the development of the stadium; provided, however, that if the City decides to relocate or reconfigure the electrical substation in the vicinity of the stadium site, the ground lease or other agreements may provide that the City shall be responsible for the cost of that relocation or reconfiguration.

(c) The City shall not subordinate its interest in the stadium site or in any other property or in the ground rent to any financing or subsequent refinancing of the stadium, and no City general fund monies or enterprise fund monies may be pledged as collateral for any Stadium Authority financing or subsequent refinancing.

(d) The ground lease shall provide that the initial term of the ground lease shall be for forty (40) years.

(e) The ground lease shall require that construction of the stadium shall not commence unless a private party (the “private tenant”) has entered into a lease of the stadium or the stadium site from the Stadium Authority (the “private tenant’s lease”) that provides for use of the stadium as the home of one or two professional football teams and other events. Professional football games and other events associated with professional football that are conducted pursuant to the private tenant’s lease are hereinafter referred to in this chapter as “NFL events.”

(f) The ground lease shall require payment by the Stadium Authority to the City’s general fund of fixed base rent totaling forty million eight hundred seventy-five thousand dollars ($40,875,000.00), in nominal dollars, over the initial forty (40) year term of the ground lease, with annual fixed base rent commencing in the first year of stadium operations and increasing periodically over the term of the ground lease to a minimum of one million dollars ($1,000,000.00) beginning in the eleventh (11th) year of stadium operations. The ground lease shall require that if a second professional football team (a “second team”) makes a long-term commitment to play its home games at the stadium, the minimum annual fixed base rent payable to the City’s general find under this subsection shall be increased by one million dollars ($1,000,000.00) commencing in the first year the second team plays its home games at the stadium.

(g) In addition to the fixed base rent, the ground lease shall require payment by the Stadium Authority into the City’s general fund of performance-based rent which, together with the fixed base rent, the City Council has determined is projected to provide fair market rent to the City. Performance-based rent shall be pursuant to a formula that provides for sharing of the revenues less expenses of non-NFL events at the stadium. As used herein, the term “non-NFL events” means events such as concerts and sporting events that are approved by the Stadium Authority and the private tenant, excluding NFL events. The fixed base rent and performance-based rent payable by the Stadium Authority to the City under the ground lease, as provided in this subsection and subsection (f) of this section, are referred to in this chapter as “ground rent.”

(h) The ground lease shall require that contributions to the construction costs of the stadium by the Agency shall not exceed forty million dollars ($40,000,000.00), exclusive of debt service and other financing costs and payments to the City for development fees. The ground lease shall also provide that if a second team makes a long-term commitment to play its home games at the stadium, the City or Agency shall receive the amounts the Agency actually contributed toward the construction costs of the stadium in accordance with this subsection, exclusive of debt service and other financing costs. The City or Agency shall also receive any amounts paid by the Agency to the City for development fees for the stadium.

(i) Neither the ground lease nor any other agreements related to the development of the stadium shall rely upon the imposition of any new or increased taxes for the development, operation, or maintenance of the stadium; provided, however, that the foregoing shall not apply to a special tax based on hotel room revenue in a financing district that is approved by a vote of the requisite number of affected hotel land owners within the district. If hotel land owners in the district approve such a special tax on hotel revenue, such tax proceeds may be pledged to provide up to thirty-five million dollars ($35,000,000.00), exclusive of debt service and other financing costs, toward development of the stadium and related infrastructure and any remaining tax proceeds may be used for other eligible financing district purposes.

(j) Neither the City nor its Redevelopment Agency shall be liable for the obligations of the Stadium Authority, including operating and maintenance expenses of the stadium; provided, that the City may elect to pay operating and maintenance expenses of events conducted or approved by the City that are not NFL events or non-NFL events.

(k) The private tenant’s lease shall require the private tenant to pay any cost overruns incurred in construction of the stadium. For this purpose, “cost overruns” means any actual costs that exceed funds available to the Stadium Authority from the sources identified in the development budget approved by the Stadium Authority and any other sources available to the Stadium Authority to fund the construction costs of the stadium.

(l) The private tenant’s lease shall require the private tenant to pay rent to the Stadium Authority that the City Council has determined will provide the Stadium Authority with funds required to pay the ground rent and operating and maintenance expenses of the stadium. For this purpose, operating and maintenance expenses shall include, without limitation, day-to-day expenses of operating and maintaining the stadium, deposits to a reserve for capital improvements, and reimbursement of reasonable costs incurred by the City in providing public safety and traffic management related to NFL events and non-NFL events, but shall not include expenses of events that are conducted by the City or Stadium Authority that are not approved by the private tenant.

(m) The ground lease shall require that following the opening of the stadium the City shall receive, in addition to the ground rent, a fee equal to thirty-five cents ($0.35) per ticket on each ticket for professional football games in the stadium up to a maximum of two hundred fifty thousand dollars ($250,000.00) per year (the “senior and youth program fee”). The senior and youth program fee is to be used for City programs for parks and recreation and libraries, such as senior activities and the youth championship team fund. (Measure J § 3, 6-8-10).

17.20.030 Council determinations.

SCCC 17.20.020 is the legislative policy of the City and provides the ways and means of accomplishing that legislative policy. Where SCCC 17.20.020 provides for any determination or approval by the City Council, such determination or approval shall be made by the City Council taking into account the purposes and findings of the voter-approved measure enacting this chapter, and shall be made on or before the Council’s approval of an agreement that commits the City to enter into a ground lease. (Measure J § 3, 6-8-10).