REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Santa Clara Stadium Authority Financial Status Report for Quarter Ending June 30, 2018 and Related Budget Amendments
Report
BACKGROUND
In Fiscal Year 2014/15 the Stadium Authority Board (“Board”) requested that staff prepare quarterly Santa Clara Stadium Authority (“Stadium Authority”) Financial Status Reports. These reports provide an update on the events held at Levi’s Stadium, Stadium Authority finances, and the impact of Stadium Authority activity on the City of Santa Clara’s (“City”).
This report provides information covering the Stadium Authority’s first quarter of the 2018/19 fiscal year, which runs from April 1, 2018 to June 30, 2018. The report provides a summary of non-NFL event activity at Levi’s Stadium only, since the NFL season starts during the second quarter, and describes the financial impact of these events on the Stadium Authority and City.
The Adopted Stadium Authority Budget incorporates the estimated revenues and expenses for all Stadium Authority funds. The attached Financial Status Report provides the budget to actual revenue and expense summaries for the operating, debt service, and capital funds. Analysis of the financial activity through the fiscal year measures the adherence to the budget and allows the Stadium Authority to monitor and project revenues and expenses. Any significant variances are explained in the report.
Additionally, staff is recommending amendments to the Fiscal Year 2018/19 Stadium Authority Budget to account for the results of the rent reset arbitration and a Capital Improvement Project (CIP) carryforward.
DISCUSSION
Non-NFL Event Revenue and Expenses
The Stadium Authority held 3 ticketed non-NFL event and 24 special events which are detailed in the report. The non-NFL event ticket sales generated $461,000 in ticket surcharge revenue, half of which funded the discretionary fund. Public safety costs for these events totaled $690,000 all of which have been fully reimbursed to the City.
Stadium Builder Licenses (“SBLs”)
SBLs account for 20% of the Stadium Authority’s annual revenue in 2018/19. SBL proceeds for the first quarter amounted to $7.4 million, 28% of what was budgeted. There are a total of 60,121 currently active SBLs which is 91.3% of the 65,877 total sellable SBL seats. The value of these SBLs amounts to $530.5 million of which $424.3 million has already been collected.
Stadium Authority Budgets
The detailed analysis of Stadium Authority budget to actual financials is provided in the attached Financial Status Report. In summary, total operating revenues were $14.3 million representing 11% of the overall budget for revenues and total operating expenses were $11.8 million or 9% of the budget. The debt service fund was able to pay down $17.7 million in debt, bringing total Stadium Authority debt down to $365 million. Lastly, capital expenses amounted to $347,000 or 4% of the $7.9 million budget.
2018/19 Stadium Authority Budget Amendments
As mentioned previously, staff is recommending amendments to the Fiscal Year 2018/19 Stadium Authority Budget. Amendments to the operating and debt service budgets are related to the additional rent revenue received as part of the stadium facility rent reset arbitration award. The total additional rent (retroactive and current year) that will be received in 2018/19 is $1.31 million ($1.09 million of this award was received on September 17, 2018 and will be reflected in the SCSA’s second quarter report). Since this added revenue is in excess of expenses, it is considered excess revenue. Article 14 of the Amended and Restated Stadium Lease Agreement prescribes that after meeting the Operating Reserve and CapEx Reserve requirements (which were included in the 2018/19 budget); excess revenue is then used to prepay the StadCo Subordinated Loan.
In addition to the operating and debt service budget amendments, staff is requesting an amendment to the CIP Budget. There are three 2017/18 CapEx projects that were projected to be completed by the end of the fiscal year, so they were not included in the 2018/19 CIP budget carryforward. These projects are the (1) Temporary Power Installation for Special Events, (2) Fire Sprinkler System, (3) Install LED Lighting at 700 North Concourse. In order to carryforward the balance of these three projects, an increase to the CIP budget of $154,492 is being requested.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
As discussed, staff recommends several budget amendments as detailed in the table below. Currently there is $28.3 million allocated for the StadCo Subordinated Loan. An additional $1.3 million is recommended to be allocated from additional rent that will be received from the Forty Niners SC Stadium Company, LLC (StadCo). Additionally, $154,492 is recommended to be allocated to construction costs from unallocated CIP fund balance in order to carry forward three CIP projects from the 2017/18 fiscal year.
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Current |
Increase/ (Decrease) |
Revised |
|
Operating Fund |
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|
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Revenues |
|
|
|
|
Rent |
$24,500,000 |
$1,310,000 |
$25,810,000 |
|
|
|
|
|
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Expenses |
|
|
|
|
Transfers Out |
$52,691,000 |
$1,310,000 |
$54,001,000 |
|
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|
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Debt Service Fund |
|
|
|
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Revenues |
|
|
|
|
Transfers In |
$49,314,000 |
$1,310,000 |
$50,624,000 |
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|
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Expenses |
|
|
|
|
StadCo Subordinated Loan |
$28,323,000 |
$1,310,000 |
$29,633,000 |
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CIP Fund |
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Expenses |
|
|
|
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Construction |
$4,720,923 |
$154,492 |
$4,875,415 |
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Reserves |
|
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|
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Ending Fund Balance - Unallocated |
$7,855,094 |
$154,492 |
$7,700,602 |
COORDINATION
This report was coordinated with the Stadium Manager per section 4.6 of the Management Agreement as well as the Stadium Authority Counsel’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Note and file the Santa Clara Stadium Authority Financial Status Report for the Quarter Ending June 30, 2018.
2. Approve Budget Amendments to the 2018/19 Santa Clara Stadium Authority Budget.
Staff
Reviewed by: Angela Kraetsch, Treasurer
Approved by: Deanna J. Santana, Executive Director
ATTACHMENTS
1. SCSA Financial Status Report for the Quarter Ending June 30, 2018