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City Council and Convention Visitors Bureau Share Blame For Convention Center Management Mess

Council’s Continued Confusion About Police Chief’s Compensation

Although the Santa Clara City Council was set to pass an ordinance giving the job of setting the Police Chief’s salary to the Salary-Setting Commission, at the Sept. 18 Council Meeting meeting they appeared to be confused.

The item was pulled from the consent calendar — items that are passed with a single vote without discussion — by Mario Bouza, Santa Clara Civil Service Commission Chair.

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In the end, the Council unanimously approved the ordinance with an amendment proposed by Council Member Patrick Kolstad: “The City Council shall take all legislative action to approve the salaries set by the Salary-Setting Commission.”

The question came up after a 2016 charter change gave the job to a new Commission to be appointed by the Civil Service Commission, which is appointed by the City Council. The charter doesn’t state whether the Salary-Setting Commission sets the salaries or recommends them to the Council for approval and nor does the ordinance.

Bouza told the Council that the Charter Review Committee “never considered that the Police Chief’s and City Clerk’s salaries would be set by the Commission.”

Since the charter was passed in 1952, Santa Clara’s Police Chief’s compensation was included in the Miscellaneous Management bargaining unit. This practice was “improper,” said City Manager Deanna Santana.

First, it was “improper for a City official to set the salary of an elected official.” Second, “there is an improperness about putting an elected official in a bargaining unit with employees.” And finally, “He was being evaluated by the Council which is also improper. An elected official is evaluated by the voters.”

“You can’t have it both ways,” said resident Hosam Haggag. “If you’re elected you’re there to serve. You can’t double dip and benefit from the benefits of being elected and the benefits of the bargaining units.”

Haggag then proposed that the Police Chief’s salary be tied to that of the Assistant Police Chief, whose salary is set by the Miscellaneous bargaining unit.

Council Member Patricia Mahan pointed out that the Police Chief is a department head “and leaving it to the discretion of a committee without any policy or guidance” isn’t proper either.

“We’re not changing anything about the Police Chief,” interjected Council Member Kolstad. “We’re trying to create this body and give them the authority to set the salary. I’m sure the HR department is going to have a large role in this. We’re not changing the charter.”

 

Convention Center Performance Audit: City Council and Convention Visitors Bureau Share Blame For Management Mess

The Council heard the results of a performance audit of the Santa Clara Convention Center (SCCC) launched by the Council in May. TAP International, a management consulting firm specializing in public agencies, reported that the Convention Center gets good marks for its high customer satisfaction scores, fiscal health and revenue and profitability growth.

However, TAP Principal Denise Callahan gave the SCCC poor grades for financial management, revenue and cost allocation, sales commissions and incentives, facility discounts, conflict of interest policy, marketing strategy, formal management policy and deferred maintenance.

“The contractor does not implement strong financial management activities,” said Callahan, its revenue and cost allocation is “improper,” as is its use of sales commissions and incentives.

Most of the discussion was directed at accusations made by Mayor Lisa Gillmor and her Council allies that the Convention Center gave “improper” — the word of the evening —discounts, engaged in possibly unlawful self-dealing and made illegal political donations.

The SCCC’s “100 percent discounts” were unheard of in the industry, said Callahan. The “self-dealing” and “campaign donations” demanded investigation by the California Fair Political Practices Commission and the IRS.

SCCC Manager Lisa Moreno said the discounts weren’t “discounts,” they were “refunds” in return for specified levels of food and beverage sales and offering them is standard industry practice, although she couldn’t say the 100 percent discount was common.

Groups receiving discounts include the Mission City Community Fund  (100%) — five City officials sit on that board, including Mayor Gillmor and Council Members Debi Davis (chair) and Mahan — the Sister Cities Association, and the City of Santa Clara (100%), noted Mahan.

“Several conflicts of interest” is specifically two items.

First is CVB advertising in the Santa Clara Weekly — the Weekly’s publisher is on the Chamber Board. The CVB staff told Callahan that, “without influence from the Board of Directors, believed it was a better business decision to advertise in a more cost-effective media outlet that targets Santa Clara.”

The logic of the business decision was irrelevant, said Callahan.

The second accusation was made against a Chamber Board Member Ravinder Lal, who operates several UPS stores in the City.

The owner of the Convention Center UPS store — the franchisee, who has a transferrable lease — is in the process of selling that franchise and transferring the lease to Lal, who, as part of the agreement has taken over management of the store.

The transaction is the sale of a business between the two private parties. Neither the Chamber nor the Convention Center are parties to the sale. Callahan refused to acknowledge this, with the City Manager and the Council majority following suit.

The accusation that the CVB made donations to political committees is based on one event.

According to Callahan, in 2012 the Chamber PAC held a fundraiser at the Convention Center, and some ticket buyers mistakenly wrote checks to the Convention Center instead of the PAC. The CVB deposited the checks instead of returning them and, instead, wrote a check to the PAC.

 

City Neglected its Fiduciary Responsibility For Convention Center, Says City Manager

The City and the CVB “share responsibility for contractor issues,” said the TAP report. “The City didn’t implement proper contract management which could have prevented some of the issues,” said Callahan.

The City neglected its oversight responsibility, failed to manage the contract and implement proper financial controls, or follow its own contracting processes.

This has been the position of the Chamber.

City Manager Santana put it more strongly. “The City completely lacked oversight,” she said. “We did not uphold our fiduciary responsibility. It’s important to keep that front and center.

“Audits are normal business practice,” she continued. “For 35 years the City never had a performance review of the Convention Center.” These were the issues that she raised with the Council at the January goal-setting meeting — held in the Convention Center.

The City “allowed a high risk environment,” and provided “no staffing. You see what happens when no one’s at the wheel. You have compliance violations.” This “is clearly a case study for us in how we manage forward,” said Santana.

This didn’t appear to hold water with Vice Mayor Kathy Watanabe. “There was no contract,” she said. “The City’s been taken advantage of.” If one party isn’t following the contract,” she said it was the responsibility of the other party to do something about it. “These are public monies.”

“There are some serious, serious issues here,” said Gillmor, who suggested that “someone” had been “looking the other way.” She had “grave, grave concerns about fiscal management…the money in lost revenues in discounts…self-dealing and conflict of interests galore.”

The report neglected the circumstances under which the CVB was created and contracted to run the SCCC, said Mahan.

“It was an enterprise model” on City land, she said, where the lease revenues from the surrounding businesses would pay for the Convention Center. “It wasn’t going to subsidize the general fund. The redevelopment dissolution destroyed that model. We have to look at …the new reality. We should be working cooperatively not adversarially.”

Despite Mahan’s dissent, the Council voted 4-1 to terminate the Chamber’s contract in 180 days, write an RFP for new management proposals, and hire several new consultants and another Assistant City Manager to manage the SCCC with an administrative assistant to keep records.

The Chamber will return in October with its answer to the TAP report.

 

In Other Business

In the Convention Center discussion City Attorney Brian Doyle revealed that the City doesn’t yet own the land under the Convention Center, which reverted to the County under the terms of the 2011 redevelopment dissolution. In late 2015, former City Manager Julio Fuentes came to an agreement with the County and the State for the City to buy back the land but since then, there has been no action.

Doyle said that he didn’t want to discuss it in open session.

The Council approved a no-fee parade permit for non-profit City groups. Due to “fiscal restraints” only five permits will be issued per year without special Council action.

The City Council meets again on Tuesday, Oct. 9.

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