Levi’s Stadium Delivers $2.5 Million to Santa Clara, But Ongoing Disputes Dominate Marathon Stadium Authority Meeting

By Carolyn Schuk
Work Daze

Separating Santa Clara City Council and Stadium Authority (SA) meetings was supposed to end the marathon meeting cycle. But if the seven-hour SA meeting on Aug. 24 was an indication, the new schedule will simply lead to twice as many endurance-testing meetings.

At last week’s meeting, nearly four and a half hours were spent discussing the yearlong Comprehensive Review of Stadium Authority Finances—the “Measure J audit”—conducted by the management analyst Harvey M. Rose Associates (HMR). Two more hours were occupied with the ongoing fight over the weeknight stadium event curfew.

That left an hour for everything else; including the SA financials and the stadium Transportation Management and Operations Plan.

Sellers Captures Spotlight

In a blistering rebuke, Santa Clara Police Chief Mike Sellers called Mayor Lisa Gillmor out for more than a year of “political grandstanding” and false and “reckless claims of abuse [and] misappropriation of funds, and allegations of corruption.”

(The full speech is available on our website: www.santaclaraweekly.com/2017/issue-34/chief-sellers-statement/. Video of the speech is available on our YouTube channel: https://youtu.be/ZflxhE963VQ)

 Gillmor didn’t reply to Sellers. However, SA Board/City Council Member Teresa O’Neill said, “All of us have nothing but the highest respect for the professionals who serve our City,” said O’Neill. “It’s unfortunate that this has been placed in the guise of what is political.”

“I know this takes a toll on [Gillmor] personally,” she continued. “I know there is no one in this room who can claim to love this City more than Lisa Gillmor. Lisa feels a high sense of responsibility because she was a strong advocate for the stadium. We have not done the kind of job our employees and residents need,” she continued, and “there’s plenty of blame.”

Stadium Delivers $2.5+ Million to City

Levi’s Stadium non-NFL events delivered $2.5 million in performance rent in the first quarter of FY 2017-2018, Acting Finance Director Angela Kraetch reported Thursday. This is profit after expenses, and goes directly to Santa Clara’s general fund.

The City collected $82,000 in direct sales taxes from the stadium for the last quarter and $42,000 for offsite parking. Outstanding stadium construction debt is $403 million, Kraetch reported, down from $429 million at the beginning of March.

The City has collected 77 percent of the seat licenses sold—$402 million. Seat licenses worth $9.6 million were defaulted during the quarter (1,650); almost $4 million of that has already been resold. New seat licenses continue to be sold for full price, Kraetch reported.

City’s Own Review Documents At Most $25,000 Unbilled Stadium Expenses

After completing its own review of Santa Clara’s payroll records, the City finance department identified a maximum of $25,000 in employee time that may not have been correctly billed to the Stadium Authority, Acting City Manager Rajeev Batra said last week.

HMR’s estimate of unbilled work was $115,000. The difference between the finance department’s numbers and HMR’s numbers, said Batra, was that the finance department reviewed all payroll records to identify stadium-related activities that were posted to incorrect accounts, rather than estimating from a sample.

According to its final report, HMR sampled six NFL events and five non-NFL events. Of this sampling, HRM estimates that $3,500 (NFL events) and $4,700  (non-NFL events weren’t charged to Stadium accounts.

These numbers were multiplied by 20 NFL events and 28 non-NFL events (there were only 27 non-NFL events) to arrive at a total of $229,000. From that, subtracting $92,000 in Fire Department reimbursements that were overlooked in the draft version of the report leaves $115,000 in estimated costs.

HMR also includes in its estimate post-event investigations and arrests; charges which may not be legal by California law.* “I have asked several times for a legal opinion on this interpretation,” Police Chief Sellers said. “As of today’s date the City has not pursued an outside legal opinion.”

There are two other elements of HMR’s claim that the City is owed money. The first is $895,000 in public safety that was billed to the construction account prior to the stadium opening.

After repeated questioning by SA Board/Council Members Patricia Mahan and Dominic Caserta, HMR principal Fred Brousseau admitted that he wasn’t saying “that wasn’t a proper use of the money,” but that the SA didn’t approve an $11 million allocation for stadium opening expenses.

Caserta disputed that the SA didn’t approve the appropriation, pointing to the final construction budget that was approved at the March 13, 2013 SA meeting.

“Mahan, Gillmor and Kolstad were on that Council,” he said. “It was a 6-1 vote [Jamie McLeod dissenting] for that final budget with the $11 million line item.” In any case, he said “If it’s $895,000 that’s not owed by the Niners, why is it in the report?”

“Well, it saved the general fund” from being used, was Brousseau’s answer.

“My understanding is that Finance director made that transfer with the authority we had given him,” said SA Board/Council Member Patrick Kolstad. “That wasn’t something under the table.”

If those expenses had been charged to the operating budget, they would have been paid by the City’s general fund, Mahan pointed out, because at that point the SA had no revenue or discretionary fund to pay them—which would have been a clear violation of Measure J. By being charged to the construction account, that cost was rolled into the SA debt and paid for from Levi’s Stadium revenues.

The other item on HMR’s list of money owed is $781,000 for five months of golf course parking in 2016. Brousseau admitted this was dispute, not an error. “Those facts are in dispute,” said Kolstad. “I would consider this [charge] a thesis not a fact.”

The HMR review cost the City $180,000.

SA Board/Council Member Debi Davis asked Brousseau if the bill would be less if the 49ers had turned over the confidential event records to the SA—currently these can only be reviewed at 49ers headquarters—”since some members of the press say that we’re wasting money.” Brousseau answered that the fee wouldn’t have been less because reviewing employee hours took longer than estimated.

It was $180,000 well spent, said SA Board/Council Member Kathleen Watanabe. “I’ve learned a lot. It seems to me…that there’s a lot of inequity.”

Heavily Debated Stadium Curfew Comes Before Council… Again

Since the City Council refused to waive the 10 p.m. curfew for the U2 concert in May, and U2 ignored it, there has been ongoing public debate about the curfew. Last Thursday night it was on the SA’s agenda; although, as Acting City Attorney Brian Doyle explained, only the SA Executive Director, City Manager Rajeev Batra, had authority to waive the curfew—not the SA Board.

In three years, there have been only two weekday concerts at Levi’s Stadium, despite the fact that most of the dates for these tours are weeknights, 49ers COO Al Guido told the SA Board. These two concerts, Beyonce and U2, alone netted the Stadium Authority $1.6 million.

“We cannot dictate to artists what venue to play, what day of the week to play, or when to play,” said Live Nation Entertainment COO Joe Berchtold. “If five of those days a week aren’t available to play [at Levi’s], it’s going to be very hard” to book events, he said. The curfew “diminishes the enthusiasm of artists to play” at Levi’s Stadium.

The majority—Gillmor, Davis, O’Neill and Watanabe—voted against recommending curfew waiver even for the upcoming Coldplay concert, despite those who spoke in favor of a waiver like resident Brian Goldenberg.

“We’re talking about …just one percent of the year,” he said. When the stadium was built we anticipated big events. Those concerts don’t end before 10 o’clock.”

“I’ve never been shy about being against the stadium,” said Council regular Deborah Bress. But “we need to make money on that stadium. We should allow them go past the 10 p.m. three or four times a year.”

Guido also reported that a survey conducted by the 49ers found that 76 percent of Santa Clara voters were in favor of eliminating the weeknight curfew entirely, or relaxing it for a few events.

“You decide if you’re in this business or not,” Guido continued. “If you have a 10 p.m. curfew, you are not in this business.”

Large stadium events are also critical to small businesses, said Santa Clara resident Sandra Daly.

“I am the only minority-owned women vendor in Levi’s Stadium. I’m here speaking on the small local businesses that depend on all the events. Four weekday events a year may not seem like a lot to you, but… not extending the curfew affects all the small businesses here,” she said.

“This is a music ban that costs our city millions of dollars. No other city in California has that,” she said, adding, “Great America is allowed to stay open past 10 o’clock over 30 days a year.”

Watanabe said the curfew waiver was “something that someone should have thought about before” and proposed tabling the discussion until her Northside constituency could talk to the 49ers.”

O’Neill proposed assigning the question to the new stadium manager, Scott McKibben. Mahan said that the Authority couldn’t pass a motion assigning the task to someone who hadn’t actually been hired, because doing so would imply that there had been a private agreement—violating the public meeting law—already on the hiring.

Mahan noted that the Stadium’s zoning permit specified a 10 o’clock curfew “unless permitted otherwise by the City Manager. It was not contemplated that it would never be changed.”

“Well you need to change that,” said Davis.

“I think 67 percent of the people don’t want concerts,” Davis continued. “To have these smiling faces coming out of there who are drunk and they’re making a mess. And you have these diesel trucks out there. What are we going to do? Sell our houses and move somewhere else because the stadium comes in? I’m a little angry.”

“Right now we’re looking at looming deficits, a pension crisis,” said Kolstad. “If every [major stadium] event generates $500,000 to our general fund, that’s critical. Kicking the ball down the road is the worst thing we can do right now.”

Gillmor responded saying, “According to our auditor we can’t count on any of that money.”

The 49ers had “absolutely no respect for our community,” she continued. “I have children. I know what it’s like to try to get them to bed at night. We have problems with transportation. We have parking issues. We have a stack of complaints after every concert.

“We’re the protectors of our community,” Gillmor concluded. “If they don’t have us, they don’t have anyone.”

 * California Constitution Article XIII D Section 6(b)5