2016 Financials Show Stadium Healthy Course…
At the July 19 Santa Clara City Council meeting, the Santa Clara Stadium Authority’s (SA) FY 2016 year-end financial report was reviewed. And the news is good: the stadium is easily covering its expenses, continuing to pay off debt significantly ahead of schedule, and netting a clear $3.8 million for the Santa Clara’s bottom line. That’s in addition to flawlessly executing the City’s first-ever Super Bowl in its first-ever major league sports venue.
Here are some notable details:
The SA began FY 2016 with a $49 million stadium operating fund beginning balance – $3 million more than budgeted. The year also started with a $19 million debt service beginning balance – $11 million more than budgeted.
In 2016, the SA was able to pay down almost $3 million more in debt than budgeted ($93 million) and leaves a $36 million beginning balance for the coming year – instead of the $8.1 million originally budgeted a year ago. The SA debt is under $500 million after only two years of stadium operation thanks to the early payment of seat licenses in 2015 and the reduction in total debt it enabled.
Direct revenue to the City’s general fund from the stadium management – public safety and administrative cost reimbursement, parking fees, performance rent, senior and youth fees – was $9.9 million in 2016. Expenditures were $6.1 million, netting the general fund $3.8 million.
…But Some Keep Searching for Symptoms of Illness
The good news that Santa Clara is benefitting both directly and indirectly from Levi’s Stadium gets drowned out by repeated insinuations by anti-stadium and anti-49er groups, candidates for public office, and the “female Council majority” – the Mercury News’ term – that stadium financials are misrepresentative, or that city staff is incompetent, have drowned out the facts.
These criticisms require repeated explanations to the Council of the terms of the contracts it approved in 2012, as well as the structure of the SA as a legal entity separate from the City of Santa Clara.
The SA operates Levi’s Stadium, collects stadium revenues and pays the stadium’s bills, with the exception of payments that are made directly by the 49ers stadium management company (StadCo) to the City.
Santa Clara receives specific revenue streams. The City can’t reach over and help itself to SA revenues, just as the SA isn’t subsidized by Santa Clara’s general fund. Surplus SA revenues do not flow to the City – they stay in SA accounts to pay SA debts.
The July 19 meeting continued the litany of criticism – and often, downright nastiness – that has been leveled at City staff for well over a year.
Parks & Recreation Commissioner, Charter Review Committee Member Tino Silva and Santa Clara Youth Soccer League past president blasted the report. “I don’t know this can be clear,” he said. “This is so far from clear. It’s worse than trying to figure out our tax code … It’s an absolute fiasco.” Silva’s critique was addressed to the parking fees, which are spelled out in the March 15, 2012 Parking Rights Agreement.*
Mayor Lisa Gillmor criticized the additional $2.7 million loan payment. Why hadn’t the Council been able to decide how that money was allocated? Acting City Manager Rajeev Batra told her that in the future the Council could review how surpluses are applied to outstanding debt.
“There are a variety of documents that govern the use of Stadium Authority funds,” interjected Council Member Patrick Kolstad.
“The amended and restated loan agreement controls the use of Stadium Authority accounts, these agreements have already been made. I don’t see much discretion for the Council in the repayment of those loans. It’s not something we can decide from week to week. It’s here in black and white in the agreement and I think it has to be adhered to.”
“What you’re saying, Council Member Kolstad, is the opposite of what the City Manager just said,” said Gillmor.
Well, no. The Council can’t just decide to take SA surpluses and use them in any way they want, but they can review and change, to some degree, how surpluses are applied, explained the City Manager.
“Even if it means paying more [in repayment penalties], if that’s the direction you want to give staff, we can do that,” said Batra. “In this case we’re just following the agreement.” In other less diplomatic words, the Council can decide to choose less optimal actions that cost the city more money. What they can’t do is funnel money away from operating and maintaining Levi’s Stadium into general fund expenses.
“Public safety costs were 37 percent over their threshold,” said Charter Review Committee member Hossam Haggag. “In corporate America if you’re 37 percent over your budget, pink slips are going to be handed out. What this means is that our threshold is artificially low. What this means is that our Stadium discretionary fund, that would go to our general fund,” is being used to fund the difference.
This, he claimed, is coming out of the general fund. In fact, the discretionary fund comes from the half of the non-NFL ticket surcharge that is retained by the SA – not the City’s share.
“I don’t mean to nitpick, but I will nitpick,” he continued. “My youngest daughter just turned four today and she has a better handwriting than whoever signed this report on behalf of the Director of Finance. You’d think that something as important as this, that Director Ameling would have felt the impetus to sign this himself. This chicken scratch of a signature won’t cut it when someone wants to know who signed off on this.”
Another perennial critic claimed, erroneously, that the City gets nothing for parking, and found the financial statement insufficient because it didn’t show collection costs for overdue SBLs.
For over a year, some Council Members have voted against accepting stadium financial reports as a protest against the. This time around the vote to accept the report was 4-2, with Gillmor and Davis dissenting. “I just don’t have faith in those numbers,” said Gillmor. Davis also voted against the additional $2.7 million debt payment, even though it’s already been paid.
But chalking up rhetorical points doesn’t change the indisputably good news in the SA’s 2016 financial report; which can be found at santaclaraca.gov/government/departments/finance.
In other action:
- Gillmor, Kolstad and O’Neill were appointed to the ad-hoc audit oversight committee. The oft-referenced audit isn’t about financial probity – although that’s often implied – but about compliance with the terms of Measure J, the stadium approval measure that voters passed with a solid majority in 2010.
- The Santa Clara golf course is no longer needed for stadium parking, because fewer people are driving and more people are using public transportation
- All of the 49ers’ public safety reimbursements for FY 2016 have been paid, and the first payment of the Facilities rent – currently in dispute – has been paid in advance.
* The parking agreement is in the agenda attachments for the March 15, 2012 meeting of the Santa Clara Stadium Authority, item 3.A.1.