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Convention Center Déjà vu All Over Again

No one should have been surprised when the Santa Clara City Council majority voted to summarily yank the Santa Clara Convention Center’s management fee. Mayor Lisa Gillmor wanted to do that, and more, 25 years ago. The only difference is that now she has the four-vote majority she didn’t in 1993.

The 1993 campaign against the Chamber of Commerce’s management of the Convention Center began shortly after then-Council Member Gillmor was seated in 1993—when the City Council approved a $5.5 million expansion to the Convention Center.

For months Gillmor and her ally Mayor Eddie Souza alleged that the Chamber of Commerce—which manages the Convention and Visitors Bureau under contract to the City—had mismanaged the Convention Center (CC) and even hinted at embezzlement, according to contemporary news stories.

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“Mayor Souza rumored to the media that the Chamber was involved in embezzlement and later that Betty Hangs was taking kick-backs,” said a May 1993 Chamber memo to a City staffer.

“Why did the Mayor not take the information to the proper authority, the Police Department and ask for an investigation instead of rumoring it to the media?” the memo asked.

The memo also claimed that Gillmor and Souza had circumvented the City Manager and a City Council-Convention Center liaison committee and had instead questioned City staff directly, held private meetings, excluded the Chamber from discussions about the CC operations and consulted a third party—the management of the Westin Hotel—about the CC management. At the time, according to the memo, the Westin was in default to the City and trying to get the CC catering contract.

Further, the memo said that Gillmor and Souza had “called around the state … and said what they had learned …suggested we were doing everything wrong. They did not do this by Council direction and in the process have potentially hurt our sales effort.”

For four months Chamber President Betty Hangs was “chastised, scrutinized and interrogated” by Gillmor and Souza, Mercury News reporter Brad Kava wrote in April 1993. This culminated in a six-hour inquisition of Hangs by the pair at a meeting Kava described as “explosive.”

City Manager Jennifer Sparacino told the Council that staff had spent $20,000 in man-hours examining Chamber and CC records and had turned up no problems.

In a 4-3 vote, the Council approved a $100,000 audit of CC finances. The decision was revisited a few months later and this time was defeated after Council Member Tim Jefferies changed his vote because, he said, of the cost.

Gillmor then attacked Jefferies, saying that he had “succumbed to political pressure from the Chamber of Commerce and the San Jose Mercury News,” referring to a Mercury editorial that said the proposed audit was engendered by “hysterical ranting and loony accusations” and “empty, vicious bluster.”

Jefferies responded that Gillmor’s attack was“an absolute bullshit allegation.” The exchange prompted Council Member Kerry Procunier to say that the Council owed the public an apology for its conduct.

“Complaints from individuals, together with numerous media reports” resulted in a county grand jury review published in 1994. The findings were published “in the hope that they may contribute to constructive discussion and resolution of a number of convention-related issues.”

After an eight-page analysis of CC operations, the Grand Jury reported it “found little justification for the often acrimonious Santa Clara Convention Center debates of recent years.

“In general, the City’s original decision to have the CC and the CVB [Convention and Visitors Bureau] managed by a non-profit organization appears to have been sound,”the report continues. “Whether the Chamber of Commerce should be the organization of choice was not included in the Grand Jury review. Warranting attention are several issues related to CC bookings policy, to contracting procedures at the CC, and to control and monitoring of Chamber of Commerce policies.”

The Grand Jury’s recommendations, laid out in three paragraphs.

First, the City Council needed to articulate a policy about its revenue goals. If the goal is maximizing direct revenue from the CC, trade shows should be favored. On the other hand, if increasing sales and hotel tax revenue was the goal, conventions and meetings would be more favorable to that goal. Overall, the Grand Jury found “the positive CC performance may be taken as an indirect indication of satisfactory performance of the CVB’s convention-oriented activities.”

Second, the Grand Jury “felt” that the food service contract should be sent out for competitive bids instead of extending an existing contract, even though the contractor at the time had a good working relationship with the City and had performed satisfactorily.

Finally, the Grand Jury found that the Chamber had a bank account for office rent payments from the City that wasn’t on the books, which “obscured its visibility.” The recommendation was that the City “tighten its monitoring procedures.” Otherwise, the Grand Jury agreed “with the generally favorable conclusions of several financial audits.”

In a response to the Grand Jury report then-City Manager Jennifer Sparacino wrote that, “Staff reported to the City Council in January 1994 that no material weaknesses were found in existing internal control processes of the Center and the [Convention and Visitors] Bureau. A number of modifications and refinements to existing accounting practices were recommended” and “nearly all had been implemented.”

One of Souza’s political opponents, former Council Member Dave Tobkin, accused Souza and Gillmor of intentionally injuring the Chamber’s reputation because its board voted against an exclusive industrial contract with Mission Trail Waste Systems.

The trash collector backed both Souza and Gillmor—deploying company employees in their campaigns—before its partners pled guilty to skimming $540,000 from the tollbooth at the City dump, tax evasion and conspiracy.

Mission Trail’s corrupt practices didn’t appear to concern Gillmor, when later that year she said “I look at it as an internal accounting problem between the partnership and the Internal Revenue Service,” a Mercury News October 1994 story reported her saying. ”According to our staff report, they’ve performed,” she said. “As to whether I believe these people are ethical or unethical—I don’t feel qualified to answer that.”

The next month Gillmor lost her bid for Mayor to Judy Nadler, who said that her experience was “that the public doesn’t want to be paying money to people who aren’t ethical.”

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