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49ers File Lawsuit Against Santa Clara County Oversight Board

And so it begins. The San Francisco 49ers have filed a lawsuit in their attempts to prevent a Santa Clara County oversight Board from pulling back the $30 million that was to help fund the 49ers new stadium in Santa Clara. The $30 million is only a small percentage of the overall project, but there are some concerns about the implications on the bigger loans the 49ers are dealing with for the project.

The 49ers have asked for a temporary restraining order (TRO) to prevent the County from using the funds for any non-stadium purpose. A TRO would basically buy time for the court to full review the events and determine their legality. If a TRO is granted, I believe the 49ers would need to put up a bond before the order becomes effective. From there, the court would then review the case and figure out the legal issues.

A Sacramento judge issued an order today requiring the County to hold the disputed funds until a July 3 hearing on the TRO. To obtain the TRO, the 49ers need to prove, among other things, that they are entitled to some kind of permanent relief, the likelihood of success on the merits, the harm is imminent, the extent to which the plaintiff is being irreparably harmed by the defendant's conduct versus the extent to which the defendant will suffer irreparable harm if the TRO issues.

The 49ers already advanced the $30 million in funds so the construction can continue. The 49ers advanced the money with the expectation they would be paid back. If they were to lose this lawsuit, they would simply need to find another way to cove that $30 million on the back end.

This is a tough PR move because the County has pushed the idea of this money going instead to schools. It is worth noting that while schools could get the $30M from the county, they actually said it was for other public agencies, that happens to include schools. It's all a perception battle though, and the county would likely win this perception battle, even if they turn out to be full of it.

The San Francisco 49ers filed a lawsuit yesterday to prevent a Santa Clara County Oversight Board from reneging on the commitment to fund $30 million for the new NFL stadium under construction in Santa Clara. The investment of RDA funds for the project was approved by the Santa Clara voters in June 2010, and formalized in written agreements in February 2011. The 49ers advanced funds into the Stadium project in reliance on the RDA's commitment to the project. After the County declined to discuss a resolution to this issue, the 49ers have begun the process to have the matter decided in court.

The first step in the litigation was a request for a temporary restraining order, filed yesterday by the 49ers, to prevent the County from disbursing disputed funds for any other purpose until the court can more fully review last week's surprise action by the Oversight Board, in which it voted to reject the stadium funding commitment.

Sacramento Superior Court Judge Lloyd G. Connelly issued an order today requiring the County to hold the disputed funds until a July 3 hearing on the TRO.

"The Judge's order is a positive first step," said Larry MacNeil, CFO of the 49ers. "We look forward to discussing with the County how we can resolve this matter."

Because the 49ers advanced the funds to the project, construction of the stadium will continue on schedule, with no change to the July 2014 anticipated completion date.

"The stadium is a public-private partnership success story," said MacNeil. "The cash advanced by the 49ers, backed by the RDA commitment, leveraged hundreds of millions in new funding to create one of the largest construction projects in the state. After just a few months it has created several hundred jobs, provided a positive regional economic impact and funding for the Santa Clara School district. By this fall, there will be 1,000 workers on this job."