The Council narrowly approved renewing a $300,000 contract with the company that has been tasked to help the City improve its tourism.
The second renewal of the Jones Lang LaSalle (JLL) contract came back to the Council Tuesday night after a few Council Members had concerns about its legitimacy. JLL is headed by Dan Fenton, the former manager of San Jose’s convention center who got into hot water in 2017 for mismanagement.
Vice Mayor Raj Chahal pointed to several descriptions of work to be performed by JLL in the previous contracts, saying there are several redundancies and instead of demanding JLL produce what was agreed upon, it has “rewarded” Fenton with two more contracts.
City Manager Deanna Santana said the broadness of JLL’s scope of work is an unfortunate necessity. The City needs an entertainment district to draw business tourism, and JLL has been instrumental in ensuring the district can be an “economic development driver,” she added.
“This is part of a larger effort, the action this evening, for the City of Santa Clara to position itself as an area for businesses and entertainment,” Santana said. “We are looking for a new mix of business that we can have high-impact opportunities that allow for us to leverage all the assets available to us.”
Although JLL has already helped build the destination marketing organization (DMO), many said there is still much work ahead. While the DMO, the tourism improvement district (TID) — the 11 hotels surrounding Levi’s Stadium — the stadium’s food-and-beverage provider Levy and its operator Spectra all supported the renewal, a few Council members raised issues.
Council Member Anthony Becker said denying the contract is a way for the Council to “show its fiscal obligation” by “tightening [its] belt on wasteful spending.”
“I am not anti-tourism. I am against wasteful spending. I do not support waste,” Becker said. “When times were good, JLL did nothing. Now that times are bad, we continue to pay for nothing. This could have been done in three months, and now we are (going) on three years.”
But Mayor Lisa Gillmor countered Becker’s claim, saying keeping JLL under contract helps the City get the most out of its assets, so it is fiscally responsible. She also added that JLL helped shine a light on some red flags before the audit of the Convention Center.
But Fenton’s reputation still lingered with other Council Members.
Council Member Kevin Park said he doesn’t doubt that Fenton did useful work. However, he said JLL, among other things, didn’t bother looking into why the Convention and Visitors Bureau was failing, indicating Fenton “doesn’t respect or use existing resources.” Further, Park said, it appeared to him that JLL simply did a “shell game” with its project, simply using work it had already used in San Jose.
Becker’s motion to deny the contract failed 4-3 with Gillmor and Council Members Karen Hardy, Suds Jain and Kathy Watanabe voting “no.” Watanabe’s motion to approve the contract passed 4-3, with Becker, Park and Chahal voting “no.”
Stadium Authority Updates Conflict Of Interest Code
In a continuation of the previous Stadium Authority Board meeting, City Attorney Brian Doyle brought back the amendment of the conflict of interest code and designated positions are required by the Fair Political Practices Commission.
Doyle told the Board that California law requires that it update its conflict of interest code every two years to align with state regulation.
Since Al Guido, President of the 49ers Stadium Management Company (ManCo), signed facility use and sponsorship agreements on behalf of the Board, he is clearly acting on the behalf of the Board, Doyle said, i.e., making political decisions. Given that, Doyle said, he is subject to a Form 700, a public official’s disclosure of assets that may be affected by its official action.
Doyle said he is unsure why the previous city attorney and manager were not complying with California law.
Authority Board Member Watanabe motioned to approve the item, but no other board members seconded the motion. In a very rare occurrence, Chair Gillmor seconded the motion, calling for a vote. The motion passed 6-1 with Board Member Chahal abstaining, saying he “did not have all the documentation.”
CalPERS Liability Continues To Soar
The Council also heard a forecast on its pension liability for California Public Employees Retirement System (CalPERS). During a study session, Doug Pryor, with Bartel & Associates, told the Council that it has more than $600 million in unfunded pension liability.
Several variables contributed to that liability, he said. First, City’s assets have been underperforming resulting in slight investment losses. Also, the City’s formula, adopted in 2011, is more favorable to retirees, which have eclipsed employees over the past few decades. More than 1,000 retirees draw from the pension while only 745 employees are in the system on the City side. For public safety, the discrepancy is similar with 296 employees in the system but 481 drawing retirement benefits.
Pryor called this trend the “natural progression of a retirement system.”
The more favorable formula has resulted in employer contributions to CalPERS more than doubling over the past decade. Retirees on the City side draw an average of $46,500 a year from the pension while public safety retirees draw $101,600 yearly on average.
Pryor said the plan to deal with the liability is to reduce it gradually over roughly 30 years. While pulling out of CalPERS might seem like a good option, he said it would only make matters worse, causing the liability to swell to about $2.2 billion.
Since CalPERS will not allow some employees to be part of it without others, Pryor called it an “all or nothing situation,” leaving the City little choice but to reduce the liability over a long arc.
Consent Calendar Spending
The Council approved the following spending in one motion on the consent calendar:
- A $294,000 contract with Lee + Ro, Inc. for the second phase of the citywide emergency generator replacement project
- A $20,000 contract — with an option to extend another $20,000 for $40,000 total — with Contractor Compliance and Monitoring, Inc. for labor compliance consulting services
The next regularly scheduled meeting is Tuesday, Feb. 23.
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
