Two latest, highly critical grand jury reports describe Santa Clara in civil proceedings as having been “outmaneuvered” by the San Francisco 49ers within the initial negotiations for the stadium, and accuse the present city council of being unable to “work together as a cohesive group,” effectively undermining the “city's ability to govern.”
The Santa Clara County reports, headlined “Overplayed” and “Irreconcilable Differences,” come nearly two years after one other scathing civil grand jury report, titled “Unsportsmanlike Conduct,” accused the 49ers of excessive political influence in the town.
In “Outplayed,” the grand jury investigated Measure J – the measure passed by Santa Clara voters in 2010 that was designed to guard the town and its financial interests when the 49ers moved south to Mission City and built Levi's Stadium. While the report said some facets of Measure J protected the town, other contracts with the NFL team to administer and operate the stadium “strongly favored the interests of the 49ers.”
“City leaders were excited to attract a major sports company with the prospect of a new world-class stadium, and they waited impatiently to complete negotiations on the terms of the stadium contract,” the report said. “The city appeared to be outmatched by the competence of the 49ers' negotiators.”
The grand jury cites the management contract for Levi's Stadium, wherein the 49ers are each a tenant and a bunch of non-NFL events, as a “glaring example of stadium contract provisions that heavily favor the 49ers' interests.” The nature of the contract presents “conflicts of interest” since the 49ers can generate revenue from the identical non-NFL events for which they negotiate terms, the report says.
In return, the town – through a separate administrative body called the Stadium Authority – has little to no influence over bookings and infrequently only learns about non-NFL events on the stadium once they develop into public, the grand jury alleges.
“ManCo (the 49ers' management company) has all the power but no risk if the events are not profitable for the stadium authority,” the report said. “Conversely, the stadium authority bears all the risks associated with ticketed events outside the NFL but has no influence on the decision-making.”
City Councilwoman Karen Hardy, who on the time was a part of a residents group that opposed the team's location in Santa Clara, said she had concerns a couple of public company doing business with a non-public one just like the 49ers. Many of those concerns, she said, have come true.
“That's something I have to work with,” Hardy said of the agreements the previous council made with the team. “I just had to take a very practical stand.”
Council member Kevin Park said the present council has worked to “fill in the gaps” created by most of the original negotiations.
Last month, the town and the 49ers settled their last two legal disputes over public safety costs and food buffet reimbursement. The city has said the deal will bring $20 million in revenue from Levi's Stadium into city coffers over the subsequent two years.
Park said he believes the settlement corrects “many of the deficiencies” within the contract, but he disagrees with residents who’re pushing for the town to go to arbitration or start contract negotiations from scratch — which Park said is just not possible.
“Saying we want to rebuild by burning down the house won’t get us anywhere,” he said.
In an announcement posted on social media, Mayor Lisa Gillmor said, “We negotiated agreements to protect Santa Clara's general assets, which was a good thing. But we trusted that the 49ers' owners would act legally and ethically, which was a mistake.”
We negotiated agreements to guard Santa Clara's general fund, which was a great thing. But we trusted that the 49ers' owners would act legally and ethically, which was a mistake.
– Lisa Gillmor (@LisaGillmor) June 13, 2024
As of 2016, there may be a unique city council, supported by a powerful and independent city staff.
We tried to repair the bugs and had a giant success: we stopped the team from lowering their very own rent in 2017.– Lisa Gillmor (@LisaGillmor) June 13, 2024
Ellie Caple, 49ers vp of corporate communications and public affairs, said in an announcement that the “report confirms the success of Levi's Stadium and that the Stadium Authority's new leadership has improved transparency and delivered additional benefits to the authority and the city. We will discuss next steps with staff and remain immensely proud of the contributions the 49ers have made to this community, including $1 billion to the Stadium Authority and $2 billion to the regional economy.”
The grand jury's second report, titled “Irreconcilable Differences,” describes what it describes as “deep divisions, rivalries, and routine disrespect” between the mayor and council members.
“Responsive and visionary leadership requires an ethical and well-informed City Council that conducts the City's business with transparency, openness, respect and decency,” the report said. “The City Council has failed to achieve these standards. Instead, some Council members have engaged in personal attacks from the gallery against other elected officials, residents and volunteers.”
These “squabbles” have led to a lack of public trust, the report said. The grand jury is recommending that all the council attend individual conflict resolution training by October — including the mayor and Councilmember Kathy Watanabe, although each “exhibited appropriate manners at meetings,” in accordance with the report.
The grand jury also beneficial that the town hire an independent ethics expert and implement “robust ethics training strategies.”
Council member Raj Chahal said the grand jury “cherry picked” most of the examples utilized in the report.
“I know the council is not perfect, but that doesn't mean five people are responsible for it,” he said. “The mayor and Councilor Watanabe have equal or even greater responsibility.”
Council member Suds Jain agreed, noting that similar disagreements amongst council members have occurred in other cities corresponding to Cupertino and Milpitas.
“The report was incredibly biased. It basically called Lisa and Kathy angels while saying the rest of us needed therapy,” he said.
In a joint statement with Watanabe, Gillmor called on the council to contemplate the report at its next meeting and implement the recommendations inside the subsequent 60 days.
“The report's findings confirm what many residents, including us, have experienced at City Hall: unprofessional, unethical and abusive behavior by the majority of the City Council,” Gillmor and Watanabe said. “This is devastating for Santa Clara.”
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