Santa Clara lawmakers have decided to meet in private to discuss $448,000 in unspent Convention Center allocations and $114,000 in disallowed credit card charges.
The decision came Tuesday night following a presentation by Denise Callahan of TAP International, the auditor the City of Santa Clara hired to review the contract closeout. That audit revealed that the Chamber of Commerce, which managed the Convention and Visitors Bureau for decades prior to Spectra taking over in March, overcharged the City for a slew of services and spent money on things it was not supposed to, including thousands for custom hand tools purchased online.
“I would really like to have some explanations on some of these things,” said Council Member Debi Davis. “We have Home Depot and Lowe’s. Why are we buying tools online? What are they building?” and, “I have never seen so many Starbucks cards in my life.”
The bulk of money in dispute — $448,000 — is unspent funds the Council allocated to the Convention Center from 2014 through 2017. Callahan called this allocation “nuanced.” That nuance is how the Council interprets the phrase “not to exceed” in the contract. Typically, she said, that language is used for contracts where the billing is settled after work is complete.
The Council voted unanimously to take the matter to closed session because of “pending litigation.” Nobody explained the nature of any actual or threatened litigation that would allow closed session discussion under California’s open records act.
Nick Kaspar, Chamber President, said the Chamber wants to “work toward a resolution” by discussing some of the charges, specifically those that paid vacation time to employees.
Mayor Lisa Gillmor called the findings “disturbing,” questioning the Chamber’s ability to legitimize the expenses. She said the Chamber hasn’t had a good track record of providing information the City requests, called such claims “false promises.”
“We have been asking for many months, and we are still waiting,” Gillmor said.
Tourist District to Collect More Money For City
The Council also changed how the City operates its Tourism Improvement District (TID). By switching from parameters from a 1989 law to the parameters in a 1994 law, the City aims to collect more money from the district.
The switch would bring with it several changes, most notable instead of the City receiving $1 for each room night, it would receive a percent of gross revenue. The district would also be governed by an owner’s association — a nonprofit — and would be required to comply with the laws that govern public meetings. Doing so would require 50 percent of the owners of the 11 hotels in the district to agree to the switch. The money collected must be spent on district improvements and marketing.
Nancy Thome, Assistant City Manager, recommended a 2 percent revenue collection. However, the Council opted to have City employees look into how a 3 percent collection would affect business since it aims to pursue a ballot measure that would increase the Transient Occupancy Tax (TOT), a tax imposed on those renting hotel rooms. The district boundaries won’t change.
Thome said the City estimates that revenue from the switch will increase TID money from $800,000 to $3.5 million. The new district would have 5-year terms as opposed to its current 1-year term, which expires in June next year. The Council wanted a better idea of how that increase would likely affect business given it would push Santa Clara toward the upper end of hotel prices in the region.
City Manager Deanna Santana said she would return in January with details for a 3 percent collection.
Convention Center Ties to Other Agenda Items
A few other items were related to the Convention Center. The Council also established the Silicon Valley/Santa Clara Destination Marketing Organization to promote the City and determine how best to spend money collected from sources such as the TID.
The Council also noted and filed the 4th quarter financial report from Spectra on Convention Center Operations. Although incomplete, the report showed that 52 percent of the Convention Center revenue came during the final quarter.
Santana said she “hopes to continue this trend.”
2018-19 Convention Center fourth-quarter profit was $831,000, compared with $2.2 million for 2017-18.
During reports, Santana also announced that the City would host the 2021 International Association of Science Parks and Areas of Innovation Conference, something Santana said she hopes will “showcase the facility in a new light.”
Related Agrees To Cover The Cost of Hiring Consultants
The Council also approved contracts for the Related project. The 12 new contracts and eight employees needed to manage the 9.2-million-square-foot development will cost roughly $5 million for contract work and another $2 million in employee salary and benefits.
The Council approved the contracts via the consent calendar, but Related has agreed to pay for the cost.
Council Member Raj Chahal was absent.
The Council meets again 7 p.m. Tuesday, Nov. 19 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.
Editor’s Note: This article was edited for accuracy regarding Convention Center revenue.