TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Nanci Klein
SUBJECT: See Below DATE: February 10, 2025
Approved
Date:
2/19/25
COUNCIL DISTRICT: 7
SUBJECT: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
RECOMMENDATION
Adopt a resolution to:
(a) Authorize the City Manager or her designee to negotiate and execute an amended and restated use, operation, and management agreement between the City of San José and DBH San Jose, LLC, for the property commonly known as the San Jose Municipal Stadium located at 588 E. Alma Avenue, San José, California including all ancillary documents necessitated to execute the agreement, for a term of 25 years, at a rent of $40,000 per year for the duration of the agreement and subject to the terms contained in this memorandum;
(b) Allow for capital improvements to Excite Ballpark funded by DBH San Jose, LLC, subject to City review as a property owner as well as its permitting processes as a regulatory authority, that are required to bring the stadium in compliance with Major League Baseball’s Professional Development League standards, as they may change from time to time;
(c) Authorize the reimbursement by the City to DBH San Jose, LLC for expenses incurred to renovate the playing field and dugouts totaling up to $5,000,000 to be paid annually as $714,285 for seven years beginning in Fiscal Year 2027-2028 and ending in Fiscal Year 2033-2034; and
(d) Approve the assignment of all stadium naming rights and collection of associated income to DBH San Jose, LLC, and collection of any telecommunications revenues under a potential lease to be arranged by the City of San José, for the duration of the lease.
COUNCIL AGENDA: 3/4/25
FILE: 25-180
ITEM: 8.1
HONORABLE MAYOR AND CITY COUNCIL
February 10, 2025
Subject: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
SUMMARY AND OUTCOME
Approval of the recommendation in this memorandum will authorize actions necessary to keep the San Jose Giants (Giants) baseball team in San José through 2050. The lease with the Giants parent company DBH, LLC (DBH), for the use of the San José Municipal Stadium (Excite Ballpark) located at 588 E. Alma Avenue, will be amended and restated for a term of 25 years.
DBH will begin the renovation work necessary to bring Excite Ballpark into compliance with Major League Baseball’s Player Development League standards. DBH is expected to spend approximately $20,000,000 to construct these improvements, including the following:
• An approximately 17,900-square-foot building that will house new clubhouses, offices, showers, training rooms, and other related uses; • An ancillary batting cage;
• Netting and shade structures to improve fan experience and safety, and better protect neighboring properties;
• Re-grade and remodel the playing field, including a new warning track and renovated dugouts; and
• Weatherproof the existing stadium bowl.
The City will reimburse up to $5,000,000 of the expenses incurred by DBH on capital improvements related to the playing field and the dugouts. This money will be paid in annual increments of $714,285 between fiscal years 2027-2028 and 2033-2034.
DBH's annual rent will increase to $40,000 a year and continue to be deposited into the stadium’s Excite Ballpark’s capital maintenance fund. DBH will keep all naming rights and video board revenue received and will no longer deposit those amounts into Excite Ballpark’s capital maintenance fund. This revenue is estimated at $3,000,000 over the 25-year term of the agreement. DBH will remain responsible for the maintenance and repair of the facility.
BACKGROUND
The San José Municipal Stadium was opened to the public in 1942. Since 1988, the stadium has been the home of the San Jose Giants, the Single-A affiliate of the San Francisco Giants that plays in the California League. The stadium is also a host site for San Jose State Spartans baseball home games, concerts, and local high school baseball division championships. The Giants report annual stadium usage of approximately 300,000 attendees.
HONORABLE MAYOR AND CITY COUNCIL
February 10, 2025
Subject: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
The stadium, which can seat 4,200 people, occupies an approximately 12.6-acre property adjacent to Solar4America Ice Rink (Sharks Ice) and Tech CU Arena, the home of the San Jose Barracuda American Hockey League team. The City owns the stadium and the underlying property.
The San José Municipal Stadium was officially named “Excite Ballpark, Home of the San Jose Giants” for a period of 10 years on October 1, 2021. The City and DBH entered into the current lease agreement for the stadium on January 1, 2022. The term of the current lease is December 31, 2027, with an option to extend the term for an additional five years to December 31, 2032.
ANALYSIS
DBH has been informed by Major League Baseball that it can no longer continue Giants baseball operations at Excite Ballpark without making improvements to the stadium in compliance with new Player Development League standards. The $20,000,000 investment proposed by DBH will address these unmet requirements and allow Giants baseball operations to continue at Excite Ballpark. The restated lease will create a new term of 25 years and expire on December 31, 2050.
The terms of the lease require DBH to improve the stadium and maintain responsibility for all maintenance of the facility and surrounding parking lot. The City will remain responsible for structural maintenance of the stadium bowl, although DBH’s renovation plans will reseal the stadium bowl and support ongoing structural integrity.
Key terms of the lease extension are described below.
Lease Terms
Term: 25 years, expiring December 31, 2050. The City’s current lease with DBH affords DBH the option to unilaterally terminate the lease without cause. This termination option has been removed from the restated lease agreement.
Excite Ballpark Renovation: DBH will arrange and secure funding to complete capital improvements as needed to bring the Excite Ballpark into full compliance with current and prospective Major League Baseball Player Development League regulations throughout the term of this agreement (“Player Development League Improvements”), including as these regulations evolve over time. These improvements, and particularly DBH’s planned clubhouse facility, will be subject to City review and reasonable discretion.
HONORABLE MAYOR AND CITY COUNCIL
February 10, 2025
Subject: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
The renovation work will be subject to prevailing wage requirements, as described in the San José Municipal Code Chapters 14.09 and 14.10.
Additionally, a Citywide Project Labor Agreement is required on public works construction projects advertised and awarded by the City with an engineer’s estimate at or above the Public Works Director’s award threshold (currently $1,200,000).
City Financial Participation: The City shall reimburse DBH for up to $5,000,000 of the expenses incurred in making the capital improvements to the playing field and dugout by paying $714,285 a year for seven years, beginning in Fiscal Year 2027-2028 and concluding in Fiscal Year 2033-2034. The capital improvements to the playing field and dugout will be subject to applicable laws, codes, regulations, and policies, including local policies and all applicable City of San José procurement standards for City capital projects.
Fire Training Center Protection: DBH’s renovation will help to ensure the Fire Training Center (the neighboring property to the south) is protected from baseballs leaving Excite Ballpark.
Rent and Maintenance: The rent paid by DBH will increase by $20,000 to $40,000 annually. These funds will be held in the Excite Ballpark capital maintenance fund managed by DBH and used to pay for repairs and maintenance as approved by the City.
DBH will fund and perform all other repairs, maintenance, and improvements required to Excite Ballpark and the surrounding parking lot up to a standard appropriate for a first-class Minor League Baseball team and in compliance with all applicable laws and Player Development League standards. The City shall bear no additional responsibility for the upkeep of the facility throughout the term of the lease, except for structural elements of the stadium bowl.
Naming Rights Agreement and Video Board Revenue: DBH will keep all revenue from the current, and any subsequent, naming rights agreements and revenue from video board rental for the duration of the lease term.
The current naming rights agreement between Excite Credit Union and DBH establishes the name of the stadium as “Excite Ballpark, Home of the San Jose Giants.” This agreement expires in September 2031 and provides roughly $125,000 annually. Currently, this revenue is deposited into the Excite Ballpark capital maintenance fund, which is not a City-budgeted fund. This revenue will be kept by DBH under the terms of the restated lease.
HONORABLE MAYOR AND CITY COUNCIL
February 10, 2025
Subject: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
Video board revenue, roughly $10,000 annually, is currently deposited into the Excite Ballpark capital maintenance fund. DBH will keep this revenue under the terms of the restated lease.
All future naming rights agreements must comply with City Council Policy 7-5 and be separately approved by the City Council.
Telecommunication Leasing and Other Revenue Opportunities: The City will use its best efforts to lease rights on the 588 E. Alma Avenue property to install a telecommunications tower for a wireless carrier. Any telecommunications lease revenue will be paid to DBH. If a City-standard 15-year telecommunications lease is executed for the property, this lease is expected, but not guaranteed, to generate $675,000.
The parties will also collaborate to identify other revenue opportunities, including adding seats or food and beverage options, hosting alternative events in or on the Excite Ballpark property, collaboratively marketing City and Municipal Stadium parking availability and uses, and expanding advertising categories as allowable under applicable signage laws and ordinances.
Netting System: DBH will be responsible for maintaining and ensuring the correct operation of the newly installed netting system.
This lease extension will ensure Giants baseball will stay in San José for 25 years. The renovations will improve the City’s Municipal Stadium asset, currently Excite Ballpark, which can be used to host a variety of camps and events when baseball games are not being played.
EVALUATION AND FOLLOW-UP
Staff will negotiate and execute a restatement of the amended and restated lease agreement between the City of San José and DBH, extending the term of the lease through December 31, 2050, and incorporating the terms outlined in this memorandum.
COST SUMMARY/IMPLICATIONS
Lease payments under the current lease total roughly $150,000 annually, including rent from DBH, and revenue from the video board rental and the naming rights agreement.
These funds are deposited into an account controlled by DBH to fund capital improvements to the facility. This account requires City approval before any funds are used.
HONORABLE MAYOR AND CITY COUNCIL
February 10, 2025
Subject: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
Under the recommended terms, lease revenue in the amount of $40,000 annually will be deposited into a capital maintenance fund managed by DBH, with use of the funds subject to City approval. DBH will continue to be responsible for funding any necessary maintenance or repair work to the facility.
DBH will self-fund all capital improvements work performed on Excite Ballpark, estimated at $20,000,000, and the City will reimburse DBH for a portion of the work, totaling $5,000,000, related to certain capital improvements. This will be paid to DBH from the General Fund in the amount of $714,285 a year, beginning in Fiscal Year 2027-2028 and concluding in Fiscal Year 2033-2034, subject to future City Council appropriations approval.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office, the City Manager’s Budget Office, and the Departments of Planning, Building, and Code Enforcement, and Public Works.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the March 4, 2025 City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Categorically Exempt, File No. ER25-014, CEQA Guidelines Section 15323 - Normal Operations of Facilities for Public Gatherings.
HONORABLE MAYOR AND CITY COUNCIL
February 10, 2025
Subject: Lease Extension and Improvements Agreement with DBH San Jose, LLC, for the San Jose Municipal Stadium
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
Nanci Klein
Director, City Manager’s Office of
Economic Development
and Cultural Affairs
For questions, please contact Kevin Ice, Assistant to the City Manager, Director of Real Estate, City Manager’s Office of Economic Development and Cultural Affairs at [email protected].