It appears the dispute over how much rent the San Francisco 49ers owe the city of Santa Clara for Levi’s Stadium may require outside mediation.
Mayor Lisa Gillmor and her City Council colleagues say the Niners, without notice, hacked off $5 million from their rent payment since December. The team argues it’s entitled to a “rent reset” based on debt, revenue and a flux in operating costs. The council on Tuesday unanimously voted to kick off a process that could result in formal arbitration.
In an odd split, City Manager Julio Fuentes—who announced he would resign earlier this month—agrees with the team’s take on its contractual obligations. Gillmor, the city’s newly appointed mayor, is calling B-S. Earlier this week, she told San Jose Inside that she only learned of the 49ers’ rent adjustment because of a passing remark from the city attorney.
“I’m not taking it as personally insulting,” Gillmor said Thursday. “I’m taking it as absolute bad oversight and bad management and bad communication.”
The contract demands $24.5 million a year from the team. By the end of 2015, the 49ers paid just $19 million. Apparently no one bothered to tell the Stadium Authority, the city commission—made up of the mayor and council—that governs the $1.2 billion stadium. The team claimed it has since paid up, though Gillmor said the city has yet to see those payments.
Earlier this week, 49ers spokesman Roger Hacker seemed optimistic about resolving the issue at Tuesday’s council meeting. But the two sides failed to come to an agreement. The team wants to lower the rent to $20.25 million. The city demands at least $24.5 million.
Now, it may require arbitrator to settle the matter. Tuesday’s council vote means the city will have a 15-day window to reach a compromise.
“The parties will meet to see if there’s some way to mutually agree to the terms of the rent,” city spokeswoman Jennifer Yamaguma said. “That 15-day window will be kicked off once the Stadium Authority sends a letter to the 49ers. That could be today. If not, then possibly next week.”
If both parties fail to settle during that “cooling off” period, they will then enter mediation or arbitration.
“We are disappointed the council decided to discard months of negotiations between the city, their outside counsel and the 49ers, and instead commence outside dispute resolution procedures,” Hacker wrote in an email.
Gillmor said she welcomes mediation because it means negotiations will play out publicly. Plus, she said, it will force both sides to tackle assumptions about future operating costs, revenue, building license payoff and other expenses that factor into the lease agreement.
“I’m very comfortable with this decision,” she said.“I think it needs to be out of our hands and in the hands of a third party in order to come to a fair and reasonable conclusion. We have to. This decision is very, very important in terms of where this is set for 40 years. We have to protect the city’s interest.”
This article has been updated to include the mayor’s remarks.