Second Stadium Audit Slated for 2018

By Carolyn Schuk
Work Daze

On Monday the City Council’s ad hoc Measure J compliance audit committee reconvened to review activity with regard to Harvey M. Rose’s (HMR) final report and to launch a second project, this time to review operating costs and revenues at non-NFL events in Levi’s Stadium.

Santa Clara receives 50 percent of the net revenue for non-NFL events, minus credits that are specified on the contracts, as performance rent. Most of this income is earned from large events like concerts.

Council Member Patrick Kolstad observed that in this second go-round, “there may be a lot less to audit than when this process was initiated.” Gillmor responded, “There are quite a few areas in all our agreements that we can audit.”

A new RPF will be let, rather than extending HMR’s contract, because the company won’t be available until next summer.

The 2016-2018 review cost the City $180,000.

Confidential operating information from individual non-NFL events are part of what will be reviewed. These have been made available to City staff—who were scheduled to review them at 49ers headquarters on Tuesday—and some have already been delivered to City Hall, the City Manager reported.

“We are working on an agreement on how to report out about revenues and costs associated with non-NFL events that protects the confidentiality of that information,” said City Manager Deanna Santana.

“The 49ers have shared non-NFL event information with the Stadium Authority since the stadium’s opening,” the 49ers said in an email statement. “The 49ers endeavored to protect the Authority’s sensitive business information from public disclosure, a goal with which the Stadium Authority Board and staff agree.

“In October,” the statement continues, “we jointly implemented a process that continues to give the Authority direct access to detailed non-NFL event information while addressing our mutual objective to protect the confidentiality of the information in a way that is in the best interests of the Stadium Authority and our valued event partners.”

There was some discussion about public safety costs—which are fully reimbursed for non-NFL events, but are capped for NFL events. These have been costing significantly more than the estimates made when the contracts were signed in 2012 and 2013, years before Levi’s Stadium opened. The overflow public safety costs at NFL events are paid from Stadium Authority reserves (not the Santa Clara general fund).

The contract caps public safety reimbursement for NFL events for three years, after which the cap can be renegotiated. One of HMR’s recommendations was to open negotiations on this.

Acting City Attorney Brian Doyle favored a more direct approach. “We should determine what the public safety costs and tell the 49ers that we expect them to pay them,” he said. “It’s pretty clear the estimates were way off. Going forward it’s my recommendation that they should pay [all] the public safety costs for the NFL games.”

“There are ways for us to trim the public safety budget,” said Gillmor. “But we want to make sure it’s very safe and the neighborhoods are protected and we’re not jeopardizing public safety at all.” Gillmor noted that recent terrorist attacks have heightened stadium security requirements.

The next committee meeting will be Jan. 22, 2018 at 5 p.m. in the City Council chambers.