New Council Surfaces Old Questions About Destination Marketing Consultant

Next week Santa Clara City Council will take up Jones Lang LaSalle’s (JLL) third contract extension for advising the City about its Convention and Visitor’s Bureau (Destination Marketing Organization – DMO) operations.

Three years ago the Council fired the Chamber of Commerce as manager of the City’s now-defunct Convention and Visitor’s Bureau (CVB). The City then hired JLL to help set up a new DMO and install new convention center management.

The item was continued from Jan. 12, when a majority of Councilmembers objected to signing off this latest contract extension without further discussion.

This contract adds another $300,000 to the $550,000 already paid to the company headed by former San Jose

Convention Center Manager Dan Fenton, whose time there was marked by mismanagement and multimillion-dollar losses. Fenton’s consulting rate is $275/hour.

 

Unanswered Questions About Earlier Deliverables

One objection was unresolved questions raised by Councilmember Raj Chahal last year about Fenton’s performance on previous contracts. At that time, Gillmor’s four-vote majority rolled over Chahal’s concerns.

“There were defined contracts which were supposed to be finished after the timeline we gave them,” said Chahal. “They did not finish it and despite not finishing that …we renewed that contract and those were basically the same clauses. Eighty percent of the clauses in the first contract” were repeated in the second and third contracts, he said.

Some of the items that have appeared in multiple JLL contracts include:

• First year DMO goal setting appeared in the initial contract (titled Amendment 1) and Amendment 3.
• Developing key metrics appears in Amendment 3 and the 2021 extension.
• Staffing plan for the DMO appears in three previous contracts. It also appears in the latest contract.
• Finalizing the budget appears in the first three contracts, as does recruiting and hiring the DMO executive director.
• Developing reporting and performance measures for the “new organization” appears in the first three contracts. Developing “efficient and effective” reporting mechanisms also appears in the new contract extension.
• “Draft and approve” the DMO contract appears on the first three contracts.

The City Manager replied that the apparent duplication was because the project evolved beyond what was initially anticipated, and successive amendments were further refinements of ongoing objectives. “No one could have ever imagined at the time what we were going to find …[and] we have not resourced internally …[for]… oversights and making sure that management policies were in place,” Santana said.

Gillmor reiterated Santana’s point, adding that “everybody has their own history of what happened there, but we were actually here …The scope changed when we discovered the things we discovered were happening… Of course you had to change. You evolve when things change and that’s our responsibility as a City Council.

“It’s been clear that we don’t have the in-house services,” she continued, “so somebody has to provide these services and to not provide these services is a dereliction of duty. That’s extremely irresponsible because that is a future revenue source for us that we rely on in our general fund.”

It appears that most of these deliverables were ultimately provided, except for marketing plans, according to The Weekly’s research.

 

Staffing Policy Question 

Another objection was a fundamental policy question: whether the City should be giving this work to outside consultants instead of using in-house staff, re-hiring former CVB staff or building in-house capacity for managing these enterprises.

Fenton’s jobs include overseeing the newly formed DMO, developing reporting “mechanisms,” marketing and staffing plans, overseeing service agreements, reviewing convention center operations and being the liaison between the City and the DMO.

Some say these jobs should be done by City staff and the new DMO manager, Matt Stewart. However, Mayor Lisa Gillmor and City Manager Deanna Santana say the City doesn’t have in-house expertise for this oversight.

Councilmember Kevin Park responded that the City once had a CVB with expertise in all the things that Fenton was being contracted to do until the Council decided three years ago to fire the Chamber of Commerce.

“It was very disconcerting to me that the Visitors’ Bureau was under attack by City Council to the point that they [the Council] dissolved it,” Park said. “We decided to basically kill the convention and business bureau which left us without a marketing arm that could even maintain the business.

“If Matt needs staff,” he continued, “I think that there are several people who were put out of work when we dissolved the CVB …[with] …experience in marketing the city and venues and have a very deep and very good understanding of the city.

 

A Consultant’s Questionable Record 

Coloring the discussion of whether oversight should be done by a consultant or a city employee, is the person at the center of it: former Team San José CEO and San José Convention Center Manager Dan Fenton. Fenton resigned in 2010.

“I’d rather see the city take a step back and let Matt Stewart be responsible,” said Councilmember Anthony Becker, pointing to contemporaneous reports about Fenton’s performance in San Jose. “I question the consultant’s track record…Mr. Fenton’s past record of operating a convention center and other facilities is highly questionable.”

Fenton’s tenure as Executive Director of Team San José (TSJ) was the subject of multiple scathing grand jury reports and San José city audits. The Grand Jury described mismanagement, lax financial practices, backroom and sweetheart deals and self-dealing that cost San José taxpayers $20 million.

Under Fenton’s management, San José lost almost $1 million from concerts and a 5,000-person eBay dinner — which moved to the Santa Clara Convention Center, bringing $250,000 in revenue to Santa Clara.

The grand jury reports and San José audits highlighted Fenton’s lack of relevant experience. “[TSJ] does not have an on-site, experienced CEO, who is dedicated exclusively to the management of the Convention and Cultural Facilities,” San José’s auditor wrote in a 2006 report regarding Fenton.

Fenton, the report continued, did “not have previous experience in the management and operations of similar convention and cultural facilities.” Further reports noted that Fenton’s “dual and triple roles” were “fraught with problems” caused by “insufficient checks and balances.”

Fenton claims on his LinkedIn page that he “spent the better part of 20 years as the chief executive officer of Team San Jose, a management company based in San Jose, California.”

Team San José was formed in 2005. Fenton joined San José in 1996. According to a 2013 Metro story, Fenton was a Doubletree hotel manager prior to his engagement with San José.

“We can provide information [about Fenton’s work in San Jose] if it’s important to the Council,” said City Manager Deanna Santana at the Jan. 12 meeting. Fenton worked with Santana in San José, but was hired before Santana came to Santa Clara.

Santa Clara’s “award to JLL was done under a competitive RFP procurement process where four consultant services submitted [bids],” said Santana. “JLL, with its broad depth of [experience] within this industry was selected.”

“The scope of [this] contract is to provide guidance for the DMO, the TID [tourist improvement district] …and the City staff,” Santana continued. “Mr. Fenton does not have the authority to direct as part of the contract and that is not his role. He does bring best practices for what the CM [city manager] should consider as well as what the City staff should consider.”

Gillmor dismissed Becker’s concerns saying she knew he “read all those articles. That was in the local paperish [sic], I don’t know, a year or two years ago. JLL has done, a wonderful job for us.”

The Council agreed to bring the contract back with more information. It’s tentatively scheduled for the Council’s Feb. 9 meeting.