Judge rules State’s seizure of 49ers stadium funds improper, freezes funds anyway

A strange and very tentative ruling came down from the Sacramento County Superior Court regarding the $40 million in redevelopment funds earmarked for the 49ers stadium. Judge Allen Sumner ruled that the contract signed by the City, former Redevelopment Agency, and 49ers is legal for a simple reason: the 49ers are a third party. The State’s argument and the law passed in 2011 was such that agreements between a municipality and its redevelopment agency were not so-called enforceable obligations, where tax increment revenue was pledged to pay for a project or debt. Since the 49ers are a party to the agreement, the contract is, in fact, an enforceable obligation. Moreover, the judge wrote that the 49ers aren’t a mere third party beneficiary, they are also a direct party to the agreement since they loaned the money upfront in the first place as RDA funds were on shaky ground during that period.

Despite the judge’s ruling, $15 million in currently frozen funds will not be freed up for the 49ers or schools per last fall’s deal. Instead, Judge Sumner chose to let Santa Clara’s Successor Agency (son of RDA) figure out the repayment schedules (ROPS) for the 49ers and the schools. Until that is determined, the money will remain frozen. This is clearly a victory for the 49ers and for other private parties who have made deals with cities in the run-up to the death of redevelopment. In making this ruling, the judge was clear in that the court had no business redefining what an “enforceable obligation” was.

Reading this ruling’s impact beyond the scope of the 49ers stadium, it won’t necessarily help San Jose or the A’s since they completed their land deal for part of the Diridon site in October 2011, well after the law took effect. Then again, Santa Clara and the 49ers didn’t have their DDA finalized until December 2011. I guess we’ll have to wait for a court to rule on the A’s land deal, whenever that happens.

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