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Mayor Calls 49ers Conflicts of Interest ‘Apparent,’ Says Contracts ‘Fraught’ With Them

Santa Clara’s City Attorney said whether the management of Levi’s Stadium is violating California’s conflict of interest laws is “very questionable,” adding that they appear to be “siphoning” money from the City to put in its coffers.

During Tuesday night’s Santa Clara Stadium Authority meeting, City Attorney Brian Doyle continually lambasted the Forty-Niners Management Company (ManCo) during two presentations to the Stadium Authority.

The first was on stadium’s fourth quarter report and the other was a request from ManCo to authorize City Manager Deanna Santana to enter into contracts for the Redbox Bowl, an NCAA post-season college football game.

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Because stadium management has exclusive rights to sponsorship revenue, redacted documents obtained from ManCo that obfuscate revenue detail, Santana said, gave her “cause for concern.” ManCo denied requests for unredacted documents.

“We also know that through those redacted statements that the Forty-Nines Stadium Company is fiscally benefitting from the Stadium Authority’s non-NFL event,” she said.

After he “demanded” the redacted documents, Doyle said ManCo’s attorney told him ManCo collected approximately $900,000 the previous two years from sponsorships, keeping roughly $400,000 of that for “advertising.”

“So, they did not give us all the money,” he said. “They allocated some of the money for themselves.”

ManCo’s request was necessary due to the Stadium Authority Board hamstringing it, removing its authority to enter into contracts for non-NFL events after concerns about prevailing wage compliance and contract procurement surfaced.

Whether the Stadium Authority Board can revoke that authority is being handled in court after ManCo sued the City and the City countersued, claiming negligence on ManCo’s part.

During the financial presentation, Kenn Lee, the City’s Finance Director, said the information in his report was very limited because the City still does not have a clear picture of non-NFL revenue from ManCo. The City has hired a forensic accountant, but that report will not be available until the spring.

Doyle said it might take the City winning its case against ManCo to get everything that it needs to paint an accurate picture of how money is being spent at the stadium.

What is clear, however, is the amount of money coming into the City’s coffers. The City netted a mere $18,000 from non-NFL events this year. Meanwhile, ManCo spent an additional $2.6 million on “miscellaneous” expenditures despite Lee saying there was nothing slated for this year that would justify such spending.

Of the 12 non-NFL events at Levi’s, nine of them generated no money or lost money. On average, non-NFL events lost $200,000.

“If that was an NFL team losing nine out of 12 events, you can bet someone is going to get fired,” said Council Member Kathy Watanabe.

Despite the Board’s previous hampering of ManCo’s authority, it still voted to allow Santana to enter into contracts provided they contain no conflicts of interest and adhere to prevailing wage law.

“I can almost assure you that our Executive Director won’t be signing anything, because this is fraught with conflicts of interest,” said Mayor Lisa Gillmor.

 

Council Approves Suing the Chamber of Commerce

In a closed session prior to the Council’s regular meeting Tuesday, the Council voted 5-1 to move forward with suing the Chamber of Commerce for mismanaging the City’s convention center.

The litigation comes after an audit by TAP International that revealed dubious billing practices led to the Chamber to overbill the City by $580,000, according to TAP’s findings.

Doyle did not disclose which Council Member voted “no;” however, Vice Mayor Patricia Mahan was absent.

 

City Adds More Housing

Two much-lauded developments — one along El Camino Real and the other on Winchester Boulevard —  also saw headway. The so-called “Agrihood,” located at 486 N. Winchester Blvd., saw slightly more than half an acre of its 7.7 acres get subdivided to allow for the sale of the land. Because the sliver of the parcel in question is in San Jose, that city council would also need to sign off on the subdivision.

The other development, located at 3035 El Camino Real, is part of the El Camino Specific Plan. The Council praised the 48-condo, 4-story development for “diversifying” the City’s housing stock by adding for-sale condos.

Andrew Crabtree, Director of Community Development, said the design — with its six live/work units — meets the general plan’s current designation but also conforms to the anticipated designations for the El Camino Real Specific Plan.

The Council had no criticism of the project with Gillmor saying it gives “people the option to own a piece of the American Dream.”

 

Study Session Highlights Need For New Civic Center

The Council also held a study session to discuss a potential new City Hall.

However, doing so would require the City generating more money. Other cities that have built new civic centers have typically raised that money from bonds or levying a tax, said Manuel Pineda, Assistant City Manager.

The need is two-fold: the City not only needs to house its employees, but it also needs a new utility building for Silicon Valley Power and its water and sewer operations. The footprint of those two buildings is roughly 243,000 square feet.

Depending on whether the Council wants to keep City Hall and the utility building in its current footprint or relocate one or the other elsewhere and sell the land, the City is looking at costs between $137 million and more than $400 million.

Regardless, Pineda said the project will have to be done in phases.

Gillmor said she would like to see the land stay under public ownership and get the utility building constructed as soon as possible since the funding source for the greater City Hall is still an unknown.

 

Consent Calendar Spending

  • A $750,000 to a contract with Flynn Resource Consultants for “consulting services related to Transmission Analysis Support.” That contract now has a not-to-exceed amount of $2.67 million
  • $4.1 million for the purchase of the Convention Center parcel and common area
  • $688,000, added to the fire department budget from the City’s stabilization reserve, to fill as-needed positions
  • $450,000 for the Oaks Junction Substation project to accommodate RagingWire Data Centers
  • $35,000 to the Healthier Kids Foundation
  • $453,870 to GFI Entertainment for sound, lighting, equipment, talent, production and stage management services

 

The Council meets again Tuesday, Jan. 14, 2020 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.

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2 Comments
  1. Lydia 9 months ago
    Reply

    Santa Clara rushed into this devil’s bargain. Seemed that all of this mess should have been anticipated before building this lemon. Pro stadium supporters and investors were dazzled with promises of being “a grown up” city and monetary profits. Anti stadium voters saw this coming a mile away. Now we’re all stuck.

  2. Ed Richards 9 months ago
    Reply

    The City was out negotiated when they put contracts together for Building and managing the stadium. Most of the City Council are not equipped to deal with large dollar contracts and complicated contracts. These items are written by attorneys & accountants. I am not saying the Council is stupid just untrained in these matters. Why can the Council not get it through there heads that by sending “the books” to the manager that they will. Become public documents available to other venues. The 49ers have allowed staff to come to Levies and look at the books but no copies leave the room.

    We need a new City Manager, mayor and City Attorney before we Are re unable to recover.

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