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Council Continues Roasting Chamber Amid Audit Findings

The Santa Clara City Council’s public flogging of the Chamber of Commerce over its management of the Convention Center and Convention Center & Visitors Bureau (CVB) ramped up to full-force at the Council’s last meeting.

With the completion of an audit by TAP International Inc., a Sacramento-based consulting firm, the Council further lambasted the Chamber Tuesday night for what many on the Council and City Manager Deanna Santana characterized as “mismanagement.”

However, Santana also acknowledged that the City too was culpable.

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“The City has allowed for a high-risk environment without any Council oversight,” she said.

The saga has been unfolding since May when the Council discovered a lack of oversight in the Chamber’s management fee when it ballooned to $150,000 this year from $45,000 just five years ago.

Since then, the Council has terminated the Chamber’s management agreement, opting to find a new operator for the Convention Center and CVB.

That termination came amid several allegations of malfeasance and incompetence. Among these criticisms are that the Chamber mismanaged money by giving its members preferential treatment, kept sloppy records, did not disclose how it was spending its money and engaged in conflicts of interest.

One example cited was the Chamber accepting discounted ads in The Santa Clara Weekly from Chamber Member and publisher of this paper, Miles Barber. Another example was the “unlawful” lease for the owner of a UPS store in the Convention Center, another Chamber Member.

The audit corroborated these claims.

Denis Callahan, with TAP, said the Chamber has demonstrated a “lack of basic understanding of governance.”

“[The Council] has a right to know how its resources are being used,” she said.

But Nick Kaspar, President and CEO of the Chamber, said the audit’s conclusions went far beyond what could be justified by the evidence and that instead of working with the Chamber, the Council was keen to demonize the Chamber in press releases and other public statements. Read the Chamber’s full response here

Part of the problem, he said, was that City and Chamber employees were operating on false assumptions on how Convention Center and CVB business was to be conducted. He also took issue with some of the audit findings. For instance, he said several billings were listed twice, inflating the total money the Chamber allegedly mismanaged.

Further, the audit lists CVB losses — which are typical — and a downturn following the dissolution of the redevelopment agencies in bookings as evidence of mismanagement, something he said Chamber employees worked hard to correct so wouldn’t show in the paperwork, he added.

“Our reputation has been dragged through the mud over this,” he said.

However, Callahan said Kaspar is misreading the audit findings, demonstrating the Chamber lack of understanding in these matters. As for the double billings, she said TAP could not substantiate whether those billings were issued twice or whether they were a bookkeeping mistake, thus their inclusion in the audit.

Mayor Lisa Gillmor said she was “dumbfounded” at Kaspar’s comments, which she categorized as a non sequitur.

Council Member Debi Davis said she wants the “blame game” to stop, acknowledging that the City was partially at fault.

To date, the Council has yet to point the finger at any of its own employees for the miscommunication or lack of oversight of the Convention Center and CVB.

Another topic under the rubric of the Chamber audit was the management of the tourism improvement district money (TID). Of the nine hotels participating in the $1 per room rented TID program, seven did not follow the proper procedures, Callahan said.

This misstep has cost the City between $14,000 and $96,000 since the program’s second year when it began being handled by the Chamber, she said. During its first year in 2005, the Council appropriated the money properly, but every year since the Chamber has been allowed to manage it.

Kaspar questioned, if the Council was in full control of the money during the TID’s first year, how the money — nearly $8 million — got turned over to the Chamber to be “mismanaged.” The question went unanswered.

“The Chamber always assumed it was transferred with proper approval,” he said. The Council approves these financial reports every year.

The Council voted unanimously to accept the audit findings, to not release any TID money to the Chamber and recover nearly $600,000 in spill-over money from the TID. Council Member Patricia Mahan left the meeting before the vote.

 

City Manager Updates Council on Levi’s Stadium

On a similar note, Santana gave a report on goings-on at Levi’s Stadium. Among them was that roughly 70 percent of the audit recommendations from the Harvey Rose Associates have been put in place.

Further, the picture of how much money the City rakes in for non-NFL events at the stadium is coming into focus. Dating back to 2014-15, on average the stadium brought in $184,000 per event that year, $62,000 the following year, $45,000 per event in 2016-17 and $55,000 per event 2017-18.

Also in Santana’s report was mention of a letter from the 49ers Stadium Management Company (ManCo), which she said refused to set aside an area for the much-disputed community room without explanation.

Santana said the City has also entered into agreements for the College Football Playoff, to be held at Levi’s Stadium in 2019, ensuring the City will not incur any of the costs typically associated with that event.

Issues surrounding the community room and creek trail, Gillmor said, are “problematic … as usual,” saying she wants to make securing the room a priority early next year.

“If that space was refused, I want to know why,” she said. “We have come a long way, but we still have a long way to go.”

The Council’s next regularly scheduled meeting will be 7 p.m. on Tuesday, Dec. 4 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.

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