The city of Santa Clara owns the land and leases it to the Santa Clara Stadium Authority. An ordinance prohibits the use of city funds or a tax increase to build and operate the stadium. The Stadium Authority can and did borrow the construction costs.

Quote:In case of, or more likely in anticipation of, the Santa Clara San Francisco 49ers Stadium becoming a money loser, as has happened with stadiums all around the country, the city of Santa Clara leadership is planning to erect a firewall to prevent them from being liable for the debts of a stadium that can't pay its bills. The firewall is called the Santa Clara Stadium Authority. It is termed a joint powers authority. A joint powers authority must be formed from two or more entities and as a partner the city has chosen its own Redevelopment Agency (officially an agency of the state of California although run by Santa Clara politicians and bureaucrats). The same players will be the head of the Santa Clara Stadium Authority that are the head of the city itself, the city council and the city manager and city attorney. In order to limit their liability in the case of a money losing stadium, the San Francisco 49ers are creating a firewall as well - the Forty Niners Stadium, LLC (Limited Liability Corporation). So if you hear anyone saying that the Santa Clara San Francisco 49ers Stadium deal is a can't miss proposition, ask them why both parties involved created new entities to protect themselves from losses.

The Stadium Authority obtained loans to build the stadium. This loan is to be repaid by a hotel tax and a complicated scheme using private financing.

To sum up, the city leases the land to the Stadium Authority which obtained the construction loans. The Stadium Authority leases the stadium to the Forty Niners Stadium, LLC, a subsidiary of the San Francisco Forty Niners, LTD., which is the team. The Forty Niners Stadium, LLC then subleases the stadium to its parent San Francisco Forty Niners, LTD.

It is a clever scheme. If the stadium fails the Stadium Authority declares bankrupty protecting the City, and The Forty Niners Stadium, LLC declares bankruptcy protecting the team ownership. The lenders are left holding the bag.