The Santa Clara Stadium Authority Board approved the 2021-22 budget Tuesday despite some objections from the management at Levi’s Stadium.
In a continuation of a study session earlier this month, the Board approved the operating budget for the stadium Tuesday night. Kenn Lee, the Board’s Treasurer, rehashed the details of the budget to the Board, again raising issues with several items within it. The biggest issues, Lee said, continue to lie with the Forty Niners Management Company’s (ManCo) lack of documentation to justify expenses or maintain the stadium.
“Once again, the Stadium Authority, the Executive Director, our staff is taking on the responsibility of teaching the Stadium Manager how to run a stadium that they were already supposed to know how to run,” Board Member Kathy Watanabe said. “This is not how it should be done.”
Lee expects revenue for the 2021-22 fiscal year to be $65 million. The Board will be able to pay $38 million toward its debt on the stadium. The budget earmarks $14.6 million for capital projects, including repair of cooling towers, improvements to the women’s locker room, turf replacement and signs.
As part of passing the budget, the Board also opted to defer deciding on a marketing plan, instead approving seeking an outside consultant to assess it for non-NFL events, a decision Board Member Suds Jain called “kind of like going to a doctor for a second opinion.” The stadium is projecting a $600,000 loss this fiscal year for non-NFL events.
Executive Director Deanna Santana said letters from ManCo representatives came in the 11th hour, detailing some issues they have. But, the letters amount to little more than “bias” and “attacks on character.”
“It is a lot of rhetoric. There is some spin to portray the officials of the Stadium Authority in bad character as if we have motives that are personal or intentionally lying. I think the facts speak for themselves though,” Santana said.
Those “facts,” she said, are, among many things, ManCo’s inability to expend capital project money to maintain the stadium, its inability to provide documentation showing it has complied with prevailing wage law or disclose conflicts of interest. In response to requests that the two parties de-escalate their legal feuds by not earmarking millions for outside counsel, Santana said the “meta message” was that ManCo wants the Stadium Authority to “defund its ability to defend itself and staff resources.”
Representatives from ManCo didn’t just take exception with the $2.6 million set aside for legal fees.
Jeff Fong, Vice President of Finance for the 49ers, said the amount of City employees — highly paid City employees — being billed has swelled to ridiculous levels, especially during a supposed belt-tightening due to the COVID-19 pandemic. He called the action “irresponsible.”
City employees had previously countered Fong’s assertion on this front, saying those additional City employees are needed because ManCo has demonstrated it needs oversight.
Another point of contention was the Stadium Authority’s holding of $8.2 million in wages until ManCo can produce documentation proving it followed prevailing wage law. However, ManCo representatives say prevailing wage is not the issue since more than half of those expenses are salaries for City Hall employees.
Further, Charmaine Yu, an attorney for the 49ers, responded to Stadium Authority Counsel Brian Doyle’s repeated characterization that the Stadium Authority could get along with ManCo if only the 49ers would stop suing the City. Yu called this “categorically wrong” and “a complete fiction.”
“Assume that the 49ers were going to stop paying rent without any justification,” Yu said, as a hypothetical. “The Authority then sued the 49ers in order to enforce its rights under the contract to receive that rent.”
“Then,” Yu continued. “the 49ers complained about being sued and said ‘the Authority: what terrible partners. They sued us. If they really wanted to have peace with us, if they wanted to have a good relationship with us, they would dismiss their lawsuit and they would forgo their claim for rent.’ That wouldn’t make peace, and the Authority would never do that. That is exactly what has happened here. The Authority has withheld payments.”
Still, Yu said she wanted to “offer an olive branch” that if the Stadium Authority agrees to suspend litigation to allow talks to happen, they both might avoid incurring soaring legal fees. Although not “enthusiastic” about doing so, should the Stadium Authority opt for recalcitrance, ManCo “will incur whatever expenses are necessary to protect their asset.”
Yu also told the Board that ManCo has already extended invitations for Stadium Authority employees to examine documents justifying salary expenses at the stadium. Lee denied having received such an invitation, but Board Member Kevin Park said he attended the meeting where that invitation was extended and conferred with the video that Yu was correct.
“Understand that if we have a choice between making money and doing the right thing, I will vote to do the right thing and take the hits to our revenue, even if that means increased interest payments,” Park said. “But if you tell me that the right thing can only be accomplished by increasing budgets for an escalating legal war, I am not sure we want to provide the ammunition for those battles. That is not a fight I think we want to get into.”
The Board passed the budget in a 5-1 vote, with Park being the lone “no” vote.
Community Development Block Grants Get Go-Ahead
The Housing department’s community action plan also saw approval. The program, funded by the U.S. Dept. of Housing and Urban Development (HUD), helps the poor through a variety of programs such as meals on wheels and rent subsidies.
Eric Calleja, with the City’s housing department, detailed some of the plan. He said funding from HUD has remained roughly what it was for the previous year: $1.3 million for home grants and $1.89 for community development block grants (CDBG).
The home grants mostly go toward rental subsidies for the poor and the block grants pay for improvements on ailing homes, Calleja said.
April 1 will begin a 30-day comment period. The plan will return to the Council May 4 for approval.
The next regularly scheduled meeting is Tuesday, April 6 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.
Members of the public can participate in the City Council meetings on Zoom at https://santaclaraca.zoom.us/j/99706759306; Meeting ID: 997-0675-9306 or call 1(669) 900-6833, via the City’s eComment (available during the meeting) or by email to PublicComment@santaclaraca.gov