REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on Amendment No. 2 to the Agreement with KPMG LLP for Auditing and Consulting Services for the Santa Clara Stadium Authority
Report
BACKGROUND
The Credit Agreement, entered into between the Santa Clara Stadium Authority (Stadium Authority), Stadium Funding Trust (FinanceCo), and Goldman Sachs Bank USA on March 28, 2012, requires that the Stadium Authority file audited annual financial statements within 180 days after the end of each fiscal year. It further requires that the financial statements be audited by a nationally recognized independent certified public accounting (CPA) firm selected by the Stadium Authority.
Section 8.3.3 of the Amended and Restated Stadium Lease Agreement (Stadium Lease) between the Stadium Authority and Forty Niners SC Stadium Company LLC (StadCo or Tenant) dated June 19, 2013, requires the Stadium Authority to furnish (or cause the Forty Niners Stadium Management Company LLC to furnish) to the Tenant a Statement of Operations within 90 days following each lease year. The Statement of Operations shall be prepared by a qualified, third party independent certified public accountant selected by Landlord and approved by Tenant, of the following: Stadium Authority Revenue, Tenant's Proportionate Share, Shared Stadium Expenses, the amount of Tenant's payments for Estimated Shared Stadium Expenses, Stadium Authority Expenses, Capital Expenditures, Net Income from Non-NFL Events, and distributions to and from the Operating Expense Reserve, Stadium Capital Expenditure Reserve and Renovation/Demolition Reserve. This reporting requirement was also noted in the Harvey Rose Measure J Audit under audit finding item 1.I.
In addition, Section 8.6.3 of the Stadium Lease allows for the Stadium Authority to conduct an audit of the Stadium Records within 180 days following the Stadium Authority's receipt of any Annual Statement of Stadium from the Tenant. The Stadium Authority desires to have an independent CPA review of the Shared Stadium Expenses between the Stadium Authority and StadCo.
DISCUSSION
On June 25, 2021, the Stadium Authority entered into an agreement with KPMG LLP (KPMG) to provide audit services for fiscal years 2020/21 to 2024/25. On June 26, 2024, the Stadium Authority entered into Amendment No. 1 to the Agreement with KPMG to increase the compensation by $100,000 for other finance-related ad hoc projects requiring KPMG’s expertise and services. The current agreement as amended with KPMG has a term of five years through March 31, 2026 and includes annual financial audit and agreed upon procedure services on the Shared Stadium Expenses. The agreement’s maximum compensation of $854,554 covers these services.
Due to scheduling conflicts at KPMG, they will not be able to complete the agreed upon procedure services on the Shared Stadium Expenses for fiscal year 2024/25 by March 31, 2026. Therefore, staff is seeking authorization to execute Amendment No. 2 to the Agreement to extend the term until June 30, 2026 (approximately three months), at no additional cost.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a "project" within the meaning of a California Environmental Quality Act ("CEQA") pursuant to the CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
FISCAL IMPACT
The proposed Amendment No. 2 to the Agreement with KPMG will not increase the not-to-exceed compensation of $854,554. The cost of the fiscal year 2024/25 audit and services are budgeted in the fiscal year 2025/26 Stadium Authority Operating Budget. There are also appropriations in fiscal year 2026/27 for audit services for any work that will extend beyond March 31, 2026.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel and Executive Director.
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 or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Approve and authorize the Executive Director or designee to execute Amendment No. 2 to the Agreement with KPMG LLP for audit and consulting services to extend the term of the agreement to June 30, 2026 in a final form approved by the Stadium Authority Counsel.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. Original Agreement for Services with KPMG LLP
2. Amendment No. 1 to the Agreement for Services with KPMG LLP
3. Amendment No. 2 to the Agreement for Services with KPMG LLP