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Santa Clara City Observer – June 22, 2016

County Civil Grand Jury Makes No Finding About Measure J Compliance, Criticizes Stadium Authority Structure

There has been lots of talk about how a County civil grand jury investigation of the Santa Clara Stadium Authority was going to be a bombshell. It turns out the report, published Monday afternoon, was much like most such reports. It contained some criticism of SA operations and recommendations for changes, but no earthshaking revelations.

Here’s what the grand jury report, did – and didn’t – find.

The report made no finding about compliance with the terms of Measure J, the stadium ballot initiative voters approved in 2010, except to observe that there has never been an audit of compliance. The grand jury recommended the City conduct such an audit – including recommendations about the scope – and that the City Council release the audit report to the public and present the findings in an open, public meeting.

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On March 22, the Council appropriated $200,000 for a Measure J Compliance audit, but has yet to publically report any action.

The grand jury also didn’t find evidence that stadium work wasn’t being reported on City employee timecards, as has been alleged by Mayor Lisa Gillmor and former Santa Clara Police Officers Association President Patrick Nikolai.

“The Grand Jury received information that some city employees were told by superiors to improperly charge Stadium activities to the City,” said the report. “The Grand Jury interviewed numerous people but was unable to corroborate this information.”

This was reiterated in the report’s conclusion: “The Grand Jury was given information that City employee hours spent on Stadium operations and maintenance may have been improperly allocated to the City. This has also been widely reported in the media. The Grand Jury interviewed many people but was not able to verify this assertion.”

The grand jury also noted that public safety costs had exceeded the threshold amount set by in Measure J, but that the overrun was covered. “As stipulated in Measure J Attachment C, Principal Terms of Public Safety Agreement, these overages were paid from the Measure J Stadium Authority Discretionary Fund,” not the City’s general fund.

If the overages continue through the next NFL season, the grand jury recommended that Santa Clara “seek an adjustment of the public safety cost threshold in accordance with clause 7.5.4(b) of the Amended and Restated Stadium Lease Agreement,” of March 2012 and amended June 2013. 

The grand jury was severely critical, however, of the Stadium Authority’s management structure.

“The Grand Jury learned from interviews that these City employees typically spend ten to fifteen percent of their time on Stadium Authority business,” the report said. “During its investigation the Grand Jury was surprised by the significant lack of understanding of Stadium Authority operational and financial details by those responsible for its management. The response to questions such as, ‘How do you assure that the City’s general and enterprise funds are protected from subsidizing the operation and maintenance of Levi’s Stadium as stated in Measure J’ was consistently ‘I don’t know.'”

Of equal concern to the grand jury was the fact that the Santa Clara Finance Director is also the Stadium Authority’s Treasurer and Auditor.

“The Grand Jury is concerned about the oversight position of auditor being held by the Finance Director,” the report said. “The Stadium Authority should adopt the same structure as the City, where the auditor position is separate and independent from the Finance Director to prevent the appearance of any conflict of interest.”

This management structure was set in place in 2011 by City Council resolution 11-7825, which established the Santa Clara Stadium Authority. It was passed unanimously by the then-sitting Council: Lisa Gillmor, Will Kennedy, Patrick Kolstad, Patricia Mahan, Jamie McLeod, Kevin Moore and Mayor Jamie Matthews. 

The resolution established the City Council as the SA Board of Directors, the Mayor as chair, and the City Clerk as Secretary. The SA’s CEO is the City Manager and its treasurer, chief financial manager and financial auditor is the City Finance Director. The only auditing specified in the resolution is an annual independent audit of SA finances.

While the resolution establishes the SA as the stadium operator, “upon the recommendation of the Executive Director, the Stadium Authority may contract with a facilities manager or make other arrangements to oversee the day to day operations of the Stadium.”

The “other arrangements” were spelled out in the Disposition and Development Agreement – approved unanimously at the Dec. 13, 2011 City Council Meeting.

“Prior to the Close of Escrow, the Stadium Authority and StadCo shall agree on the final form of the Stadium Management Agreement. The Parties anticipate that StadCo will create an Affiliate to enter into the Stadium Management Agreement (“ManagementCo”)… that shall be responsible for the day-to day operation of the Stadium on behalf of StadCo and the Stadium Authority, pursuant to an annual operations plan approved by the Stadium Authority, including … development of budgets and capital plans, and maintenance of books and records.”

You can find a link to the grand jury’s report at www.scscourt.org, or download it directly from tinyurl.com/cgj-rept-stadium.

Council Action on Related’s Northside Development Proposal Anticipated at Next Week’s Meeting

At its June 8 meeting, the Santa Clara Planning Commission approved Related California’s City Place Santa Clara master development plan, with Commissioners Sudhanshu Jain and Yuki Ikezi dissenting. The plan is expected to go to the City Council for approval at the June 28 meeting.

Information about the proposed development – including negotiating agreements, the draft master plan, and Environmental Impact Reports (EIRs) – can be found at SantaClaraCA.gov by selecting “Planning and Inspection” under the pull-down “Government” menu, “Planning Division” from the left side menu at the Planning and Inspection page, “Development Projects List” at the Planning Division page, and scrolling down and selecting “City Place Santa Clara.”

Or get there directly with tinyurl.com/sccityplace-docs.

The webpage doesn’t include the Planning Commission packet for the June 8 meeting, nor San Jose’s April 29 44-page letter concerning the EIR.

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The Mlnarik Law Group, Inc.

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