The bottom line on the long-awaited report on the Santa Clara Stadium Authority’s compliance with Measure J is that management consulting company Harvey M. Rose Associates does not substantiate assertions that Santa Clara has been cheated out of any money due it from Levi’s Stadium. Nor does the report offer indisputable evidence of the now widely reported claim that Santa Clara is owed $2 million.
The Weekly obtained a copy of the report following Mayor Lisa Gillmor’s discussion of the confidential draft in a June 2 San Francisco Chronicle video story. The Mayor declined the Weekly’s request for comment.
The report claims Santa Clara is owed money that was misappropriated, not paid or not billed.
The first is $894,228 that HMR claims was taken from construction funds to cover “City Police, Fire and possibly other department costs” between April 2014 and October 2015. The report provides no explanation of how this number was calculated, no backup detail showing this transfer, and no identification of the accounts it was transferred from and to.
The next amount is $718,000 that HMR claims is owed the city for golf course parking. Parking was discontinued on the golf course in July 2016.
The 2014 Golf Course parking agreement sets the minimum use fee at the difference between 2012-2013 net city income from the golf course ($1.03 million) and the amount that income has dropped “as a result of StadCo’s use of the Golf Course.” From March to July 2016 there were no NFL events and only seven non-NFL events. The 49ers dispute that these seven events would account for a $700,000+ drop in golf course net income.
Further, in a Nov. 2016 letter the 49ers told the City that their analysis of golf course revenues showed that in fact they had already overpaid for the golf course parking by over $1 million.
Finally, HMR lays out $424,349 in staff costs that the City didn’t bill for. Neither the contracts nor Measure J specify the activities to be reimbursed. Measure J only says that the stadium operator will reimburse the City for “reasonable costs” for public safety and traffic management.
HMR arrived at this estimate by using a sample of four 2014 events, five 2015 events and two 2016 events. HMR extrapolated this over 39 stadium events from 2014 through June 2016 to arrive at the $424,349 number.
“These activities were identified … based on interviews with staff,” says the report. “Many of the activities described were identified… based on our understanding of various activities that took place as the Stadium began operations.”
The activities that are in question here are largely non-event day activities. They also reflect decisions made early this year by the committee supervising the HMR audit to retroactively include activities such as attending planning meetings, report-writing, equipment maintenance, writing job offers and new hire orientation.
HMR’s findings also include several that paint the Stadium Authority as lackadaisical in its oversight of a $1.5 billion public asset.
“The stadium Authority did not establish effective contract administration procedures to ensure and report contract compliance to the Board and public in a number of key areas,” the report says, “including monitoring the Stadium manager company to ensure that they provided all information and planning documents to the Stadium Authority as required in the various agreements and that those documents were presented to the board.”
The report states that “numerous aspects of the agreements between the Stadium Authority and the 49ers entities … were not complied with during fiscal years 2014-15 and 2015-16, primarily in the areas of … delivery of required plan and budget documents… ”
The contracts don’t describe the formats of reports in detail, and until last January when Acting City Manager Rajeev Batra created a chart, the Stadium Authority had no summary list of what reports should be prepared and when they should be prepared. Measure J says nothing about reporting requirements.
The 49ers dispute that they have failed to comply with contractual reporting requirements, saying that the question is one of format, not content. Last December the 49ers sent a 10-page letter to the Stadium Authority, detailing Stadco’s compliance with reporting requirements.
HMR also recommended renegotiating some of the contract terms approved by the Stadium Authority in 2011, 2012 and 2013 because they “do not appear to be in the best interest of the Stadium Authority.” Most of the current Council Members, including Mayor Lisa Gillmor, were party to these negotiations and voted for the terms.
HMR claimed that they were unable to complete their Stadium Authority compliance audit because the 49ers refused to allow them to make copies of proprietary contracts with event promoters. They were allowed to review the contracts at the 49ers’ offices, but would not allow HMR to make notes or include them in reports without a non-disclosure agreement.