A lack of oversight in chamber of commerce spending has caused the City Council to discontinue paying it a management fee.
The Santa Clara City Council halted a yearly allocation to the Santa Clara Chamber of Commerce & Convention-Visitors Bureau Tuesday night, a fee that has grown from $45,000 in 2013 to a proposed $150,000 in 2018. While the fee had been in place for many years, the original 1984 agreement only details that the chamber would manage the convention center and visitors bureau but does not assign such a fee.
Mayor Lisa Gillmor said it is not evident what the City is getting for this fee.
“Nobody seemed to talk about the management fee,” she said. “When you increase fees, you need to get an amendment to the contract … we have overpaid these fees, and I see no evidence of services.”
Part of the problem is that the management fee is rolled into a bulk line item in the budget; however, when presenting its budget to the City’s finance department, the chamber clearly delineates the fee. Finance department employees then roll the management fee into a larger budget item for Council consideration.
In 2013, instead of a flat $45,000 a year rate, the chamber began receiving 2 percent of annual revenue from the convention center as a management fee.
In response to the question of where that money is going—i.e., what is the City getting for the fee—Joe Siecinski, Chair of the Chamber Board, said while convention centers typically operate at a loss, Santa Clara’s turns a profit. Over the past 10 years, he said, it has put $2.2 million into the City’s general fund and sees yearly growth.
Reassessing the management fee was long overdue, he said.
“Imagine not getting a raise for 29 years,” he said. “Two percent is less than a credit card fee.”
Further, Siecinski said, he and others met with Gillmor and Council Member Debi Davis to discuss changing the way the fee was paid.
Still, City Attorney Brian Doyle said “two Council Members cannot form contracts on behalf of the City.” He added that the fees “might be recoverable.”
Some Council Members didn’t see the mishap as being entirely on the chamber. Council Member Pat Kolstad said the City bears some of the responsibility; Council Member Patricia Mahan said she failed to see how the onus falls solely on the chamber when both the chamber and the finance department were simply following past practices, not realizing the contract never detailed provisions for a management fee.
“I am not as concerned with how we got here so much as what we are going to do moving forward,” Kolstad said.
Gillmor said she refused to “sweep this under the carpet,” insisting the chamber committed “major, major mishaps with public finances.”
The Council voted 5-1 to conduct a financial audit and discontinue paying the management fee until the City Manager’s Office can draft a new contract. Mahan was the lone “no” vote.
The Council also discussed the appointment of a planning commissioner and for the now-empty Council Member seat.
After several weeks of postponing the appointment of a new planning commissioner due to an incomplete Council, the Council finally made a decision. Although Dominic Caserta’s resignation last week still left six members able to vote, the Council managed to come to a consensus, appointing Anthony Becker.
“I know this City like the back of my hand,” he said. “Our citizens come first.”
Also up for discussion was the filling of Dominic Caserta’s seat on the Council. The Council opted to appoint someone to his seat to fill the remainder of the term until the November election.
Caserta resigned last week from the Council and withdrew his bid for County Supervisor amid several sexual harassment allegations. He denied the allegations, intimating they are politically motivated because of their timing.
Mahan urged the Council to leave the seat vacant until the November election, saying five people shouldn’t be in charge of the future of the City.
“That kind of open political discourse can start healing our City,” she said.
However, a ballot measure drafted by the Charter Review Committee and approved by 80 percent of Santa Clara voters gives the Council the authority to appoint someone to Caserta’s seat so long as it does so within 30 days of the seat becoming vacant.
The majority of the Council disagreed. Watanabe, who the Council appointed to fill a vacancy and won her election campaign, said the Council needs seven members on the dais to conduct business.
Public comments were split fairly even, with many opposing appointment and claiming the Council would be less likely to appoint an ethnic minority. One woman held a sign that read “All White is not Alright. Don’t Appoint.”
“We are a democratic country. We don’t run by appointments,” said William Davis, a Santa Clara resident. “Appointments are for China or somewhere. It might fit in some situations; it doesn’t fit in this one. We don’t need an appointment; we need an elected official.”
The Council voted 4-2 to appoint someone to Caserta’s seat, with Mahan and Kolstad voting against appointment.
The application process will open Thursday and run through June 5. The Council will make a selection June 12. The appointee must have the support of five of the six Council Members to get appointed; otherwise, the seat remains vacant until November.
Land Use Decisions
Several decisions regarding land use were also key topics.
The Council voted unanimously to take out a $10.2 million loan from the land sale reserve fund to subsidize a sports park on Grant and Reed Streets.
Craig Mobeck, Director of Public Works, said the loan, which makes up roughly half the cost of the $20.195 million project, would be paid back within three to four years through park fees.
The sports park would feature four soccer fields, two parking lots to be shared with the adjacent dog park, a playground and a neighborhood building.
Two housing projects also saw approval. A 54-townhome located at 1375 El Camino Real. The 2.23-acre parcel needed rezoning from thoroughfare commercial to planned development.
Moonlite Lanes will now play host to 58 more for-sale townhomes. The 2.87 acres was set to be developed into apartments by San Mateo-based Prometheus after the bowling alley’s closure in 2016. However, that proposal was met with staunch public opposition. Since then, the developer has reduced the height of the buildings from six stories to three, changed from rentals to for-sale homes and reduced the density from 158 units to 58.
No one spoke in opposition to the development and both saw unanimous Council approval.
Securing a parcel of land set to be lost because of the dissolution of the redevelopment agencies (RDA) was also of importance to the Council. State law mandates that the successor agencies that replaced RDAs sell the land formerly used for RDA.
The Council voted unanimously to allow the City Manager to make an offer on a 9.4-acre parcel at 4911 Great America Parkway to secure it for City use.
Budget Study Session
Prior to the regular meeting, the Council heard from the finance department regarding the City’s fiscal outlook.
Projections for the City’s financial forecast look bleak, with an estimated $8 million deficit looming next year and growing to $28.2 million by 2028. City Manager Deanna Santana said City employees have managed to reduce next year’s deficit to just $1 million. If they can continue chip away at the deficit a little each year, by the end of the 10-year forecast, it could be eliminated.
Angie Kraetsch, the City’s Finance Director, said as unfunded pension liability for California Public Employees Retirement System (CalPERS) increases, it will continue to eat up a larger percent of the City’s budget. By 2028, for every $1 the City generates in revenue, $0.75 of it will go to fund CalPERS.
However, the figures do not take into account any changes the CalPERS board might make to the system, a recession or possible revenue generated from projects, such as City Place, slated to come to fruition in the next few years.
“What goes up, must come down to a certain degree,” said Council Member Teresa O’Neill. “We have to keep that in mind.”
Water rates will also increase, with a 5 percent increase to groundwater rates, a 6.9 percent increase in recycled water rates and a 3 percent increase in sewer rates.
The Council also voted unanimously to accept the map of the districts to be set should Measure A pass in the June 5 election. The districts divide the City in a north-south fashion and aim to remedy issues many say violate the California Voting Rights Act.
The Council meets again 7 p.m. Tuesday, May 29 in Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.