REPORT TO COUNCIL AND STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on a Response to the Santa Clara County Civil Grand Jury Report Entitled “Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers”
Report
COUNCIL/BOARD PILLARS
Enhance Community Engagement and Transparency
Ensure Compliance with Measure J and Manage Levi’s Stadium
BACKGROUND
On June 13, 2024, the Santa Clara County Civil Grand Jury published a report entitled “Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers” (Civil Grand Jury report). The Civil Grand Jury report includes various findings and recommendations. California Penal Code section 933(c) requires that a governing body of the particular public agency or department that has been the subject of a Civil Grand Jury final report to respond within 90 days on the specified findings and recommendations pertaining to matters under the control of the governing body.
On July 16, 2024, the Civil Grand Jury’s findings and recommendations were presented to the City Council/Stadium Authority Board and staff requested input on the desired process for providing the City/Stadium Authority’s response. No formal Council/Board action was taken; however, it was decided that staff would develop responses based on the Council/Board’s general discussion.
The Penal Code outlines the following legal requirements for responses:
Response Standard for Findings
Penal Code Section 933.05(a) requires the responding entity to report one of the following actions for each Civil Grand Jury finding:
1. The respondent agrees with the finding.
2. The respondent disagrees wholly or partially with the finding, in which case the response shall specify the portion of the finding that is disputed and shall include an explanation of the reasons therefor.
Response Standard for Recommendations
Penal Code Section 933.05(b) requires the responding entity to report one of the following actions for each Civil Grand Jury recommendation:
1. The recommendation has been implemented, with a summary regarding the implemented action.
2. The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe for implementation.
3. The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This timeframe cannot exceed six months from the date of publication of the grand jury report.
4. The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefor.
Consistent with the Council/Board’s July 16, 2024 discussion and Penal Code Sections 933.05(a) and 933.05(b), this report contains draft responses for the City Council and Stadium Authority Board’s consideration and approval.
The City and Stadium Authority’s responses on the Civil Grand Jury report findings and recommendations are due to the office of the Honorable Beth McGowan, Presiding Judge, Superior Court of California, County of Santa Clara by September 11, 2024.
DISCUSSION
The Civil Grand Jury report made various findings and recommendations; however, only specific findings and recommendations require City/Stadium Authority response. The report included a total of twenty (20) findings and thirteen (13) recommendations. Of these, the City and Stadium Authority have been directed to respond to all of the findings and 13 recommendations. It should be noted that 1) some findings/recommendations may require a City or Stadium Authority specific response, 2) the Civil Grand Jury identified Recommendations 7a and 7b for City/Stadium Authority response; however, neither of these Recommendations exist whereas Recommendation 7 does exist and appears to be relevant for Stadium Authority response, and 3) three of the 13 recommendations identified for City/Stadium Authority response provide no recommendation (# 4, 5, and 11).
A complete list of all findings and recommendations in the Civil Grand Jury’s “Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers” report can be found on pages 70-74 of the document, which is attached to this staff report (Attachment 1) and can also be found on the Civil Grand Jury’s website: <https://santaclara.courts.ca.gov/system/files/civil/outplayed-measure-j-city-santa-clara-and-san-francisco-49ers.pdf>
Proposed Responses to Civil Grand Jury Findings
For the Council/Board’s consideration, below are proposed responses to the Civil Grand Jury’s findings that the City/Stadium Authority was directed to respond to:
Finding 1
From the beginning, the City was impatient and overmatched in its negotiation posture with the 49ers to the long-term detriment of the City/Stadium Authority.
Draft Response
The City/Stadium Authority disagrees with this finding.
Both the Forty-Niners and the City/Stadium Authority engaged highly qualified professionals to assist with negotiations for the development and operations of the Stadium. One primary objective of the City/Stadium Authority in this was to minimize the contribution of public funds and to protect the City’s general fund from liability to the maximum extent possible. This objective was achieved, as noted in the Civil Grand Jury’s Finding 3. Also achieved was the inclusion of contract terms that entitle the City/Stadium Authority to share in various income streams from both NFL and Non-NFL events held at the Stadium. Clearly tradeoffs were made in these negotiations. At this point in time, however, debating who “won” these negotiations almost 15 years ago does not seem like a constructive exercise. The City prefers to continue to work with the 49ers to interpret and apply contract obligations fairly, and to operate the Stadium in a manner that is mutually beneficial, all in a manner that advances and protects the City and Stadium Authority’s legitimate public interests, and the interests of Santa Clara residents. The terms of the recent settlement agreement with the 49ers are an example of how this can be done effectively, with substantial additional monies now secured for the benefit of the City’s General Fund well beyond the terms of the original agreements.
It should also be noted that by comparison to a number of other Stadium deals, negotiated at or around the time of Santa Clara’s stadium deal and since, a substantially greater contribution of public funds was involved. For example, in April 2018 Clark County sold $645 million in bonds to go toward the $750 million total public contribution provided to finance Allegiant Stadium, a $2 billion total project cost, in Las Vegas, with the balance accounted for in room tax revenue before the bond sale. Because of a shortfall in room tax revenue, Clark County ended up needing to withdraw $11.55 million from a debt reserve fund to make its December 2020 scheduled $16.06 million bond payment.
In 2017, Little Caesar’s Area (Detroit) opened using $324 million in public funding for a $863 million total project cost.
In 2020, Globe Life Field (Arlington, Texas) opened using $500 million in public funding for a $1.2 billion total project cost.
There are at least a dozen other publicly funded deals with similar public subsidies.
Finding 2
The City has not studied the actual economic impact of the Stadium. The 49ers have produced their own studies, which they use to tout long-term unverified benefits and frame all discussions surrounding the success of the Stadium.
Draft Response
The City/Stadium Authority agrees that it has not conducted a comprehensive study of the full (direct and indirect) economic impact of the Stadium.
The City/Stadium Authority does have detailed information on “direct” revenues generated by Stadium operations to the City and the Stadium Authority. This information is presented to the Stadium Authority Board quarterly in the form of Stadium Authority Quarterly Financial Reports. These documents outline revenues and expenses from stadium events. Specific to revenues, the Quarterly Financial Reports outline the following revenues:
• Stadium Revenues
o Rent
o NFL and Non-NFL Ticket Surcharge
o Stadium Builder License (SBL) Proceeds
o Non-NFL Event Net Revenue
o Naming Rights
o STR sponsorship revenue
o Interest
• General Fund
o senior and youth fees
o base rent
o performance rent
o sales tax
All such reports have been provided to the Grand Jury and are available to the public on the Stadium Authority’s website.
To-date, the City/Stadium Authority has not invested public dollars to conduct an economic impact study that examines revenues and expenses outside of the comprehensive study of the actual economic impact of the Stadium. While there are other “indirect” economic impacts that benefit the City (e.g., hotel tax), this information has not historically been tracked and reported as “Stadium related” because it is difficult to ascribe to Stadium Authority operations based on the data the City and Stadium Authority receive.
Regarding the most recent economic impact study conducted and released by the Forty-Niners, the City/Stadium Authority has no comment as we were not consulted on any aspect of such study.
Finding 3
Measure J’s promise to protect the City’s General Fund has been realized. The funding structure from the Stadium Lease has successfully allowed the Stadium Authority to pay off Stadium construction loans and fund required Waterfall reserves faster than originally planned.
Draft Response
The City/Stadium Authority agrees with this finding.
Finding 4
The City/Stadium Authority agreed to use ManCo, an affiliate of the 49ers, with an inherent conflict of interest to handle the Stadium Authority’s financial interests in non-NFL events.
Draft Response
The City/Stadium Authority agrees with this finding that there are inherent conflicts of interest; however also notes that there are material advantages and efficiencies to having one entity manage the Stadium for both NFL and non-NFL events, and that this arrangement is not atypical for similar venues throughout the country. Of course, care must be taken to provide proper oversight and accountability where such an arrangement exists, and City/Stadium authority is committed to provide such oversight, with critical self-assessment and improvements where needed, going forward.
Finding 5
The City/Stadium Authority failed to ensure that the Management Agreement included a fair termination clause.
Draft Response
The City/Stadium Authority is unable to definitively agree or disagree with this finding due to a lack of any clear definition of what would constitute a “fair termination clause.” Further, as pointed out in the City’s response to Finding 1, above, debating the “fairness” of contract terms negotiated years ago does not seem like a useful exercise today.
Current professional staff and outside legal counsel were not involved in the negotiations of such provisions. However, as is typical for such negotiations, one would expect that the professional staff involved at the time negotiated the terms for the Management Agreement termination language with substantial interest and effort, with typical tradeoffs between the parties occurring based on competing interests and objectives, before agreement was reached on final language and terms.
Finding 6a
The City/Stadium Authority failed to ensure the Management Agreement provided the Stadium Authority with full access to financial records.
Draft Response
The City/Stadium Authority partially disagrees with this finding. The Management Agreement does contain substantial terms for access to Stadium financial records. The challenge has been with historic disagreements over the extent and implementation of such access. Using existing contract language, such access has substantially improved, particularly with the advent of the new financial Management System implemented in 2022.
Finding 6b
ManCo’s financial transparency with the Stadium Authority has improved with the
implementation in 2022 of a new financial management system.
Draft Response
The City/Stadium Authority agrees with this finding.
Finding 6c
Transaction-level testing generally supports ManCo’s reporting of financial results for non-NFL events.
Draft Response
The City/Stadium Authority agrees with this finding.
Finding 7a
The City/Stadium Authority failed to ensure that the original Management Agreement and the 2022 settlement agreement contained sufficient language requiring specific items or methods and performance metrics to prioritize Stadium Authority revenue generation. This has resulted in a failure to hold ManCo accountable for the success of non-NFL events.
Draft Response
The City/Stadium Authority partially disagrees with this finding.
The March 28, 2012 Management Agreement includes Standards of Care and Duties terms in regard to ManCo’s obligations to exercise prudent, commercially reasonable good faith efforts to maximize Stadium Authority’s revenues (sections 2.9 and 2.10). The Stadium Authority agrees that the Management Agreement does not otherwise include specific methods or performance metrics in regard to generating those Stadium Authority’s revenues. Further, the Stadium Authority made multiple efforts from and after 2017 to try to implement more specific methods and metrics in the Marketing Plans. The parties could not agree to the level of specificity, with ManCo ultimately relying on the operative Management Agreement terms in place. The 2022 Settlement Agreement further warrants and confirms ManCo’s duty of care obligations and the prioritization to maximize Stadium Authority’s revenues. By the time of the 2022 Settlement Agreement, the agreements for earlier money-losing events (like the College Football games) had ended or were ending, and ManCo prioritized booking more profitable events that Stadium Authority has held on and after 2023.
Finding 7b
The Stadium Authority failed to use the prescribed Marketing Correction Plan per Article 3.3.1 of the Management Agreement process to hold ManCo accountable for unsuccessful non-NFL event bookings.
Draft Response
The City/Stadium Authority disagrees with this finding.
On December 13, 2018, Stadium Authority served ManCo a Notice to provide a Management Correction Plan, pursuant to Article 3.3.1 of the Management Agreement. That Correction Plan Notice concerned ManCo’s communications and reports to Stadium Authority regarding non-NFL Event bookings, and ManCo’s procurement practices. ManCo’s non-substantive response to that Correction Plan Notice and ManCo’s booking of money losing non-NFL Events became one of the bases of Stadium Authority’s actions to terminate ManCo as the Stadium manager in 2019 and 2020, and claims in Stadium Authority’s February 2022 Amended Cross-Complaint for Breach of Contract. The parties settled those claims with their August 31, 2022 Settlement Agreement, which included Stadium Manager’s express warranties regarding booking non-NFL Events and maximizing Stadium revenues [See Settlement Agreement Section 8(c)].
In addition to the December 2018 Notice of Correction Plan, Stadium Authority has made multiple efforts to hold ManCo accountable for unsuccessful non-NFL event bookings throughout the years, as exemplified by public discussions of the 2018, 2019, and 2020 Marketing Plan, and Stadium Authority’s hiring an independent consultant to review the 2019 and 2020 Marketing Plans. These efforts will continue.
Finding 8a
There is no evidence showing that ManCo is negotiating to maximize Stadium Authority profits for non-NFL events.
Draft Response
The City/Stadium Authority disagrees with this finding.
The Management Agreement provides for a Stadium Marketing and Booking Fee that is performance based. This structure is purposely designed to incentivize ManCo to maximize Stadium Authority profits. As a Forty-Niner entity affiliate, ManCo is also inherently motived to ensure that the Stadium Authority is successful so that adequate funds will be available to contribute towards needed capital improvements to the venue shared with the Forty-Niners, and that Stadium Authority monies will be available, as necessary, to timely pay the Forty-Niners any entitlement they may have to reimbursement of public safety costs above the public safety cost threshold.
Also, it should be noted that Stadium Authority net revenues have increased substantially in recent years. Accordingly, City/Stadium Authority believes it is inaccurate to say that there is “no evidence” showing ManCo is negotiating to maximize Stadium Authority profits. That being said, City/Stadium Authority agree that ManCo’s obligation and commitment under the Management Agreement to maximize revenues and minimize costs in accordance with industry standards is at the core of their responsibilities and warrants ongoing and enhanced oversight by Stadium Authority staff and Board.
Finding 8b
The Stadium Authority has failed to ensure the Management Agreement requires ManCo to incentivize its staff to prioritize the Stadium Authority's success. There is no evidence that there are employee sales goals, metrics, or consequences related to unprofitable non-NFL events.
Draft Response
The City/Stadium Authority disagrees with this finding.
The City/Stadium Authority contract and relationship is with ManCo, not its employees. It would not be typical, or we believe appropriate, for such a contract to include or require terms for how ManCo incentivizes or compensates its employees.
The contract based (and other) financial incentives for ManCo to maximize profits for Non-NFL events is discussed in the City/Stadium Authority response to Finding 8.a, above.
Finding 9a
StadCo/ManCo interprets the Stadium Lease to require non-NFL ticket surcharges be applied to tickets associated with Rental and Trophy Luxury Suites, but failed to remit all corresponding surcharges to the Stadium Authority.
Draft Response
The City/Stadium Authority agrees that this is the correct interpretation of the application of the ticket surcharge; however, we disagree in part that StadCo/ManCo failed to remit all corresponding surcharges to the Stadium Authority.
The Stadium Authority staff was able to confirm that surcharges were applied to tickets associated with Rental and Trophy Luxury Suites. This conformation was possible for the last two fiscal years through the Financial Management System; however, we are not able to verify payment of such amounts for prior years before the Financial Management System was implemented.
The Stadium Authority makes no assessment of ManCo’s interpretation of the Stadium Lease.
Finding 9b
StadCo/ManCo interprets the Stadium Lease to not require non-NFL ticket surcharges to be applied to Seating Bowl complimentary tickets and Owners Club Luxury Suite tickets.
Draft Response
The City/Stadium Authority agrees that this is how StadCo/ManCo interprets the existing agreements with respect to the application of the non-NFL event ticket surcharge. This matter is currently under review with Stadium Authority legal counsel to confirm, in all respects, whether or not this is the correct interpretation.
Finding 9c
Suite ticket revenue submitted to the Stadium Authority does not account for suite ticket revenue for certain suite attendees.
Draft Response
The Stadium Authority partially disagrees with this finding.
As noted in Finding 9a, Stadium Authority staff was able to confirm that surcharges were applied to tickets associated with Rental and Trophy Luxury Suites. This conformation was possible for the last two fiscal years through the Financial Management System; however, we are not able to verify payment of such amounts for prior years before the Financial Management System was implemented.
Finding 10a
Most revenue from non-NFL events goes to the promoter, which is typical. StadCo can make money on luxury suites regardless of the event's profitability for the Stadium Authority.
Draft Response
The City/Stadium Authority generally agrees with this finding in that event promoters and performers generally receive most non-NFL event revenues, and that StadCo revenues from luxury suites are not contingent on the profitability of the event to the Stadium Authority.
Finding 10b
The Stadium Authority is unaware of the market revenue potential for non-NFL events at the Stadium. The Stadium Authority does not know what net revenues should be expected for non-NFL, ticketed and non-ticketed, events.
Draft Response
The City/Stadium Authority partially disagrees with this finding. The Stadium Authority released a Request for Proposals and has awarded a contract to an independent consultant to study the market potential trends and financial performance for stadium events and concerts at publicly owned venues.
The City/Stadium Authority will attempt to obtain market-based revenue information. It is important to note that information for public facilities will be easier to attain, and while we solicit information from privately-owned stadiums, it will be up to the discretion of those facilities to release such information.
Further, it is important to note that the City/Stadium authority now has 10 years of experience with operations at the Stadium and has accumulated substantial knowledge over this time period on the large stadium market generally, and the market revenue potential for Levi’s Stadium. That being said, this is an important issue, and City/Stadium Authority is committed to developing a deeper understanding of such matters, augmented by the input of industry professionals.
Finding 11
Per the Stadium Lease, the Stadium Authority failed to negotiate pertinent details about buffet costs in the contract, such as parameters on cost thresholds and alcohol. The Stadium Authority accepted responsibility for buffet costs but failed to follow up when the expense was omitted from ManCo’s budgets.
Draft Response
The City/Stadium Authority partially disagrees with this finding. Although the buffet costs language in the Stadium Lease is not extensive the understanding of the City/Stadium Authority staff at the time of negotiations for the original Stadium agreements was that buffet costs would be covered by Facility Rent paid by StadCo to the Stadium Authority. In hindsight, particularly since current City/Stadium Authority staff was not involved, it would not be fair, or useful, to now characterize this as a failure in City/Stadium Authority negotiations or “follow-up.” It should be noted that any contract term ambiguity on buffet costs was addressed under the terms of the May 2024 Settlement Agreement with revisions to the Stadium leases that now impose clear limits on buffet cost reimbursements and add provisions for Stadium Authority audits of such costs.
Finding 12
A Multi-Use Community Facility at the Stadium was one of Measure J’s original promises and was memorialized in the Stadium Lease. The current designated space for the Community Room at the Stadium is not easily accessible nor is it pragmatic for most civic events.
Draft Response
The City/Stadium Authority agrees with this finding.
Finding 13
The FIFA World Cup commitments for the City and the Stadium Authority were made without consultation with the City/Stadium Authority.
Draft Response
The City/Stadium Authority agrees with this finding. Current staff were not involved at the time; however, the Stadium Authority does not have a record of substantive communications between staff and StadCo/ManCo regarding terms for the FIFA World Cup event.
Proposed Responses to Civil Grand Jury Recommendations
For the Council/Board’s consideration, below are proposed responses to the Civil Grand Jury’s recommendations that the City/Stadium Authority was directed to respond to:
Recommendation 1
Given the long-term nature of the various agreements, the 49ers' sophistication, and the history of past disputes, the City/Stadium Authority should engage advisors with specialized knowledge to determine options to level the playing field.
Draft Response
The recommendation has been implemented.
The Stadium Authority has and will continue to hire consultants with specialized expertise including the following areas: legal, marketing, audit and financials, systems implementation, and security.
Recommendation 2
The City should commission its own report to determine the Stadium's actual economic impact over the last decade. This recommendation should be implemented by July 1, 2025.
Draft Response
The recommendation will not be implemented because it is not warranted or reasonable.
The recommendation will not be implemented because it would be extremely difficult to effectively implement and would not be particularly useful going forward. There are clearly “indirect” economic impacts from Stadium operations that benefit the City of Santa Clara and the greater region, (likely increases in City transit occupancy taxes and sales taxes being the most obvious). However, looking at such information in hindsight and determining the amount of such revenues that should be ascribed to Stadium Authority operations would be extremely difficult. (See also, City/Stadium Authority response to Finding 2, above.) Instead, City/Stadium Authority recommends that such a study be conducted after the major events scheduled to occur at the Stadium in 2026 (Super Bowl LX and FIFA World Cup). This will give City/Stadium Authority, the opportunity to develop an appropriate methodology for measuring economic impact, and to develop and implement revenue tracking mechanisms, as needed and practically available, to facilitate an accurate measurement of “indirect” Stadium operations related revenues. This should be done in consultation with qualified experts and the Forty-Niners entities.
Recommendation 3
The May 2024 settlement agreement gives the Board/City Council new flexibility to divert Excess Revenue from the Stadium Authority to the City’s General Fund. When diverting Excess Revenue, the Board/City Council should be mindful of the long-term financial health of the Stadium Authority and request the Treasurer to produce a long-term plan for funding all required Stadium reserves, including reserves for capital improvements. This recommendation should be implemented by October 31, 2024.
Draft Response
The City Council/Stadium Authority Board agrees with this recommendation, and it will be implemented.
The Treasurer plans will provide a report to the Stadium Authority Board showing a current projection of the long-term plan. In addition, a Facilities Condition Assessment is currently underway which will help to inform the Board and staff of the appropriate level of capital improvement reserves necessary to maintain the Stadium. A recommendation will be brought forward upon completion of the Facilities Condition Assessment and for presentation to the Board during the next Budget Study Session in early 2025.
Recommendation 4
None
No Recommendation Included for Response
Recommendation 5
None
No Recommendation Included for Response
Recommendation 7 (Per the note above, Recommendations 7a and 7b are identified for Stadium Authority response; however, neither of these Recommendations exist whereas Recommendation 7 does exist and appears to be relevant for Stadium Authority response)
The Stadium Authority should retain the expertise needed to meaningfully weigh in on ManCo’s Marketing Plan to ensure that the Stadium Authority’s profitability is maximized. The Stadium Authority should also establish a yearly audit procedure to measure and analyze each season's Marketing Plan against its outcomes, updating future plans based on this analysis. This recommendation should be implemented by December 31, 2024.
Draft Response
The recommendation has been partially implemented. The Stadium Authority retained the services of an outside expert to review ManCo’s Marketing Plan in 2021 and will do so in the future.
As noted in our response to Finding 10b, above, the Stadium Authority released a Request for Proposals and has awarded a contract to an independent consultant to study the market potential trends and financial performance for stadium events and concerts at publicly-owned venues.
The Stadium Authority will attempt to obtain market-based revenue information. It is important to note that information for public facilities will be easier to attain; while we solicit information from privately-owned stadiums, it will be up to the discretion of those facilities to release such information.
The Stadium Authority also plans to hire consultants in the future to assist with review an input for each year’s Marketing Plan. Stadium Authority staff will also review the annual Marketing Plan against performance and industry baselines.
Recommendation 8
As part of the Marketing Plan, Stadium Authority should require that ManCo produce a
marketing plan that maximizes profits for the Stadium Authority and incentivizes ManCo
marketing staff to prioritize the profitability of the Stadium Authority. This recommendation should be implemented by December 31, 2024.
Draft Response
The recommendation has been partially implemented, and additional efforts will be taken to provide oversight of ManCo’s marketing plan. Please see our aforementioned responses to Findings 8b and 10b, as well as Recommendation 7.
It is also important to note that the sole objective of the marketing plan is not to maximize profits. There are other considerations, such as the impact on the City’s reputation and booking of events that pose significant public safety and community impact challenges.
Notwithstanding, the Stadium Authority believes that maximizing profits is an important issue and this will continue to be an ongoing matter that we address through oversight of ManCo’s activities.
Recommendation 9
The Stadium Authority should review and ensure that it receives all a) non-NFL event ticket surcharges for all event attendees, and b) ticket revenue for all suite attendees owed to the Stadium Authority. This recommendation should be implemented by October 31, 2024.
Draft Response
The recommendation has been implemented to the extent possible and the Stadium Authority’s ability to provide oversight and confirm receipt of appropriate revenue has greatly improved in the last two years since the implementation of a Financial Management System.
Stadium Authority staff has access to ManCo’s Financial Management System (FMS) and currently reviews non-NFL event ticket surcharge and ticket revenue for suite tickets sold to ensure that SCSA is receiving these revenues that are owed. Stadium Authority staff will continue to review this annually as part of the year end close and review of quarterly revenue information.
Recommendation 10
The Stadium Authority should hire a professional third-party consultant, not affiliated with the 49ers, to analyze the reasonable expectations for non-NFL events such as:
• An analysis of the market revenue potential for non-NFL events at the Stadium.
• An analysis of ManCo's Marketing Plans, comparing successful (FY 2022-23) and unsuccessful (FY 2017-18) bookings to potential market revenue.
• A plan with measurable objectives and incentives for ManCo to achieve these results.
This recommendation should be implemented by December 31, 2024.
Draft Response
A portion of this recommendation has been implemented and will continue to be a part of ongoing Stadium Authority operations and oversight; one portion of this recommendation is not warranted or reasonable, as explained below.
As noted above, the Stadium Authority has and will continue to take efforts to enhance oversight of ManCo’s marketing plan. Please see our aforementioned responses to Findings 8b and 10b, as well as Recommendations 7 and 8.
In regard to attempting to conduct a comparative analysis of ManCo's Marketing Plans with regard to the successful FY 2022-23 and unsuccessful (FY 2017-18) bookings and revenue, we believe that such an effort will detract from needed ongoing oversight and Stadium Authority operations. Significant resources and time have already been spent by staff, legal counsel, and the Civil Grand Jury attempting to discern the rationales for prior year’s performance with limited to no success. Given that revenues are at an all-time high and major enhancements have been made in the areas of data accessibility and oversight, we believe that future time is best spent on efforts are ongoing oversight and Stadium Authority operational issues.
Recommendation 11
None
No Recommendation Included for Response
Recommendation 12
The Stadium is not an appropriate location for a Community Facility. The Stadium Authority should work with the 49ers to identify and procure an alternative space for community needs. This recommendation should be implemented by June 30, 2025.
Draft Response
The recommendation has not yet been implemented.
Stadium Authority staff will aim to discuss with StadCo/ManCo and identify alternatives by June 30, 2025. However, it is important to note that if the agreed-upon alternative includes relocation and/or facility modifications, it is unlikely that such changes can be made (implemented) by June 30, 2025.
Recommendation 13
The Stadium Authority should insist on consultation and prior notice before any major Stadium event commitments are made. This recommendation should be implemented by December 31, 2024.
Draft Response
This is a matter of ongoing discussions between Stadium Authority and ManCo., with improved communications and opportunities for input already implemented. Within the next two Non-NFL Event booking cycles Stadium Authority staff’s intent is to formalizes this process, including Stadium Authority opportunities to approve certain major events in advance.
FISCAL IMPACT
There is no fiscal impact related to sending the response other than administrative staff time and expense. However, implementation of certain contemplated recommendations may result in increased expense for the City or Stadium Authority, which will be addressed by budget action, if necessary.
COORDINATION
This report was coordinated between the City Attorney/Stadium Authority Counsel and City Manager/Executive Director’s Offices.
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. Discuss and approve a final response to the Civil Grand Jury Report entitled “Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers” and direct the City Attorney/Authority Counsel to prepare the formal response consistent with City Council/Stadium Authority direction.
2. Authorize the Stadium Authority Chair to submit the City/Stadium Authority’s response to the Civil Grand Jury Report in the form approved, subject only to finalization of response language, as directed, and any technical, conforming, non-substantive modifications approved by the City Attorney/Authority Counsel, to the Honorable Beth McGowan, Presiding Judge, Superior Court of California, County of Santa Clara, no later than September 11, 2024.
Staff
Reviewed and approved by: Jovan D. Grogan, City Manager/Executive Director and Glen R. Googins, City Attorney/Stadium Authority Counsel
ATTACHMENTS
1. Civil Grand Jury Report: “Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers”