REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on a Change Order to the Agreement with Jones Sign Co. Inc. to Include Extended Warranty for the Levi's Naming Rights Signage Refurbishment/Replacement CapEx Project at Levi’s Stadium, Budget Amendment in the Amount of $256,942, and Delegated Authority for Final Extended Warranty Amount
Report
EXECUTIVE SUMMARY
On December 3, 2024, the Stadium Authority Board approved a budget amendment for the Levi's Naming Rights Signage Refurbishment/Replacement line item in the Stadium Authority FY 2024/25 Capital Expense (CapEx) Budget to increase the budget to $3,861,081 and an agreement with Jones Sign Co. Inc. in the amount of $3,978,556 to replace the four (4) Naming Rights signs at Levi’s Stadium, pursuant to the First Amendment to the Naming Rights Agreement with Levi Strauss & Co. and the Levi’s Stadium Naming Rights Extension and Enhanced Signage Project Implementation Agreement (Implementation Agreement) with Forty Niners SC Stadium Company LLC (StadCo); and authorized the Stadium Manager to execute any and all documents associated with, and necessary for the award, completion, and acceptance of the project and change orders for the agreement up to $397,856, for a total not to exceed amount of $4,376,412. On October 21, 2025 the Board approved another budget amendment for this project increasing the budget to $4,658,688 with an offset of $797,607 of reimbursement revenue from StadCo for its share of the costs in accordance with the Implementation Agreement. This amendment was needed because all costs associated with this project would be capitalized on the Stadium Authority’s financial statements.
The Stadium Manager is requesting additional budget amendments and the Stadium Authority’s selection of extended warranty to close out the CapEx project.
BACKGROUND
On May 9, 2013, the Santa Clara Stadium Authority (Stadium Authority) and Levi Strauss & Co. (Levi’s) entered into a Naming Rights Agreement (Attachment 1). Under the agreement, Levi’s provides an annual payment to the Stadium Authority that increases at a rate of 3% per year in exchange for exclusive naming rights and branding at the Stadium. The payments total approximately $154,000,000 over the initial agreement term of 20 years. These payments go into the Stadium Authority’s “operating fund” and are used for the reduction of the Stadium Authority’s debt from the initial stadium construction, and to support stadium operations and maintenance.
The Naming Rights Agreement provides Levi’s naming rights entitlements that include various exclusive privileges such as signage, media, and tickets to stadium events, in addition to naming the Stadium. The signage includes two Exterior Stadium and two Interior Stadium signs (Naming Rights signage). Under the Naming Rights Agreement, the Stadium Authority is responsible, at its sole cost, for cleaning, repairing, and maintaining the Naming Rights signage.
On January 30, 2024, the City Council/Stadium Authority Board approved a multi-component deal related to the Naming Rights Agreement extension. Through the First Amendment to the Naming Rights Agreement (Attachment 2), the term of the agreement was extended for an additional ten (10) years through February 29, 2044. During the extension period, Levi’s will continue paying the annual fee to the Stadium Authority, increasing at a rate of 3% per year. The total anticipated revenue over the 10-year extension period is approximately $119,000,000, bringing the total anticipated revenue over the Naming Rights Agreement’s thirty-year term to approximately $273,000,000.
As part of the Naming Rights Agreement extension, the Stadium Authority committed to providing a one-time enhancement of the Naming Rights signage (also referenced as the Enhanced Signage Project) that includes the stadium Name Letters on the east and west exteriors of the Stadium and the two signs above the Stadium scoreboards in the interior of the Stadium. Concurrent with the First Amendment to the Naming Rights Agreement, the Stadium Authority and Forty Niners SC Stadium Company LLC (StadCo) entered into a Levi’s Stadium Naming Rights Extension and Enhanced Signage Project Implementation Agreement (Implementation Agreement) (Attachment 3) to coordinate the Enhanced Sign Project and share in the costs for the design, construction, and installation of the signage which needed to be completed by December 31, 2025.
The Implementation Agreement outlined the following cost allocation to share the costs of the Enhanced Signage Project: Stadium Authority will fund the first $2,000,000 of total project costs and any costs over the initial $2,000,000 will be shared by the Stadium Authority (70%) and StadCo (30%). At the time of the proposal, StadCo provided a preliminary cost estimate of approximately $3,000,000 for the project, including the removal of the existing signs and the design and installation of the Naming Rights Signage.
The Implementation Agreement also required StadCo to solely fund a project to enlarge the stadium video display screens attached to portions of the Enhanced Signage at the north and south ends of the Stadium (StadCo’s Video Display Project) that would happen concurrently with the Enhanced Signage Project. Additional terms for the implementation of the Enhanced Signage Project include (a) project design, procurement, and construction to maximize project value to meet industry standards while minimizing project construction and long-term maintenance costs; (b) project implementation to minimize impacts on NFL and Non-NFL events at the Stadium; (c) accounting that separates StadCo’s Video Display Project costs from Enhanced Signage Project costs; and (d) a three-year warranty (with coverage consistent with industry standards), with the cost of any extended warranty to be borne by the Stadium Authority.
Lastly, the Implementation Agreement included StadCo’s commitment, beginning in 2024, to provide $4,000,000 ($200,000/annually over the next 20 years) for grants to non-profits or community projects serving the Santa Clara community. The City and StadCo subsequently entered into an Initial Grant Funding Agreement approved by the City Council that outlines the funding process for the first three years, which has provided funding for key Santa Clara organizations and the City’s Community Grant Program.
Pursuant to Section 2.9 of the Stadium Management Agreement between the Stadium Authority, StadCo, and Forty Niners Stadium Management Company LLC (Stadium Manager), the Stadium Manager is responsible for maintaining Levi’s Stadium (Stadium) “in the Required Condition and operate it as a high-quality NFL and multi-purpose public sports, public assembly, exhibit and entertainment facility…” The Implementation Agreement also provided that the Stadium Manager is responsible for managing and implementing both the Enhanced Signage Project and StadCo’s Video Display Project.
In 2024, the Stadium Manager completed a competitive solicitation process for Levi's Naming Rights Signage Refurbishment/Replacement CapEx Project. In the months leading up to the procurement, City/Stadium Authority staff met regularly with the Stadium Manager’s Stadium Operations team to ensure the project design, procurement, and permit approvals remained on schedule for project completion.
On December 3, 2024, the Stadium Authority Board approved a budget amendment for the Levi's Naming Rights Signage Refurbishment/Replacement line item in the Stadium Authority FY 2024/25 CapEx Budget to increase the budget to $3,861,082 and an agreement with Jones Sign Co. Inc. (Attachment 4) in the amount of $3,978,556 to replace the four (4) Naming Rights signs at Levi’s Stadium, pursuant to the First Amendment to the Naming Rights Agreement and Implementation Agreement; and authorized the Stadium Manager to execute any and all documents associated with, and necessary for the award, completion, and acceptance of the project and change orders for the agreement up to $397,856, for a total not to exceed amount of $4,376,412. On October 21, 2025 the Board approved another budget amendment for this project increasing the budget to $4,658,688 with an offset of $797,607 of reimbursement revenue from StadCo for its share of the costs in accordance with the Implementation Agreement. This amendment was needed because all costs associated with this project would be capitalized on the Stadium Authority’s financial statements.
As noted in the December 3, 2024 agenda report, the warranty required by the bid and ultimately included in the agreement only partially fulfilled the three-year warranty required under the Implementation Agreement. The agreement included a one-year warranty from the prime contractor covering any defective workmanship or materials furnished on the Enhanced Signage Project. The Stadium Manager worked with Jones Sign to provide additional warranty options which included informal quotes for a full three-year parts and labor warranty and a full ten-year stand-alone parts warranty for signage materials. The Stadium Manager’s recommendation at the time was for the Stadium Authority Board to review and approve the recommended actions first and the Stadium Manager would subsequently submit a recommendation to issue a change order to the contract to include the additional warranties at a later time. Staff agreed with the Stadium Manager’s proposed approach and committed to reviewing the additional warranty with subject matter experts before the subsequent request was presented to the Stadium Authority Board.
Consistent with the Stadium Manager and staff’s prior commitment to present a separate request to fulfill the Implementation Agreement’s three-year warranty requirement and consideration of extended warranty beyond the initial three years to the Stadium Authority Board, the Stadium Manager obtained an updated extended warranty proposal from the contractor and submitted the following request that will close out the Levi’s Naming Rights Signage Refurbishment CapEx Project, including the extended warranty:
1. Recommend an augmentation of the Stadium Authority capital expenditure budget of $101,515, to cover the estimated remaining costs of installing the naming rights signs, increasing the total Stadium Authority budget from $3,861,081 to $3,962,597.
2. Recommend that the Stadium Authority select the extended warranty option for the nine-year extension beyond the one-year warranty for a total of ten years, at a cost of $1,178,750 for the new naming rights signs.
3. Recommend approval for a change order to the construction contract with Jones Sign Co., Inc. (Jones Sign) to include the specific extended warranty selected by the Stadium Authority.
4. Authorize further augmentation of the Stadium Authority capital expenditure budget to cover the cost associated with the selected extended warranty.
A Recommendation for Award Memo was submitted by the Stadium Manager, which describes the project and the request and includes an updated extended warranty proposal from Jones Sign (Attachment 5).
DISCUSSION
The Levi’s Naming Rights Signage Refurbishment CapEx Project was initiated in early 2025 and the Stadium Manager and City/Stadium Authority staff worked collaboratively to expedite the project, while coordinating efforts to minimize impacts on NFL and Non-NFL events and ensure that project implementation complies with the sign visibility and functionality requirements outlined in the Naming Rights Agreement. City/Stadium Authority staff also reviewed the project scope to confirm that all aspects belonging to the Levi’s Naming Rights signage were separate from StadCo’s Video Display Project which sit directly below the north and south interior signs. The Stadium Manager confirmed that the project was substantially completed in early January 2026 and they are working on the final project checklist.
As noted above, under the Implementation Agreement, the Stadium Authority is responsible for funding the first $2,000,000 of total project costs and any costs over the initial $2,000,000 will be shared between the Stadium Authority (70%) and StadCo (30%). The Implementation Agreement defines total project costs for the Enhanced Signage Project as demolition and disposal of the existing signage, third-party design and construction of the Enhanced Signage, City permitting fees for the initial installation of the Enhanced Signage, and a minimum three-year warranty for the Enhanced Signage. Additionally, Section 3 under the Implementation Agreement outlines the following requirement, “The sign shall come with a minimum 3-year warranty (with coverage consistent with industry standards), with options presented to extend the warranty up to 10 years, subject to availability. Any costs for a warranty longer than 3 years would be at SCSA’s sole cost and expense.”
Article 50 of the Agreement with Jones Sign outlines warranty and guarantee work requirements. This includes the contractor repairing or replacing, at the discretion of the Stadium Manager, any or all work that may prove to be defective in its workmanship, materials furnished, methods of installation or fail to conform to the contract requirements together with any other work which may be damaged or displaced by such defect(s) within a period of one year from the date of the Notice of Completion of the project without any expense whatsoever to the Stadium Manager, ordinary wear and tear and unusual abuse and neglect excepted. Contractor is required to promptly repair or replace defective equipment or materials, at contractor’s option. All costs associated with such corrective actions and testing, including the removal, replacement, and reinstitution of equipment and materials necessary to gain access, will be the sole responsibility of the contractor. Additionally, for any work that is corrected, the contractor’s obligation to correct defective Work will be reinstated for an additional one-year period, commencing with the date of acceptance of such corrected work. The reinstatement of the one-year warranty will apply only to that portion of work that was corrected.
In addition to the above warranty, Article 50 also requires the contractor to obtain for Stadium Manager all warranties that would be given in normal commercial practice and assign to Stadium Manager any and all manufacturer’s or installer’s warranties for equipment or materials not manufactured by the contractor and provided as part of the Work, to the extent that such third-party warranties are assignable and extend beyond the warranty period set forth in Article 50. The contractor will provide the Stadium Manager with all warranty and guarantee documents prior to final Acceptance of the Project by the Stadium Manager.
The terms and conditions of the warranty, including the one-year warranty period, are standard for public works projects based on staff’s review. Below is a breakdown of the current project costs, including the warranty described under Article 50 of the Agreement with Jones Sign:
To meet the minimum three-year warranty required by the Implementation Agreement, with options presented to extend the warranty up to 10 years, subject to availability, the Stadium Manager obtained an itemized quote from the Contractor for additional extended warranty. Per Stadium Authority staff’s request for an updated itemized quote after the original expired in early March and clarification on the TBD amount for the sales tax line item, the Stadium Manager obtained an updated quote dated June 1, 2026 (Attachment 6) which outlines the following options:
|
Extended Warranty Options |
Total Warranty Period |
Cost |
Stadium Authority’s Cost Allocation |
StadCo’s Cost Allocation |
|
2-year Comprehensive Warranty Covering Everything, including face material for letters and batwings |
3 years |
$108,740 plus $3,180 in Sales Tax on Material and Equipment ($111,920 Total) |
$78,343 |
$33,576 |
|
9-year Comprehensive Warranty Covering Everything, including face material for letters and batwings |
10 years |
$1,178,750 plus $37,081 in Sales Tax on Material and Equipment ($1,215,831 Total) |
$1,182,255 |
$33,576 |
The Stadium Manager recommended the Stadium Authority’s selection of the additional nine-year warranty beyond the one-year warranty for a total of ten years, citing significant repair costs associated with the original signage. In their recommendation memo, the Stadium Manager referenced that cost of repairs for the original signage between July 2016 through December 2024 totaled approximately $770,297. Staff could only confirm $689,803 of such costs, and through subsequent communication with staff, the Stadium Manager clarified that the historical repair costs should be rounded to approximately $700,000. The Stadium Manager’s recommendation memo also noted that based on the historical maintenance cost adjusted for the increased size of the Naming Rights signage (the total square footage is estimated to have increased by a minimum of 30% relative to the original signage per the Stadium Manager’s conservative estimate), the expected baseline cost is approximately $1,000,000.
Since the warranty only covers defective work and equipment or materials, not normal wear and tear which would fall under the Stadium Authority’s obligation to repair and maintain the Naming Rights signage under the Naming Right Agreement with Levi’s, staff recommends the selection and purchase of the additional two-year warranty option. The proposed two-year extended warranty would extend the Contractor’s warranty obligation under Article 50 of the Agreement to a total of three years. This would all be implemented through a change order to the agreement with Jones Sign. Please note, the terms and conditions in the June 1, 2026 quote will not form, or be incorporated into the Agreement with Jones Sign or change order.
Under Section 3.6(c) of the Agreement, Jones Sign is required to produce Preventive Maintenance Procedures as part of a Technical Manual that include manufacturer-recommended procedures to be performed on a periodic basis and recommended frequency of preventative maintenance. The Stadium Manager communicated to staff that they will use industry-standard practices for preventive maintenance on the signs and will consider the practices provided by Jones Sign as part of the Technical Manual; however, since they haven’t had an opportunity to review them yet, they could not confirm that they will apply those procedures. Additionally, the Stadium Manager confirmed that they will start budgeting maintenance costs for the signage in FY 2027/28.
At the time of finalizing the report, staff is researching to confirm whether material and equipment under an optional warranty are taxable in the State of California. However, as the sales tax in question is minimal ($3,180 in total, split 70/30 respectively between the Stadium Authority and StadCo), staff’s recommendation includes a budget amendment for the full amount inclusive of sales tax and additional delegation of authority to the Executive Director to determine and approve the final change order amount.
Based on the documentation and additional clarification provided by the Stadium Manager, and the analysis above, staff recommends Stadium Authority Board approval of a budget amendment of $256,942 for project costs (of which $145,022 will go towards closing out the signage project and $111,920 will purchase the additional two-year warranty) and $77,083 to recognize offsetting revenue from StadCo for its 30% share of the costs (of which $43,507 will go toward closing out the signage project and $33,576 will purchase the additional two-year warranty), delegation of authority to the Executive Director to determine and approve the final amount that can be utilized for the change order to the Agreement with Jones Sign to purchase the additional two-year warranty, pending resolution of the sales tax question, and delegated authority to the Stadium Manager to execute a change order to the Agreement with Jones Sign, in an amount up to $111,920, to include the two-year extended warranty option selected by the Stadium Authority, upon Executive Director approval of the final amount.
The Stadium Authority reserves all rights to confirm and dispute charges by and payments to the Stadium Manager during a fiscal year-end reconciliation/true-up, including but not limited to changes based on improper allocation, calculation, lack of support, or failure to comply with the Parties’ contracts or California law. The Stadium Authority may raise related questions before the fiscal year-end reconciliation/true-up, which the Stadium Manager agrees to assess and respond to in good faith.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
FISCAL IMPACT
The total cost of the Naming Rights Signage CapEx project with the additional two-year warranty is $4,915,628.47, of which the Stadium Authority’s share is $4,040,940.27 based on the cost allocation outlined in the Implementation Agreement for the project.
The FY 2026/27 CapEx Budget contains $350,292 for the remaining costs of the Levi's Naming Rights Signage Refurbishment CapEx Project. Approval of staff’s recommendation will require a budget amendment to increase the project cost line item by $256,942 to a total budget amount of $607,234 as well as increase offsetting revenue from StadCo by $77,083.
The table below summarizes the budget amendment as discussed above:
CapEx Budget
|
Description |
Current |
Increase/ Decrease |
Revised |
|
Other Revenue |
$110,000 |
$77,083 |
$187,083 |
|
Levi’s Naming Rights Signage Refurbishment |
$350,292 |
$256,942 |
$607,234 |
|
Ending Fund Balance - Capital Expenditure Reserve |
$609,221 |
($179,859) |
$429,362 |
There will be future maintenance costs associated with the Naming Rights signage which the Stadium Manager plans to start budgeting for in FY 2027/28.
COORDINATION
This report has been coordinated with the Stadium Authority Treasurer’s and Stadium Authority Counsel’s Offices.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov.
RECOMMENDATION
Recommendation:
1. Approve a budget amendment for the Levi's Naming Rights Signage Refurbishment line item in the Stadium Authority FY 2026/27 CapEx Budget to increase the budget by $256,942, for a total budget amount of $607,234 with an offsetting increase to Other Revenue ($77,083) and a decrease to the Capital Budget Ending Fund Balance ($179,859);
2. Authorize the Executive Director to approve the final change order amount upon determination on the applicable sales tax for the extended warranty; and
3. Authorize the Stadium Manager to execute a change order to the agreement with Jones Sign Co. Inc., in an amount up to $111,920 to extend the currently included one-year warranty by an additional two years for the Naming Rights Signage Refurbishment CapEx Project, for a total not to exceed agreement amount of up to $4,220,226, upon the Executive Director’s determination on the applicable sales tax and approval of the final change order amount.
Staff
Prepared by: Christine Jung, Deputy City Manager
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. Naming Rights Agreement with Levi’s
2. First Amendment to the Naming Rights Agreement with Levi’s
3. Levi’s Stadium Naming Rights Extension and Enhanced Signage Project Implementation Agreement with StadCo
4. Agreement with Jones Sign Co. Inc.
5. Stadium Manager’s Recommendation Memo with Extended Warranty Proposal Dated February 1, 2026
6. Updated Extended Warranty Proposal Dated June 1, 2026