REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Santa Clara Stadium Authority Financial Status Report for Quarter Ending December 31, 2021 and Related Budget Amendment
Report
BOARD PILLARS
Ensure Compliance with Measure J and Manage Levi’s® Stadium
Enhance Community Engagement and Transparency
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 third (October 1, 2021 - December 31, 2021) quarter of the 2021/22 fiscal year.
The Adopted Stadium Authority Budget incorporates the estimated revenues and expenses for all Stadium Authority funds. The attached Financial Status Reports provide 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 reports.
Certain operating expense payments were withheld based on Board direction for the partial suspension of payments at the March 27, 2019 Stadium Authority Board meeting, based on the concern that public funds would be used to pay for expenses that were not legally procured, or compliant with prevailing wage law or self-dealing/ conflict of interest laws. At that meeting, the Board directed the Executive Director to only release public funds to ManagementCo when supporting documents have been submitted to show the expenses adhere to our agreements and State and local laws.
At the March 23, 2021 Stadium Authority Board meeting, the Executive Director was delegated authority to approve budget amendments of $4.2 million to move funds from the Legal Contingency line item to Shared Expenses after the review of adequate documentations for costs based on Board direction. Subsequent to that direction, Stadium Authority staff met at Levi’s® Stadium on March 30, 2021 to review documentation for shared expenses. After follow-up meetings with the Stadium Manager, payments related to compensation that were reviewed and approved for monthly payment, totaling $4.2 million for the fiscal year.
In addition, based on conversation at Stadium Manager-Stadium Authority Quarterly meeting, it was stated that the utility costs invoiced were based on the budget, which did not factor utility costs to operate the vaccination site into consideration. Because the vaccination site is treated as an NFL sponsored event, these costs are not borne by the Stadium Authority based on the terms of the Stadium Lease Agreement. As the vaccination site was expected to operate for four to six months, the Stadium Authority requested that the portion estimated to be associated with the vaccination operations be credited back based on historical usage and per the lease requirements regarding expenses for NFL sponsored events. No additional information was provided by the Stadium Manager and the Stadium Authority continues to pay half of the invoiced amount until documentation showing a credit for the vaccination site utility usage is produced.
DISCUSSION
The attached financial status reports provide information covering the Stadium Authority’s third (October 1, 2021 - December 31, 2021) quarter of the 2021/22 fiscal year. The reports summarize National Football League (“NFL”) and Non-NFL event activity at Levi’s® Stadium and describes the financial impact of these events on the Stadium Authority and City since FY 2014/15. The report also 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.
NFL Event Revenue and Expenses
There were nine NFL games held in the third quarter of the 2021/22 fiscal year. Levi’s® Stadium hosted two pre-season NFL games of the 2021 season on August 14, 2021 and August 29,2021 and seven regular NFL season of the 2021 season started on September 26, 2021.
Non-NFL Event Revenue and Expenses
There were no ticketed Non-NFL events held in the third quarter of the 2021/22 Fiscal Year. Only smaller and non-ticketed events were held in FY 2021/22. Ticketed Non-NFL events are expected to resume in FY2022/23.
Stadium Builder Licenses (“SBLs”)
SBLs account for 36% of the Stadium Authority’s annual budgeted revenue in FY 2021/22. There is a total of 61,548 currently active SBLs which is 93% of the 66,066 total sellable SBL seats. The value of the active SBLs amount to $537.1 million of which $484.7 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 Reports. In summary, total operating revenues were $47.4 million representing 73% of the overall budget for revenues and total operating expenses were $37.1 million or 57% of the budget. The debt service fund was able to pay down $14.0 million in debt, bringing total Stadium Authority debt down to $282.8 million. Capital expenses were $0.8 million representing 5% of the overall CIP budget.
FY 2021/22 Stadium Authority Budget Amendments
From time to time, budget amendments may be necessary to align revenues or expenditures to actual or unexpected activity during the course of a fiscal year. As of the timing of the publication of this report, additional information from activity known through the completion of the majority of FY 2021/22 has resulted in recommended budget amendments as follows:
1. Rope Rescue Gear Project - The Fire Department requested high angle and vertical rescue equipment to address the intricate and complex areas of the Stadium which includes an artificial high point, full rope response kit, winch, rigging, fall protection, and patient extraction device. This project was expected to complete during FY 2020/21 but experienced delays due to ongoing impact of COVID-19 on global supply chains. This project was completed in January 2022, and a budget amendment of $27,054 is required to add this project to the FY 2021/22 CapEx Budget.
2. Stadium Personal Protective Equipment - The Police Department requested active shooter gear for the Stadium team to address the emerging threat of active shooters which includes vests, helmets, protective plates, EMS equipment, and other appropriate personal protective equipment. This project was expected to complete during FY 2020/21 but experienced delays due to ongoing impact of COVID-19 on global supply chains. This project was completed in February 2022, and a budget amendment of $14,886 is required to add this project to the FY 2021/22 CapEx Budget.
3. Public Safety Command Post Dispatch System - The Police Department requested a system that will interface between the system that is used at the Stadium and the City’s Hexagon CAD system which allows the tracking of all incidents/requests that occur during an event. In October 2019, the Stadium Authority requested information to confirm compliance with the contracts and applicable laws before issuing payment. ManagementCo provided supplemental information in March 2022, and a budget amendment of $85,000 is required to add this project to the FY 2021/22 CapEx Budget.
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 above, the Rope Rescue Gear Project, the Stadium Personal Protective Equipment Project, and the Public Safety Command Post Dispatch System Project are not part of the Stadium Authority FY 2021/22 CapEx Budget, and the Board will need to approve a budget amendment of $126,940. These funds will be offset by a decrease in the Stadium Authority Capital Expense Reserve.
The table below summarizes the budget amendment as discussed above:
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 December 31, 2021;
2. Approve a budget amendment to include the Rope Rescue Gear Project in the Stadium Authority FY 2021/22 CapEx Budget in the amount of $27,054 from Stadium Authority Capital Expense Reserve;
3. Approve a budget amendment to include the Stadium Personal Protective Equipment Project in the Stadium Authority FY 2021/22 CapEx Budget in the amount of $14,886 from Stadium Authority Capital Expense Reserve; and
4. Approve a budget amendment to include the Public Safety Command Post Dispatch System Project in the Stadium Authority FY 2021/22 CapEx Budget in the amount of $85,000 from Stadium Authority Capital Expense Reserve.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Office of the Executive Director
ATTACHMENTS
1. SCSA Financial Status Report for the Quarter Ending December 31, 2021
2. FY 2021/22 Stadium Authority Budget Amendment - Rope Rescue Gear Support
3. FY 2021/22 Stadium Authority Budget Amendment - Stadium Personal Protective Equipment Support
4. FY 2021/22 Stadium Authority Budget Amendment - Public Safety Command Post Dispatch Support