49ers spiff up Levi’s Stadium
Santa Clara County on Monday appealed a November ruling that slashed the 49ers property taxes in half for the team’s Levi’s Stadium, saying in a court filing that the decision violated the state’s constitution and state property tax laws.
The team was initially required to pay taxes on the full value of the $1.3 billion stadium which opened in 2014, but appealed the property assessment on the grounds that it doesn’t use the stadium for the entire year.
Four years later, the Santa Clara County assessment appeals board split property tax liability evenly between the 49ers and the Santa Clara Stadium Authority, a public entity created to construct and operate the stadium, and required that the county refund the 49ers a total of $36 million.
At the time, the team said that it would accept the decision, while County Assessor Larry Stone described it as “shocking and unexpected.”
Stone appealed the decision Monday in Santa Clara County Superior Court, arguing that the court should require the assessment appeals board to reconsider its “arbitrary and capricious” determination of the property tax liability.
In response to questions about the court filing, 49ers spokesman Rahul Chandhok released the following statement:
“We are aware of the Assessor’s decision to appeal the independent appeals board’s decision regarding possessory interest tax.”
While the 49ers do not receive ticket revenue from non-football events, Stone argued in the filing that a variety of arrangements limit how much the stadium authority actually brings in for those events.
A 49ers-controlled management company is paid to book all non-football events and the team brings in revenue during those events from “exclusive areas,” such as a steakhouse, the team store and the team museum.
Much of the stadium authority’s remaining revenue is earmarked for paying down more than $600 million in debt that the county took out to finance construction of the stadium, which was approved by Santa Clara voters in “Measure J” on the ballot in 2010.
James Williams, the Santa Clara general counsel, said that the complex arrangement between the 49ers and Santa Clara was designed to obscure the revenue brought in by the team and that the appeals assessment board “threw up their hands” rather than properly assessed how much value each side of the arrangement holds in the stadium.
“You have yet again another example of how an entity like the 49ers tries to use complication to evade paying their fair share of taxes,” Williams told McClatchy.
Rick Eckstein, a Villanova University sociology professor who co-wrote a book about public financing of stadiums, said that sports teams are typically much more sophisticated than the cities and counties with whom they negotiate stadium deals.
“The teams are always about two or three steps ahead of the municipalities in being clever,” Eckstein said.
While it’s not unusual for sports teams and municipalities to bicker over stadium deals, Roger Noll, an emeritus economics professor at Stanford University, said that this property tax fight is unique. Usually, teams are responsible for either all or none of the property taxes assessed on a stadium, Noll said. He chalked up the confusion in the Levi’s Stadium dispute to vague terms in the initial agreement.
“In the moment of the romance, they all thought they understood what they were doing,” Noll said.
The property tax fight between the 49ers and Santa Clara city and county officials is but their latest dispute. The two sides have tussled over nearby soccer fields, a curfew for events at the stadium, the amount of rent owed by the team and, most recently, $600,000 the team spent on refinishing the stadium’s floors. The latest dispute is also not the first time the two sides have gone to court.
Given their history, Noll doesn’t anticipate the relationship will improve anytime soon.
“These kinds of arrangements only work if both sides want them to work and if there’s good faith,” he said. “The well has been so poisoned between them, I don’t see any resolution.”