00:01:53 >> Good evening, everyone. I'm going to
00:01:55 call the Santa Clara stadium authority
00:02:00 meeting to order. Could you please stand
00:02:01 for the pledge of allegiance and remain
00:02:05 standing for our statement of values.
00:02:06 I pledge allegiance to the flag of the
00:02:07 United States of America, and to the
00:02:08 Republic, for which it stands, one Nation,
00:02:09 under God, indivisible, with liberty and
00:02:15 justice for all.
00:02:17 >> As we gather we humbly seek blessings
00:02:19 upon this meeting. May we act with
00:02:22 strength courage and will to perform our
00:02:24 obligations and duties to our people with
00:02:28 justice to all. Seek wisdom so we may act
00:02:30 in the best interest of our people our
00:02:32 neighbors and our country. All this we
00:02:34 ask so we serve our community with
00:02:37 fairness and respect putting their needs
00:02:39 before all.
00:02:40 >> Thank you, please be seated. Roll
00:02:42 call, assistant city clerk.
00:02:45 [roll call]
00:03:05 >> You have anything you want-
00:03:06 >> Thank you.
00:03:07 >> Go ahead. Mine as well do that now.
00:03:10 >> A23 announcement. Members of the Santa
00:03:13 Clara stadium authority sports and open
00:03:17 space and housing authority are entitled
00:03:20 to receive $30 for each attended meeting.
00:03:22 The city of Santa Clara adopted a code of
00:03:25 ethics and values and behavioral standard
00:03:27 for public meetings to promote and
00:03:30 maintain highest levels of conduct. This
00:03:31 includes mutual respect, robust discussion
00:03:33 and allowing city business to be done in a
00:03:36 efficient and consistent manner. Please
00:03:38 note as the presiding officer the mayor
00:03:40 direction and matter of process and de
00:03:44 quorum should be fallowed and use of the
00:03:45 gavel indicates all conversations conclude
00:03:49 and everyone in attendants should come to
00:03:52 order and attention. Welcome and thank
00:03:54 you for your participation.
00:03:55 >> I want to draw attention to the fact
00:03:56 that Council member O'Neill is with us, so
00:04:01 are you there Theresa?
00:04:04 >> Yes, can you hear me?
00:04:06 >> Yes, we can hear you. Just want to
00:04:08 make sure that is working. She is on city
00:04:10 business in Washington DC so thank you for
00:04:13 joins us Theresa. If you see me looking
00:04:16 up and talking to the ceiling, I'm talking
00:04:19 to stadium authority member O'Neill. So
00:04:22 we are going to start with a study
00:04:25 session. The discussion of the proposed
00:04:27 Santa Clara stadium authority fiscal year
00:04:30 2019-20 budget stadium authority
00:04:35 compliance and management policy.
00:04:36 Executive director.
00:04:38 >> Good evening. Want to start first
00:04:43 reviewing the agenda and I'll pass it over
00:04:45 to our attorney so he can establish
00:04:50 standard of care and talk through one of
00:04:52 the provisions within our agreement. For
00:04:56 today we want to go through the standard
00:04:58 of care provision, look at the budget
00:05:00 development schedule, provide a overview
00:05:02 of our budget, the non NFL event revenue,
00:05:07 stadium authority operating budget, budget
00:05:11 risk, the stadium authority debt budget as
00:05:14 well as capital budget so we have a lot of
00:05:17 grounds to cover but want to begin with
00:05:20 management agreement and key term.
00:05:23 >> As you all know, mayor, council, staff,
00:05:30 those watching at home, the relationship
00:05:37 between the 49ers management company and
00:05:39 the stadium authority is one of agency.
00:05:42 We are the principle they are the agent
00:05:45 and typical to these type of agreements
00:05:49 this particular one is a property
00:05:51 management agreement. They have certain
00:05:55 duties the law recognizes and the duty in
00:05:58 this particular agreement stated in
00:06:00 section 2.9 of the management agreement
00:06:03 this is standard of care, and it requires
00:06:05 the stadium manager to exercise prudent
00:06:10 commercially reasonable good faith efforts
00:06:12 in managing and operating the stadium in
00:06:14 accordance with the terms of the
00:06:16 agreement. It requires the maintenance of
00:06:19 the stadium in required condition and
00:06:22 operating the stadium as a quality NFL and
00:06:26 multi-purpose public sports public
00:06:29 assembly and facility to standard of
00:06:36 quality comparable to other similar
00:06:37 facilities. It requires the stadium
00:06:41 manager to control management operating
00:06:46 expenses, stadco and stadium authority
00:06:50 expenses and requires to maximize
00:06:54 operating revenue. These 4 elements that
00:06:56 I highlighted I think we refer to several
00:07:00 times throughout the presentation. You'll
00:07:04 hear a lot of discussion about whether the
00:07:08 interaction in terms of coming to the
00:07:12 proposed budget and presenting it to you
00:07:14 has been reasonable on the part the
00:07:16 manager, and I think that the measure of
00:07:21 reasonableness is to be measured against
00:07:24 the backdrop of the standard of care and
00:07:26 the 4 elements of the standard of care the
00:07:30 stadium manager agreed to. So, these 4
00:07:33 elements again I think are very standard
00:07:37 kind of measures of whether or not someone
00:07:42 is meeting their requirements under
00:07:45 agreement, so it requires prudent,
00:07:47 commercially reasonable good faith efforts
00:07:50 in managing. It requires a standard of
00:07:52 quality comparable to other similar
00:07:54 facilities. It requires the control of
00:07:58 operating expenses, and it requires an
00:08:01 element of maximizing operating revenues.
00:08:05 So, those are the criteria by which we
00:08:10 will measure whether or not the effort in
00:08:14 coming to the budget has been reasonable
00:08:15 and whether or not it complies with the
00:08:18 standard of care in the agreement.
00:08:22 >> Alright. I want to share a slide
00:08:24 regarding our budget development process.
00:08:26 Last year as we had completed under my
00:08:31 tenure the first proposed budget with the
00:08:35 take-away's is work collaboratively with
00:08:37 our management company to establish a
00:08:38 budget development schedule so we could
00:08:41 establish key milestones that need to be
00:08:44 accomplished with review for budget and
00:08:47 study session and formal consideration.
00:08:49 This is here is just a outline of the
00:08:51 budget development schedule that roughly
00:08:54 late November we agreed to. I do want to
00:08:56 mention a couple dates here in terms of
00:08:59 the cut-off date is end of March 14
00:09:02 because we went into publishing on the
00:09:04 15th for public distribution and were able
00:09:08 to accomplish the milestone by making the
00:09:10 documents available last Friday. The next
00:09:13 session we'll have on the proposed budget
00:09:16 is March 27 where you will hear follow-up
00:09:23 and questions today, issue a supplemental
00:09:25 report, understand what information we
00:09:27 have available and the board will be asked
00:09:29 to consider the proposed budget. As part
00:09:34 of your proposed budget, you have a series
00:09:36 of documents that was part of your packet.
00:09:39 I issued a executive director transmitted
00:09:44 letter which speaks to contacts for which
00:09:46 we make our budget projections. We offer
00:09:49 organizational chart, general information
00:09:53 around the stadium authority, review for
00:09:57 NFL and non NFL event and operating budget
00:10:01 for stadium authority and administrative
00:10:04 budget and 5 year forecast. There is the
00:10:07 budget service budget and capital budget
00:10:09 with the 5 year forecast. So, in terms of
00:10:13 where are we, I think it is important to
00:10:16 establish the context of where we are at
00:10:18 within the current fiscal year and how
00:10:22 we've made some adjustments with respect
00:10:24 to the document that you have in front of
00:10:26 you. We Heard-it is important in last
00:10:31 year's budget the projected revenue for
00:10:34 last year was $5.6 million in the adopted
00:10:40 budget. We Heard late January through the
00:10:42 media that the management company was
00:10:45 bringing down the projected net revenue to
00:10:47 $750 thousand. The result of that revised
00:10:52 number would be that the performance rent
00:10:55 would be paid to the city would be $215
00:10:58 thousand as well as a loss of $2.4 million
00:11:02 to the general fund when compared to the
00:11:04 budget. It is also important to recognize
00:11:07 that in the media where we learned this
00:11:11 information is that it was attributed
00:11:13 largely to the cure few and we have asked
00:11:16 for information to substantiate where the
00:11:20 impact from the curfew or development
00:11:23 permit condition may have impacted these
00:11:26 numbers, and we don't have that
00:11:28 information where we can show a cause and
00:11:31 effect. We also have asked for supporting
00:11:33 documentation from the management company
00:11:35 to provide how is it that throughout the
00:11:39 fiscal year the draft profit and loss
00:11:43 statements they provided as well as other
00:11:45 documentation has not trended with a $750
00:11:48 thousand revenue. To date we have not
00:11:51 been able to provide any supporting
00:11:53 documentation that would allow for us to
00:11:56 substantiate a $750 thousand revenue. It
00:12:00 is important to note it could be for cost
00:12:04 unknown to us or have not surfaced or been
00:12:07 validated so there will be due diligence
00:12:11 we need to take place on our part in order
00:12:13 to really understand where we are at
00:12:15 within the current fiscal year. That
00:12:17 required for the stadium authority staff
00:12:20 to depart from the approach in the past
00:12:24 fiscal year and look at projections based
00:12:26 on trends and information we know and that
00:12:28 is what you have before you today. We
00:12:30 have information in the budget that is
00:12:33 based on what's reasonable for us to
00:12:36 project by way of revenues and
00:12:39 expenditures, which Angie will walk us
00:12:41 through. We did not use the management
00:12:47 companies 2018-20 projection but we are
00:12:51 now projecting $4 million now that we
00:12:54 completed most of the quarters so we'll
00:12:58 bring that down as a close out from 5.6 to
00:13:02 $4 million. Staffs analysis of events
00:13:06 make up compared to prior years using
00:13:09 average and data is information we are
00:13:13 bases our information and the existing
00:13:15 profit and loss statements we are provided
00:13:17 by the management company throughout the
00:13:18 year. The good news is that we have had
00:13:24 quite a productive year. There are
00:13:26 several accomplishments with the proposed
00:13:28 budget and a little increase funding on
00:13:30 the general administration budget. We
00:13:33 have been able to complete our work on the
00:13:35 community engagement. We have baseline
00:13:39 data which informed the work plan and
00:13:42 areas of interest. The noise monitoring
00:13:45 program is part the ongoing baseline
00:13:47 program we offer. We successfully work
00:13:50 would the management company for an
00:13:52 assignment agreement for our college
00:13:54 football play off championship game. We
00:13:57 implemented 70 percent of measure J audit
00:14:00 recommendations. We now have in place a
00:14:02 stadium auditor who has presented a audit
00:14:06 work plan which occurred in short order.
00:14:08 We are in process still of continuing to
00:14:11 complete a policy manual. You will have
00:14:14 review of a policy before you regarding
00:14:17 measure J. Stadium authority coordination
00:14:20 in terms of the financial our compliance
00:14:22 auditing and in process of always
00:14:25 clarifying processes that us be organized
00:14:30 and transparent. The rent arbitration
00:14:35 awards. We were able to produce going
00:14:37 back to 2014 non NFL event financial
00:14:41 transparency to allow the board to make
00:14:43 more informed decisions as well we
00:14:46 completed my first year issuing a
00:14:49 executive director annual report. Here I
00:14:52 think what is important you'll see this
00:14:54 chart again in the fiscal transparency
00:14:58 category, we were able to look at the
00:15:01 value, average value of non NFL event and
00:15:06 understand the relationship between the
00:15:08 ticketed and non ticketed events as well
00:15:09 as where the losses occur. The purpose of
00:15:15 the information is look at the strategy
00:15:17 employed by the property manager, how is
00:15:19 it that we can hit the standard of care
00:15:22 and maximize revenue and the processes
00:15:27 we'll look at going forward.
00:15:34 >> So, I want to switch gears and move to
00:15:36 the fiscal year 19-20 proposed budget.
00:15:39 The total proposed stadium authority
00:15:42 operating budget is $73.6 million. The
00:15:46 general and administrative expense budget
00:15:51 equals $2.5 million. It is up and
00:15:53 represents about three percent or a little
00:15:56 over three percent of the total budget.
00:15:58 It is right sizing 4 issues of oversight
00:16:04 and accounting and work plan and it does
00:16:06 include a executive level position for
00:16:09 overall oversight of the multi department
00:16:13 public service department. Neighbor
00:16:15 focus, response and impact mitigation
00:16:17 related-anything related to policy
00:16:22 development and coordination of public
00:16:24 service to support this effort.
00:16:45 >> Really takes talking to about 10, 12,
00:16:49 15 different people and we thought we
00:16:50 could gain efficiency by having a staff
00:16:54 member who lives with managing the data,
00:16:56 given we had the addition of 1TE but
00:17:02 focused on agreement and financial
00:17:04 transparent and working with Tyler and
00:17:06 Angie on areas of auditing and improved
00:17:09 transparency of the board received. For
00:17:13 purposes of continued improvement and
00:17:16 oversight we are focused on compliance
00:17:18 with the agreements as well as increased
00:17:20 transparency. Part of what you will see
00:17:32 as already mentioned is a part of the
00:17:34 process for reviewing the proposed budget
00:17:36 is there is we did develop a new policy to
00:17:39 insure compliance with measure J and
00:17:42 manage Levi stadium. We also have in our
00:17:45 work plan highlights the community room is
00:17:48 a item we will bring back once we complete
00:17:51 the budget process. The creek trail, we
00:17:54 are working on different approaches for
00:17:58 deployment of our public services for
00:18:01 events as well as policy development that
00:18:03 has come up through the neighborhoods and
00:18:04 implementation of the work plan. There
00:18:07 are a number of items that are outstanding
00:18:09 and not included in the proposed budget
00:18:13 either because there was a absence of
00:18:14 complete information for us to carry them
00:18:16 forward, or because they came in late on
00:18:20 Thursday. One of the items that is our
00:18:24 item is additional stadium authority
00:18:26 insurance, we are still resolving those
00:18:28 issues. We think it is important for us
00:18:29 to purchase more insurance on the stadium
00:18:32 authority part for our public safety
00:18:34 services. The stadium management had a
00:18:37 series of requesting expenses and Angie
00:18:41 will walk us through those. It is our
00:18:44 understanding buffet services for the
00:18:49 applicable agreement have not been
00:18:52 included in the past and so this year on
00:18:56 late last week or maybe the week before,
00:18:58 the management company asked we include
00:19:01 them at about a million dollar cost. The
00:19:04 management company is asking for
00:19:06 additional resources for staff for non NFL
00:19:10 events as well at ticket operation. I
00:19:14 want to mention the second to the last
00:19:16 bullet because it is important positive
00:19:19 development in that, we have had some very
00:19:22 preliminary conversations with the
00:19:26 management company about the option of
00:19:28 establishing a stand alone financial
00:19:30 system for the stadium authority that
00:19:32 would allow for Real-Time access to event
00:19:34 financial data. And so while we are still
00:19:37 very much in preliminary stages, there is
00:19:40 general agreement and as it has always
00:19:42 been, that the management company should
00:19:46 have segregated and stand alone
00:19:48 information for the stadium authority see
00:19:51 we have Real-Time information available to
00:19:53 us Rather then always working in arrears
00:19:57 or draft information. I'm going to pass
00:20:01 it over to Angie to get us into the
00:20:03 numbers.
00:20:04 >> Thank you.
00:20:05 >> Good evening. Angie crutch, the
00:20:08 stadium treasurer. I want to take a quick
00:20:09 moment to introduce the people next to me
00:20:11 because sometimes council we have new
00:20:15 council board members that may not know
00:20:17 them. This is Tyler cook the principle
00:20:19 financial analyst and the person that does
00:20:21 all the accounting for the stadium. He is
00:20:24 my go to so if you see my whispering to
00:20:28 him it is because he has to answer a
00:20:29 question to me and you know Lynne lam, our
00:20:32 stadium auditor. I like to show this
00:20:36 chart and I know the council that or board
00:20:39 that have been here have seen it several
00:20:41 times. But I feel it is a good slide for
00:20:43 the public, so the city of Santa Clara
00:20:47 owns the land which the stadium is on and
00:20:49 we lease the-we have a ground lease to the
00:20:53 Santa Clara stadium authority, which is
00:20:56 the owner of the stadium and it leases the
00:20:59 stadium to stadco during the NFL season
00:21:02 for 6 months and then stadco leases the
00:21:07 stadium to the 49ers football company and
00:21:10 at the bottom you have the management
00:21:12 company that receives funding to manage
00:21:15 the stadium from the stadium authority and
00:21:18 stadco. When you hear shared stadium
00:21:22 expenditures that is the term because we
00:21:24 pay half and stadco pays half. Just a
00:21:28 quick stadium authority budget flow chart,
00:21:30 as the executive director mentioned,
00:21:33 stadium authority operating budget is
00:21:35 $73.6 million. The stadium authority debt
00:21:41 service is 51.6 and stadium authority caps
00:21:46 at 14.4 and $51.2 million is transferred
00:21:52 to debt service so you get a total budget
00:21:55 of $88.4 million. So, total revenues are
00:21:59 $73.6 million. I wont go line by line but
00:22:04 will call out the net non-NFL event
00:22:08 revenue number. If you recall last year
00:22:10 we budgeted at the gross level. We were
00:22:13 unable to get that information this year
00:22:15 even though we requested a estimate just
00:22:17 so we could actually base our 19, 20
00:22:20 numbers on that and we were not able to do
00:22:25 that so we had to use past practice and
00:22:27 the net number. We base the number in the
00:22:31 budget you will see there is a
00:22:33 marketing-it is in the definition and I
00:22:34 can give you the page number at the end of
00:22:38 the report. But it's-we use the benchmark
00:22:43 to get that number and it is in the budget
00:22:45 also. So, the operating expenses to
00:22:49 balance the budget it is $7.36 million.
00:22:54 And then these three categories go to the
00:22:58 city general fund. I will talk about it
00:23:01 shortly but I want to say the third bullet
00:23:06 $2.7 million, we did receive a cash budget
00:23:10 from management company, and since they
00:23:13 are projecting that the stadium authority
00:23:15 will only receive $175 thousand in net
00:23:20 non-NFL event revenue for 19-20 that means
00:23:24 the performance would be zero, but I will
00:23:26 have a slide on that. So, this is a chart
00:23:31 from the budget and it shows our general
00:23:33 administrative budget. What we think it
00:23:36 takes to support our efforts so you can
00:23:39 see there is $1.2 million for staff
00:23:41 support. 8 thousand for board stipends.
00:23:46 Audit service, we have a financial audit
00:23:51 and ticket sur charge audit and for the
00:23:53 stadium authority our stadium auditor to
00:23:56 do performance audits. $500 thousand for
00:24:00 legal service and we also have consultants
00:24:02 for community outreach, noise monitoring
00:24:04 and public safety as well as other
00:24:07 expenses for routine office expenses and a
00:24:11 hundred thousand we have budgeted for
00:24:15 executive director and board directives.
00:24:19 Then discretionary fund we had a beginning
00:24:21 balance of 1.9. We are budgeting about
00:24:26 $616 thousand. We have budged $250
00:24:29 thousand and just to be able to use for
00:24:32 other initiatives and so we are projecting
00:24:35 that ending balance to be $2.3 million.
00:24:40 So here's the performance rent calculation
00:24:43 just to kind of walk people through to see
00:24:45 how we calculate that. We have a set
00:24:49 amount of ground rent which is $355
00:24:51 thousand. We are using the marketing
00:24:53 benchmarks so have the $5.8 million. So,
00:24:57 the calculation is we have to take half of
00:25:00 that net non-NFL event revenue and get
00:25:06 $2.9 million and subtract out the
00:25:09 performance rent credit which is 50
00:25:10 percent of the ground rent and that is
00:25:12 where we get to this number of 2.7 for
00:25:15 performance rent. So, I have a few slides
00:25:20 on budget risk. Manco was unable to
00:25:25 provide a projection for non event for
00:25:29 19-20 during the budget development
00:25:31 process. As mentioned earlier, this is
00:25:33 why we were unable to give a gross number
00:25:36 in the revenue or expenses and again, as I
00:25:38 mentioned earlier, we projected $5.8
00:25:41 million and 2.7 paid to the city in
00:25:44 performance rent. On March 14, we
00:25:47 received $2.8 million in additional cost
00:25:49 to the stadium authority from the event
00:25:52 management company. Here is a breakdown
00:25:55 of each one of those. Additional $1.1
00:25:59 million for buffet service for the
00:26:03 business license holders for the
00:26:05 applicable agreements and then
00:26:08 approximately hundred thousand for ticket
00:26:11 operation and 1.2 for ticket operation
00:26:14 staff, it staff and sales and marketing
00:26:15 staff. And then additional $400 thousand
00:26:18 for H r, payroll accounting and finance
00:26:22 staff to work on stadium authority related
00:26:24 items. This is in addition to $500
00:26:27 thousand that was also requested in the
00:26:30 line item and we are only proposing a $200
00:26:35 in the line item so it would have been
00:26:37 over $900 thousand but we are only
00:26:39 proposing 200-110 of that is bank fees
00:26:44 that we have to pay to the trust. Those
00:26:47 are fixed cost we pay and then the
00:26:49 remaining was just in case we had other
00:26:51 expenses we needed to pay. So, that's the
00:26:54 total of 2.8. Here's what I spoke to you
00:26:57 about. Information received from the
00:26:59 management company on March 14th reflects
00:27:03 forecast of $175 thousand for net non-NFL
00:27:07 event revenue which no performance rent is
00:27:12 paid to the city. You can walk through
00:27:16 and see it ends up being-we'll get more
00:27:19 ground rent then we would get in net
00:27:25 non-NFL event revenue. So, debt service
00:27:28 we have $51.6 million budgeted. Which
00:27:34 includes principle of $34.8 million and
00:27:37 interest payments of $16.7 million. Total
00:27:41 outstanding debt is projected to decrease
00:27:44 by $34.8 million that's really good news.
00:27:50 I always show you this slide. I like to
00:27:52 see the trend going down, so you can see
00:27:55 in March 2014 where it was the highest of
00:27:58 653.4 and now we are projecting at 305.3.
00:28:04 For the 2019-20 capital budget, now it has
00:28:09 $14.4 million. 12.9 in stadium
00:28:15 improvements we have a carry over for the
00:28:18 community room build out of $630 thousand
00:28:22 and public safety of $1.5 million which
00:28:27 includes fencing on Tazman and have the
00:28:29 stadium warranty related construction of
00:28:31 1.5 that is carrying over since the build
00:28:35 of the stadium. One note is we will be
00:28:37 with drawing the parking gates at the
00:28:39 soccer park project in the amount of
00:28:41 $97.650 and this is reflected in the
00:28:46 adopted budget you will see next week so
00:28:49 the 14.4 will become 14.3. Tag team. In
00:28:58 conclusion, the budget is balanced between
00:29:02 revenue and expenditures but does not
00:29:06 integrate new information received on
00:29:08 march 14. It mains required reserve for
00:29:11 operating discretionary and capital funds
00:29:16 and maintain debt services commitments and
00:29:18 identifies anticipated excess revenue. We
00:29:22 invest in expenditures. I think we will
00:29:26 all agree this budget provides greater
00:29:28 transparency every year we try to add more
00:29:31 information to be more transparent.
00:29:35 Additional budget adjustments may be
00:29:36 required after the review of the March 14
00:29:40 budget submittal. We haven't had time the
00:29:43 turn around time was not enough for us to
00:29:45 do the research on that.
00:29:47 >> I want to mention to-excuse me-we are
00:29:50 trying to make every effort to bring back
00:29:52 to the board a supplemental memo that
00:29:58 allows to bring detail with supporting
00:30:00 documentation for the March 27 hearing.
00:30:08 We wanted to allow extra cushion in the
00:30:11 event a budget adjustment is needed
00:30:13 outside the regular budget process so we
00:30:15 bring back the due diligence. I will say
00:30:18 the last statement, because I think it is
00:30:21 important for me to address that the last
00:30:25 minute developments of happening on
00:30:28 Thursday March 14th of adding additional
00:30:31 $2.8 million with not a lot of supporting
00:30:36 information, I think it raises serious
00:30:38 questions with respect to how manco is
00:30:41 managing the city asset and we should
00:30:43 be-it should be cause for concern with
00:30:46 standard of care. The ability to maximize
00:30:48 revenue, control cost, as well as being
00:30:51 transparent. We started with the budget
00:30:54 schedule, to establish clear milestones
00:30:58 for reliability and serving the board with
00:31:00 the information it needs to make informed
00:31:02 decisions. Getting the information on
00:31:04 Thursday evening or Thursday late
00:31:06 afternoon has not allowed for us to do
00:31:09 that work and bring to you that set of
00:31:11 information on critical expenditures
00:31:14 important to the management company as
00:31:16 well as important for the board and so we
00:31:19 acknowledge that there is more work that
00:31:21 needs to be done but we also feel
00:31:24 confident in what we are proposing to you
00:31:27 this evening. That ends our presentation.
00:31:30 >> Okay. Questions from the authority
00:31:34 board? Authority member Davis.
00:31:40 >> Angie, can we go back to page 6? Under
00:31:47 outstanding issues not included in the
00:31:50 proposed budget, is this the stuff that
00:31:53 came Thursday night? Is this addition of
00:31:55 things? Or is that from us? Page 6.
00:32:03 Outstanding issues not included in the
00:32:05 budget. Is that the information sent and
00:32:07 we didn't get to go through?
00:32:09 >> So, it is a blend. The first one the
00:32:12 additional stadium authority insurance is
00:32:15 our-the stadium authorities and think
00:32:18 don't know if you talked to sue today
00:32:20 about that.
00:32:21 >> We have a desire to purchase more
00:32:23 insurance for our public safety coverage
00:32:26 and manage risk, so that is one item that
00:32:29 is our item not included in the budget.
00:32:32 The second to the last as I mentioned, it
00:32:34 is a new development. There is-we had
00:32:38 good conversations with the management
00:32:40 company around establishing a
00:32:43 financial-stand alone financial system,
00:32:44 however we don't have numbers to put
00:32:45 around it to have integrated into the
00:32:48 budget.
00:32:49 >> And stadium manager request expenses,
00:32:53 that is you, buffet service, a new one.
00:32:57 >> Is the chart that followed.
00:33:02 >> That's them?
00:33:03 >> Yes.
00:33:04 >> These are some of the expenses that
00:33:10 fall within the line item.
00:33:15 >> Buffet services? SBL holders per
00:33:23 agreement. I thought-go ahead. Explain
00:33:25 that one.
00:33:29 >> It is in the stadium lease agreement
00:33:31 that for certain SBL holders
00:33:38 buffet service would be provided.
00:33:40 >> It is in the contract?
00:33:41 >> It is one of the agreements. I think
00:33:45 it is on their agreement. Their
00:33:47 individual agreement but not positive on
00:33:51 that.
00:33:52 >> How many holders is that?
00:33:53 >> I believe it is over 900.
00:33:55 >> 900. And marketing staff for non-NFL
00:34:02 events. Is that us or them?
00:34:05 >> It is them.
00:34:06 >> Them. Okay. So, they have been
00:34:10 marketing because I pulled up last year's
00:34:12 marketing 2018 and there was no mention in
00:34:19 there of a marketing staff what so ever
00:34:23 other then the fact they were going to
00:34:25 look into hiring a sales representative
00:34:27 and assistant time person, is that in the
00:34:29 contract we have to pay them for marketing
00:34:31 staff?
00:34:32 >> That is a area where I have to do
00:34:35 research because that I don't know.
00:34:38 >> Okay, I would like-because there is not
00:34:40 a lot of-there is verbiage but no back up
00:34:46 so I like to see back up on most of all
00:34:49 this because it doesn't make sense why we
00:34:51 have a study session and they are not here
00:34:53 to answer a question, so it does-to me it
00:34:56 is like why are we here. I'm concerned
00:35:00 about this. Why are we getting stuff at
00:35:03 zero hour when they knew this was going to
00:35:05 happen? Didn't they have advanced warning
00:35:08 that we were going to do this? Every
00:35:10 year.
00:35:11 >> They were given a copy of the budget
00:35:13 calendar and we were maintaining contact
00:35:16 to let them know when we planned to
00:35:18 publish.
00:35:19 >> I guess those are the only questions I
00:35:20 can ask because nobody can answer then the
00:35:22 city manager. Okay. Thank you.
00:35:27 >> Other council questions? Authority
00:35:32 member O'Neill, you can jump in if you are
00:35:34 ready. Theresa.
00:35:40 >> Council member authority member Davis
00:35:46 covered some of my concerns. Some of
00:35:50 the-it is good to see the additional data
00:35:51 because for a long time I wondered why are
00:35:54 we not seeing more of a break out,
00:36:00 particularly like the [inaudible comments]
00:36:06 like a lot of times you say where are all
00:36:09 the costs. Just to know how many FTE's
00:36:14 are being paid for through the stadium
00:36:19 authority budget. I think this is the
00:36:21 first time we are seeing it so this is all
00:36:23 good, but it does call into question--a
00:36:29 few things. A couple of my questions, in
00:36:33 terms of even some of the whole plan-I
00:36:38 know we haven't started to look at the
00:36:39 marketing plan, but there were some ing
00:36:42 things in there about some of the expenses
00:36:48 related to the facility and the things
00:36:49 like, I had some questions about-like the
00:36:57 49er store and the museum and the locker
00:37:01 rooms and all of those things. Are those
00:37:06 considered stadium authority areas or
00:37:11 assets, or are those considered as
00:37:17 belonging to stadco?
00:37:21 >> So, I know the team store is a tenant
00:37:26 so is the museum I believe too.
00:37:31 >> They are tenants to stadco and not to
00:37:37 us?
00:37:38 >> Correct.
00:37:39 >> Does that mean they operate half a
00:37:40 year? Sorry, Council member O'Neill I had
00:37:47 to ask that question. Are you still
00:37:55 waiting for the answer, Theresa?
00:38:00 >> Yeah. All of those areas are
00:38:04 considered owned by-tenant spaces?
00:38:12 >> Yes.
00:38:13 >> Getting any revenue off those or if we
00:38:20 are responsible-I think it is good because
00:38:22 in the past I think it is interesting to
00:38:25 see much more of a break out of the
00:38:27 capital budget in terms of maintaining the
00:38:31 facility. Once again, it is-I think this
00:38:35 is a more realistic look at what all needs
00:38:38 to be done, but once again-just looking
00:38:43 down the road a little bit as to what
00:38:45 expenses are really things related to
00:38:50 stadco and what are for the stadium
00:38:52 authority.
00:38:53 >> I think maybe part the question would
00:38:54 be where does the rent that is generated
00:38:57 year round for those facilities, where
00:38:59 does it go?
00:39:01 >> I want to clarify and we will answer
00:39:04 thoroughly in writing board member
00:39:08 O'Neill, as part of the supplemental, but
00:39:11 the revenue from the rental of the museum
00:39:15 or the store or is the restaurant, that is
00:39:17 not reflected in the stadium authority
00:39:20 budget, that is on the stadco side, nor do
00:39:26 we have information of revenue amounts and
00:39:29 operations and for what duration.
00:39:32 >> Okay. And I know there is going to be
00:39:34 a lot of questions. I'm sure you will
00:39:36 capture all our questions for next week.
00:39:42 The best you can. Thank you. You can
00:39:45 continue, authority member O'Neill.
00:39:50 >> I'll hold off for now and let somebody
00:39:53 else ask a couple.
00:39:55 >> Just jump in-I don't have a light from
00:39:58 you so just jump in if you like to speak.
00:40:01 Authority member hardy.
00:40:04 >> Thank you.
00:40:05 >> Thank you.
00:40:06 >> Thank you. I really new to this so
00:40:08 read it very carefully. The one question
00:40:11 that was on page 5 for the slides where it
00:40:16 talked about the new position deputy city
00:40:19 manager, you said that the cost there that
00:40:22 was $2.5 million, that's per year. Is
00:40:28 that the actual cost of a new employee or
00:40:33 is that from within we are going to do
00:40:35 that? That new position.
00:40:37 >> The $2.5 million represents roughly I'm
00:40:43 looking at-I think we have about 34 staff
00:40:46 assigned and so what we do is take
00:40:50 whatever projected percent of our time
00:40:52 that based on past trends of how each
00:40:56 employee who works on stadium authority
00:40:58 charges their time and carry that forward.
00:41:01 If you look at the top line, the staff
00:41:03 support is $1.16 million. We have board
00:41:10 stipends which is $8 thousand. Audit
00:41:14 service is estimated at $267 thousand.
00:41:16 Legal services at $500 thousand. So, the
00:41:20 deputy city manager a portion of this is
00:41:22 assigned and I'm not certain what we carry
00:41:25 forward as part of this and obviously as
00:41:29 the person is working on deployment for
00:41:31 events and the overall permitting of
00:41:34 events and the city reviews, this person
00:41:36 would be able to charge their time as well
00:41:38 as the events and so that has been the
00:41:41 funding strategy for this position as well
00:41:43 as working on neighborhood deployment,
00:41:46 parking and any other requirements to have
00:41:49 addressed the concerns that have been
00:41:51 raised over the past year. So, the $2.5
00:41:53 million is derived from the budget you see
00:41:57 on the slide before you.
00:41:58 >> I would like to say too, the staff
00:42:01 support is the equivalent of 3.8 staff
00:42:07 FTE. That is not a lot of staff to do a
00:42:09 lot of what we have to do.
00:42:10 >> I like to just if Angie can give the
00:42:13 detail. I said 34 but dont want to put a
00:42:16 bad number in the record. If we can
00:42:18 provide the number of staff that are
00:42:20 working for which this represents a
00:42:23 increment of their time and I believe we
00:42:25 are bringing the total FTE, which is a
00:42:30 assembly of multiple staff from
00:42:34 2.something to 3.8, so we did have a small
00:42:38 growth in our staff assigned based on the
00:42:41 different set of proportion time. Angie
00:42:47 is pulling the number so you understand
00:42:48 how we increased our GNA budget.
00:42:51 >> I will have it in just a second.
00:42:53 >> So, I guess-
00:42:55 >> Great question we should get in the
00:42:56 record.
00:42:57 >> I want to understand that are you are
00:43:00 talking about bundling all those different
00:43:06 assignments into one deputy city manager
00:43:10 or are you adding to that or specifically
00:43:14 from within assigning someone to do those
00:43:19 tasks?
00:43:20 >> We are adding to the-with the issues
00:43:25 that have surfaced over the last year and
00:43:27 the manner for which we have been trying
00:43:29 to coordinate, everything from at one
00:43:33 point I mentioned in the policy priority
00:43:36 session, 91 fire inspection violations,
00:43:38 there is issues of code enforcement, there
00:43:41 is issues of permitting and coordinating
00:43:44 that work. We don't have a particular
00:43:46 staff person and then the neighborhood
00:43:48 deployment and the neighborhood mitigation
00:43:50 efforts. I dont have a resource that is
00:43:54 ready to go and work at a multi-department
00:43:57 from a multi-department approach. I
00:43:59 mentioned in the priority setting session
00:44:01 the burden has largely been on the police
00:44:03 department and that was frankly
00:44:06 inappropriately placed because in order to
00:44:08 respond to the stadium it requires about 5
00:44:11 different departments, and it largely
00:44:14 reflects some of the results we received
00:44:17 in the baseline data in terms of the
00:44:20 issues that had gone unaddressed with
00:44:24 either traffic, neighborhood protection
00:44:27 and mitigation and policy development so
00:44:29 our goal is try to put a resource in place
00:44:31 that is able to work cross departmentally
00:44:34 to once and for all begin to address the
00:44:39 issues and connect the relationship
00:44:41 between the permitting, the parking
00:44:45 neighborhood programs and public safety
00:44:46 and multi-department deployment.
00:44:49 >> If I can ask a follow up then, how is
00:44:51 that compliant with measure J if we are
00:44:53 having to use that much staff time?
00:44:57 >> This is where I want this in the record
00:45:00 because we were at roughly 2.4 or 2.6FTE's
00:45:07 last year.
00:45:08 >> 2.4.
00:45:09 >> 2.4 FTE last year and that represents
00:45:14 over a couple dozen different staff
00:45:17 members, which is a problem when you are
00:45:19 that wide spread throughout the
00:45:20 organization and there isn't one entity to
00:45:22 track the several dozen of employees that
00:45:27 have touch point with stadium authority
00:45:30 and oversight and taking thought up to 2.8
00:45:34 FTE and trying to have one person
00:45:38 responsible for largely deployment and
00:45:39 coordination of departmental service. I
00:45:44 think from the monitoring and
00:45:46 implementation of the agreement and
00:45:47 adherence to the agreements, I think we
00:45:49 established we are managing that, bringing
00:45:52 forward the information the board had been
00:45:55 requesting over the years but between
00:45:58 myself and Walter and Katelyn we dont have
00:46:00 the additional capacity to now take on the
00:46:05 neighborhood mitigation efforts we already
00:46:07 talked about as a whole.
00:46:08 >> That will be?
00:46:11 >> That is this individual.
00:46:14 >> That is part of this budget so it will
00:46:16 be part the budget so it's charged to the
00:46:19 stadium authority?
00:46:20 >> Yeah.
00:46:21 >> Not coming out of city budget?
00:46:25 >> There is a percent charged in the GNA
00:46:28 budget and looking to Tyler of Angie to
00:46:30 reflect that.
00:46:31 >> Going back to the question there are 37
00:46:33 individuals that charge to the stadium,
00:46:35 but it is the equivalent of the time of
00:46:40 3.8. For the deputy city manager 25
00:46:43 percent is in the number here, and then we
00:46:45 anticipate 25 percent we charge to non NFL
00:46:49 event and 25 percent to NFL events because
00:46:52 they are going to be overseeing the
00:46:56 deployment and additional 25 percent
00:46:58 because we think the city manager may need
00:47:00 help on certain things also. All work
00:47:04 whether it is over 75 percent or not they
00:47:07 would charge to the stadium.
00:47:10 >> I will just say, I round the numbers
00:47:12 really quick. For $1.1 million for
00:47:18 buffet service if we think of 10 stadium
00:47:21 events that are NFL and there is 900
00:47:25 people that is $122 per person. Better be
00:47:30 good food.
00:47:33 >> And want to restate now that the number
00:47:36 is out there, the importance when we talk
00:47:40 about having 5 different departments
00:47:42 respond to the importance of having one
00:47:44 person who is managing that oversight and
00:47:46 has the capacity to address this as you
00:47:49 know, that's Walter and I have our focus
00:47:53 on different areas within the organization
00:47:55 and corralling and working with 37
00:48:01 different individuals is important to have
00:48:02 managed and tracked within the stadium
00:48:04 authority set of resources.
00:48:09 >> Alright. Authority member Chahal.
00:48:13 >> Thank you, mayor. So, I have the same
00:48:20 concerns like-two concerns, both our
00:48:24 expenses as well as manco expenses
00:48:29 increasing which is hitting the bottom
00:48:32 line of our general fund, money which is
00:48:34 supposed to come our general fund is being
00:48:36 reduced. Starting with the-like for
00:48:43 18-19, I'm concerned about even budgeting
00:48:46 like we are budgeting $4 million where man
00:48:51 co is saying 750K. That is a big delta,
00:48:55 and how we are projecting that to be $4
00:48:59 million because that is a string of all
00:49:01 most three times. That is one of my
00:49:04 concerns.
00:49:05 >> So, we receive on a quarterly basis a
00:49:07 draft profit and loss statement that
00:49:10 reflects the activity for the quarter both
00:49:13 by way of the events and the financial
00:49:19 activity. It is in draft and requires
00:49:21 further refinement as information
00:49:23 continues to come in, but in review and
00:49:25 Tyler is largely the individual who
00:49:27 reviews those documents, in review of
00:49:30 those quarterly statements, they are-the
00:49:33 information for the first three quarters
00:49:37 is not confirming a $750 thousand revenue
00:49:40 projection. Based on the information
00:49:45 while we budget add the $5.6 million level
00:49:48 last year, the trend information for the
00:49:49 first 3 quarters is showing roughly $4
00:49:52 million so we would have adjusted the
00:49:54 revenue projection down to $4 million
00:49:57 based on the information they provided us
00:49:58 for the three quarters. We learned through
00:50:01 the media in January they were bringing
00:50:03 down to $750 thousand, however, woo we
00:50:08 have not received any supporting
00:50:09 documentation that would substantiate a
00:50:13 large issue that occurred in the 4th
00:50:16 quarter that would cause for that amount
00:50:19 to come down to $750 thousand. As the 4th
00:50:24 quarter is ending the end of March we look
00:50:28 to see what comes in the 4th quarter
00:50:30 report because that will be a learning
00:50:31 opportunity to understand what
00:50:33 significantly occurred that brought what
00:50:35 was trending to $4 million in the fiscal
00:50:39 year to now 750 but we have been working
00:50:42 on the proposed budget and we asked them
00:50:44 for the supporting information, we have
00:50:46 not been able to receive that from them.
00:50:48 >> My question on that would be, like, we
00:50:52 have data for the past three, four years
00:50:57 for non NFL revenue we are getting and the
00:51:03 events are held into the stadium, but due
00:51:06 to [inaudible comments] the number of
00:51:11 events have decreased, right? So that
00:51:13 should give us a fair idea instead of $4
00:51:17 million keep it up-Be realistic. If we
00:51:21 are losing the event at the high scale,
00:51:24 revenue on these events then we need to
00:51:27 project them to be fairly close to what it
00:51:30 should be basically.
00:51:31 >> So, if you-we can go to slide 9. Thank
00:51:37 you, Angie. Angie and Tyler can speak to
00:51:41 fiscal year 18-19 for what we are tracking
00:51:44 by way of events, but since fiscal year
00:51:49 16-17 as well as 17-18, they are trending
00:51:54 pretty equal in terms of the amount of
00:51:57 ticketed events as well as special events
00:52:01 and even the average revenue is just
00:52:07 within a small margin of difference. I
00:52:12 can ask if they can comment on 18-19
00:52:16 fiscal year and where that is trending.
00:52:21 If you look at the data for the last
00:52:24 couple years it is fairly within some
00:52:27 consistent form of numerical figures.
00:52:32 >> That is my concern because if we are
00:52:34 consistent with the past history, whereas,
00:52:37 in 18-19, we are not there because we lost
00:52:41 some of the events and other stuff.
00:52:45 >> We have asked what events we have lost
00:52:49 as a result of the curfew, and their own
00:52:54 e-mail said they don't have a lot of data
00:52:56 on that and we have not been-other then
00:53:00 the position that one promoter has taken
00:53:05 the media, I believe his last name is
00:53:08 Macina he won't book he had already booked
00:53:10 with the stadium authority as well as I
00:53:12 believe there was another promoter of a
00:53:14 concert that chose to go to San Francisco,
00:53:17 but I can't speak to either by
00:53:21 conformation what events have been lost
00:53:23 because that information has not been
00:53:24 provided to us.
00:53:25 >> I think it is also important to
00:53:27 recognize there is no-they received no
00:53:29 information from them that they have lost
00:53:33 events. Whatever that means. I don't
00:53:36 know what it means to lose a event. I
00:53:38 think we have events if staff could give
00:53:41 the statistics for the last year-we had
00:53:49 concerts and non NFL football and soccer
00:53:54 so within the range of those numbers and
00:53:56 you certainly could not explain the loss
00:53:59 of revenue they are now telling us by the
00:54:02 loss of even one or two week day or the-it
00:54:06 isn't a loss, it is a failure to book a
00:54:09 week day concert. There was no week day
00:54:12 concert I think this past year, but-and I
00:54:18 think the data we have seen at least just
00:54:20 because you have a concert we have a
00:54:22 concert on a Friday that lost money, which
00:54:27 was a weekend concert so necessarily all
00:54:30 concerts make money and they certainly
00:54:32 haven't provided us with any records what
00:54:35 so ever, which explain why the revenue
00:54:39 suddenly dropped from what we thought from
00:54:42 the first three quarters what the trend
00:54:43 was going to be to suddenly going down to
00:54:48 175 thousand. There is no real
00:54:51 explanation for it at this point.
00:54:52 >> That is the key point is for the first
00:54:54 3 quarters, the numbers were trending with
00:54:58 past years. Everything that Angie and
00:55:01 Tyler and they are nodding yes, that they
00:55:03 had provided no indication that the
00:55:06 numbers would fall from $5.6 million,
00:55:09 which was what we had budgeted, to 750 so
00:55:14 something occurred in the 4th quarter we
00:55:15 need to learn more about because as I
00:55:18 mentioned we get our quarter reports from
00:55:21 them and Tyler goes and reviews them as
00:55:23 well as the granular level. He goes
00:55:26 through the invoices and tracks the
00:55:29 information, but in the first three
00:55:31 quarters there was not a trend of such a
00:55:34 significant revenue drop, and when we
00:55:39 tried to ask about it and seek
00:55:41 documentation that substantiates it we are
00:55:44 not receiving any information that says
00:55:46 this is the one item or this is the one
00:55:48 event or occurrence that has cause for a
00:55:51 drop for what we were going to bring down
00:55:53 from $5.6 million to $4 million, because
00:55:56 of the first three quarters of the fiscal
00:55:59 year showing that trend to now 750. So,
00:56:04 at the close of the fiscal year we'll get
00:56:06 more information and we will be able to
00:56:10 bring this to the board and explain what
00:56:12 their documentation is supporting. I also
00:56:16 want to mention that I'm new to this
00:56:20 organization still. I have been here less
00:56:22 then a year and a half, but I know when I
00:56:25 was doing my research and watching the
00:56:28 stadium authority board conversations,
00:56:31 watching the board talk as well as staff,
00:56:34 the information that was being tossed
00:56:38 around is there was an assumption the
00:56:41 stadium authority would have 5 to 7FTE to
00:56:44 support the stadium authority. For
00:56:48 whatever reason the previous years the
00:56:51 staff counts were not at 5 to 7 FTE so I
00:56:55 think that the request for going from 2.4
00:57:02 FTE to 3.8 is still very much aligned to
00:57:05 the standard of care of controlling cost.
00:57:07 We articulated the valid reason it is
00:57:10 supported by data that came forward
00:57:13 through statistically valid surveys.
00:57:17 There is a need for coordination, we
00:57:19 brought before you violations and
00:57:21 neighborhoods conditions that need to be
00:57:22 attended so we are still very much below
00:57:26 what was originally anticipated or
00:57:30 staffing fully the stadium authority board
00:57:32 which is 5 to 7 and our request here I
00:57:35 feel prudent which takes to 3.8 FTE's.
00:57:39 >> I would just like to say something
00:57:41 about the $500 thousand in the legal
00:57:44 budget. I think it is important for the
00:57:46 public to realize that the reason we are
00:57:49 responding so much money is because the
00:57:51 49ers keep suing us. They sued us twice.
00:57:54 We just got another claim today from them.
00:57:59 They could help with this budget too if
00:58:01 they would just stop suing us. I think it
00:58:06 is particularly gnawing for them to say
00:58:08 your costs are too high, and Frankly a lot
00:58:12 of my time has been spent just pulling
00:58:15 teeth trying to get them to comply with
00:58:17 these agreements. So, I mean it is very
00:58:20 important for the public to realize, they
00:58:22 could criticize the city for spending too
00:58:25 much money on our side or failing to
00:58:27 approve what they are requesting but a lot
00:58:30 of this has been because they have not
00:58:33 been performing to the standard of care
00:58:35 and we are just trying to get them to
00:58:38 perform what they obligated themselves in
00:58:40 the agreement.
00:58:43 >> Madam mayor, couple comments.
00:58:47 >> Authority member Chahal do you have
00:58:51 questions?
00:58:52 >> I have more but go ahead.
00:58:53 >> He says he will let you ask the
00:58:56 question on this issue. Is it a
00:59:01 follow-up?
00:59:02 >> I had a couple comments. I appreciate
00:59:04 what authority member Chahal about looking
00:59:08 at trends and data but now having spent a
00:59:13 a few years trying to get more data, on
00:59:16 the NFL events part the reason why it is
00:59:19 difficult to figure what is going on is
00:59:21 because a lot of times the event counts
00:59:23 whether it's 4 people having a luncheon or
00:59:31 70 thousand people at a grateful dead
00:59:35 event it is counted as event. Some of the
00:59:38 areas where we need more granularity we
00:59:41 get general statements on bridle shower or
00:59:45 bridle fair or corporate party but it is
00:59:48 very hard to figure out the scope of every
00:59:52 single event getting counted the same way
00:59:54 as a event. One of the things I wanted to
00:59:57 comment about, the issue of the very large
01:00:01 events and in a conversation I had with
01:00:05 the stadium manager, and in like the first
01:00:09 year or so when he and I were talking
01:00:13 about and asking questions about the
01:00:15 number of the large events particularly we
01:00:18 tend to think of the concerts. He
01:00:20 mentioned the fact that this was the
01:00:22 stadium was new, it was a novelty and he
01:00:27 thought that level of concerts was large
01:00:32 scale events was probably not sustainable,
01:00:35 and yet you look what we got projected
01:00:38 coming in for the next month or two, we
01:00:42 got several quite large events. You got
01:00:46 the Mexico soccer game, you got the U.S.
01:00:50 women's world cup prelude. We got the
01:00:55 rolling stones. When I was hearing things
01:00:59 about a relatively small number of those
01:01:04 large events. We already have three
01:01:07 scheduled in the first quarter for the
01:01:12 fiscal year for the stadium authority. I
01:01:15 think we are still kind of struggling to
01:01:17 get our arms around what are we really
01:01:20 making off of these and the difficulty
01:01:23 with the event. That's why I think it is
01:01:27 hard to be able to know when you see a
01:01:31 number count going down if we don't have
01:01:33 any idea what the scale is and in terms of
01:01:37 the request for the additional FTE, from
01:01:44 the very beginning I had raised concerns
01:01:47 that we weren't having people-we didn't
01:01:51 have dedicated staff and I think just in
01:01:54 the probably past couple years, since we
01:01:56 had the audit we had a chance to kind of
01:02:02 get a idea and making sure everybody's is
01:02:05 booking their time and recording it
01:02:07 correctly on the time sheets so we kinds
01:02:10 of have that idea, and once again to look
01:02:13 at that in comparison to the FTE counts
01:02:16 that we are funding through manco. So, it
01:02:24 is all most like one of my thoughts is
01:02:27 part of this deputy city manager, when we
01:02:31 really look at the public safety cost and
01:02:36 talk about either removing our adjusting
01:02:39 that threshold, the cap cost, whether we
01:02:42 should be looking at a good portion of
01:02:46 this potential deputy city manager is
01:02:49 actually they're coordinating police,
01:02:52 public works, fire, and all that. That
01:02:56 goes into what we should really booking at
01:02:59 as once again a overall public safety cost
01:03:03 for the large scale events.
01:03:07 >> Thank you. Authority member Chahal if
01:03:10 you like to continue.
01:03:11 >> Coming back to the same thing, I also
01:03:16 want to point the [inaudible comments] we
01:03:19 have a history of [inaudible comments] how
01:03:23 do we control that? I'm happy that we
01:03:28 signed an agreement that bay area
01:03:31 management committee. I think that is the
01:03:33 name they are responsible for the losses
01:03:36 on that, but there are other loss making
01:03:40 events that are impacting our general fund
01:03:43 revenue. How do we as a stadium authority
01:03:47 control that to increase the bottom line.
01:03:50 I think one of the [inaudible comments] is
01:03:52 the school our local high school game held
01:03:57 in the stadium, right? If I'm not
01:03:59 mistaken. How do we control that?
01:04:01 >> Under the agreements, the property
01:04:03 manager has the authority to schedule the
01:04:06 non NFL events. Under the agreements as
01:04:10 well which is our next item so it is a
01:04:12 great question, the agreements call for a
01:04:15 marketing plan that shall be mutually
01:04:19 agreed to and so we will walk you through
01:04:22 the concerns with the draft marketing plan
01:04:25 and some areas we think it is reasonable
01:04:28 to suggest and achieve within the
01:04:32 marketing plan a reflection of matrix to
01:04:35 track money losing events as well as
01:04:38 multi-year events that lose money so we'll
01:04:40 provide a walk-through as part the next
01:04:43 presentation, but in terms of controlling
01:04:45 it, the authority rests with the property
01:04:49 manager to enter into non NFL agreement.
01:04:54 The authority you have is to mutually
01:04:58 agree to a marketing plan when it is
01:05:00 officially meets your need to track
01:05:03 information that impacts the bottom line.
01:05:06 >> We do have some recourse to control
01:05:10 those events? Or no? As of today?
01:05:20 >> I think that remains to be seen. There
01:05:22 are different ways to figure out what
01:05:24 recourse we have with respect to
01:05:27 particular events. The one event I'm
01:05:30 aware of that is known loser is the pack
01:05:32 12 and that will go on this season. I
01:05:34 don't know if-because they dont give us
01:05:38 let's say the word reliable data as to
01:05:42 ahead of time as to whether an event will
01:05:44 or will not be profitable, it is very hard
01:05:47 for us to say okay, is this worth our
01:05:50 investment of public resources of the
01:05:53 return on investment worth it. We just
01:05:55 dont know and so it is only been since
01:05:58 last year that we had any real idea of
01:06:01 which events lose money and which events
01:06:03 make money and since doing that they did
01:06:06 cancel the pack 12, the final game in the
01:06:10 series for next year, but as far as this
01:06:14 year goes we still have that loser, and as
01:06:19 far as I know, I don'ts think we know
01:06:21 whether any of the other events they
01:06:23 booked are money losing or not. That is
01:06:26 why in terms of the budget, we-you know,
01:06:31 it is unfortunately but we don't have the
01:06:33 information to give you as to which events
01:06:37 are going to make money and which are not
01:06:39 because they haven't given the data.
01:06:41 >> That is my concern. We as the stadium
01:06:44 authority should be able to make decisions
01:06:47 because we are controlling authority on
01:06:50 that and if we don't have any authority to
01:06:52 control these things one way or the other
01:06:55 I think it is a defeating purpose like
01:06:58 what we are here for and that is what we
01:07:00 need to sit together or whatever we want
01:07:02 to do it so it is mutually benefit to all
01:07:04 of us. That brings to the next question I
01:07:08 had was for the-we had a detailed noise
01:07:15 survey done. What is our-because that is
01:07:19 one of the things which is coming in the
01:07:21 past that is impacting our revenues. So,
01:07:26 what are our goals after that noise survey
01:07:31 done, what are our goals? How we are
01:07:33 going to act into those things so that we
01:07:35 bring some clarity from the stadium
01:07:39 authority point of view or the council as
01:07:41 a city council leadership. What are the
01:07:45 goals how we are trying to project that so
01:07:48 we give clarity to them. We gave 3 or 4
01:07:52 games or not at all. What will the
01:07:55 ultimate crux of that study?
01:07:58 >> We will respond to that in writing and
01:08:01 pull up the noise monitoring program, and
01:08:05 some of the information that came from the
01:08:10 original work with the noise monitoring
01:08:14 program data and the permit conditions
01:08:18 that speak to thresholds for noise and how
01:08:21 the noise program monitoring program has
01:08:23 been responsive with us being able to
01:08:25 track events that go or any other activity
01:08:29 in the area that go beyond the threshold
01:08:31 limits. I'll bring forward a more
01:08:35 thorough response because I don't have the
01:08:37 noise program information in 41 of me. I
01:08:39 don't have the threshold limits we
01:08:45 presented before that come from I believe
01:08:47 the development permit condition.
01:08:49 >> Okay.
01:08:50 >> I need to pull that information.
01:08:52 >> That is fine, because I was looking at
01:08:54 all detailed survey done and the noise and
01:08:58 there is Contradictory messages in the
01:09:04 document but if you want to bring back
01:09:06 because one of the documents says 60
01:09:07 percent said we are [inaudible comments]
01:09:09 and then I was looking at the whole of
01:09:12 survey results, they were in the range of
01:09:16 30, 35, 36 percent. We can discuss that
01:09:19 later.
01:09:20 >> I do want to add a little to the last
01:09:23 question. I think it is important that
01:09:26 the issues around the closure and being
01:09:31 aware of what money loser events I we are
01:09:35 with financial's, it gets back to
01:09:38 management 3.3 which we talked about where
01:09:41 we said in advance of the event what are
01:09:45 the conditions and scenarios and within 45
01:09:47 days after understand some the financial
01:09:49 activity. The management company has
01:09:53 presented us with a template what they
01:09:55 propose. They report from regularly on at
01:09:59 least minimum quarterly basis. The ball
01:10:02 is in our court now to sort through that
01:10:05 and bring them back a response. We are
01:10:08 hoping to do that at the April quarterly
01:10:10 meeting on this topic and continue that
01:10:12 discussion. We had requested more
01:10:16 information that allowed for us after an
01:10:19 event to bring forward so we can advise
01:10:21 the board on the financial's around how we
01:10:24 are trending more frequent then receiving
01:10:27 at the end of the year. But we have work
01:10:29 to do and I just want to acknowledge the
01:10:31 ball is in our court for responding to the
01:10:33 management company.
01:10:34 >> That was my point. If we have some non
01:10:40 clarity items on the management agreement
01:10:43 we need to look into those so we dont have
01:10:45 contentions on every of these items
01:10:48 basically. Because that is the guiding
01:10:52 document so we need to look into that
01:10:55 later. I have one more question.
01:10:57 >> I also want to acknowledge that you
01:10:59 raise a very valid point in terms of why
01:11:02 are we doing this? If we follow the
01:11:06 revenue numbers that are being projected
01:11:09 by the management company of no
01:11:11 performance so absent of $2.7 million to
01:11:16 the general fund the net revenue of $175
01:11:19 thousand we expend a lot of just energy
01:11:22 workforce energy on certainly tracking
01:11:26 from the financial standpoint auditing
01:11:32 researching the agreements and moving on
01:11:34 the issue as well as the incredible work
01:11:36 our staff does to respond and deploy to
01:11:38 the events. Certainly it is a cost
01:11:41 benefit discussion that this board should
01:11:43 have in terms of the value of that 175 for
01:11:49 the $2.8 million they asked on Thursday.
01:11:54 You can find humor in the staff cost equal
01:11:57 the buffet cost on the stadium authority
01:12:00 staff side, and it really goes to think
01:12:04 through are we maximizing our
01:12:06 opportunities, which is the next topic in
01:12:08 terms of why the marketing plan is so
01:12:10 important going forward.
01:12:12 >> Okay. Next one is on the naming rights
01:12:17 agreement. We are falling behind on that
01:12:20 one two, right?
01:12:21 >> That is part the next presentation.
01:12:24 >> [Inaudible comments]
01:12:25 >> My last question would be the things
01:12:30 which are brought to us on March 14th that
01:12:34 buffet and all that stuff-where do they
01:12:40 fall, are these under that agreement?
01:12:43 They can Bill us that thing or are these
01:12:46 expenses generally manco can Bill us or
01:12:50 not?
01:12:51 >> So, I'll start and hand it off to the
01:12:54 attorney. We received this information on
01:12:55 Thursday. I think a little after 3
01:12:58 o'clock by that time we were well into
01:13:01 completing and beginning to produce the
01:13:04 budget. Some of the cost may fall into
01:13:07 the agreement and other cost may be nice
01:13:12 to have or something that developed late
01:13:16 for them to include. I do think it is
01:13:20 worth mentioning though, which really begs
01:13:23 the question, this is roughly a $3 million
01:13:28 spread from what had been planned over the
01:13:30 last couple months, and to the extent that
01:13:33 the buffet has been included in the
01:13:37 agreements and it is only now 5 years
01:13:39 later they are discovering it had not been
01:13:44 baked into the budget it really should
01:13:46 cause for serious concern about what is
01:13:48 happening over there. We already know
01:13:51 that we don't have our documents, and or
01:13:54 entirely the set of documents. We know
01:13:57 through the download of the general ledger
01:14:01 that we found discrepancies highly desired
01:14:04 to close, and we know now that the revenue
01:14:07 that we projected and was trending for the
01:14:10 first three quarters is not what they say
01:14:12 based on their numbers with lack of
01:14:14 supporting documentation. There's on the
01:14:18 part the board you should be concerned
01:14:20 about this activity because it's-there is
01:14:25 a lot of questions that need to be
01:14:27 answered.
01:14:28 >>Ia mentioned the buffet cost is part of
01:14:32 the agreement.
01:14:33 >> It is in the stadium lease agreement.
01:14:38 We dont know what to consider for years
01:14:43 1-5. I'll leave that to the attorney.
01:14:45 >> Basically they didn't expense this from
01:14:47 1-5 but expenses this year all collected
01:14:50 from the back?
01:14:51 >> It appears that is what occurred.
01:14:54 >> This is part the agreement though?
01:14:56 >> Well, okay, let's talk about that; they
01:15:18 find this at the last minute. Does that
01:15:20 sound like good faith to you?
01:15:22 >> It should be--
01:15:24 >> Right.
01:15:25 >> What I'm saying-
01:15:26 >> I think we really have to explore what
01:15:30 is going on here. It seems people are
01:15:34 turning dials at the last minute and I
01:15:35 think we really need to be careful about
01:15:38 that and I prefer not to answer the
01:15:40 question of does the agreement require
01:15:41 that or not unless I have the full facts
01:15:44 of the context of how this is all gone
01:15:48 about. It does seem extremely odd to say
01:15:52 you owe a million dollars a year back to
01:15:56 us because it is in the agreement and
01:16:02 suddenly when there is some kind of
01:16:06 persuasion attempting to be had here about
01:16:09 non NFL events and-there is no way around
01:16:13 the fact that their performance as a
01:16:17 manager in terms of non NFL events is
01:16:22 terrible this year compared to prior years
01:16:23 and so they may have gone to the press and
01:16:26 said, well, it is all because we can't get
01:16:29 week day concerts but none of the data we
01:16:31 have explains that is reason for it. We
01:16:38 have to be mindful maybe the poor
01:16:43 performance is due to the fact they are
01:16:45 poor managers and responding resources
01:16:48 fighting us in different regards as
01:16:50 opposed to just simply performing their
01:16:53 duties faithfully in good faith. The
01:16:58 experience I had dealing with this doesn't
01:17:03 feel like good faith.
01:17:06 >> That's the reason I say if we review
01:17:09 the management agreement to sort these
01:17:11 things out.
01:17:12 >> When your agent doesn't give the
01:17:16 information they are required to give you
01:17:19 it makes difficult to answer your
01:17:20 questions. I'm sorry about that. They
01:17:23 are not here to answer your question when
01:17:25 they have the answers.
01:17:26 >> I'm equally concerned because we are
01:17:29 losing $2.8 million of the general fund so
01:17:32 we have to be concerned about these things
01:17:34 and we have to thing a solution to the
01:17:35 table. 1 billion stadium we have to get
01:17:40 something for our residents.
01:17:41 >> If they talk to you maybe you can ask
01:17:44 them to show up and answer the questions.
01:17:45 >> I have not spoken to them yet, but
01:17:48 happy to talk to them.
01:17:50 >> Thank you. Authority member Watanabe.
01:17:53 >> Thank you, board chair. I was going to
01:17:57 bring up the document provided to us, the
01:18:01 stadium authority individual board member
01:18:02 priorities. Actually you are responsible
01:18:05 for the relationship going forward. I
01:18:07 don't know how it will be implemented but
01:18:09 it looks like it will be your
01:18:11 responsibility going forward so according
01:18:13 to this you might talk to-
01:18:16 >> [Inaudible comments]
01:18:17 >> So according to this we all have
01:18:20 responsibilities for priorities.
01:18:23 >> [Inaudible comments]
01:18:26 >> I raised that point. I raised the
01:18:28 point. It isn't I'm the only one should
01:18:30 be responsible for that, madam Watanabe.
01:18:34 We all are responsible. We all have to
01:18:36 make sure it should be brought in
01:18:39 properly. Right. I requested that.
01:18:43 >> And just a couple of things. Because
01:18:48 of the fact that there are no real numbers
01:18:51 for the non NFL events, what concerns me
01:18:55 also is just-I hope it is appropriate to
01:18:58 bring it up is the tax appeal recently
01:19:02 discussed and surprised all of us, and
01:19:05 basically saying that we are responsible
01:19:10 for paying back $600 thousand or losing
01:19:13 $600 thousand a year, and when you look at
01:19:17 these numbers we are-the way I see it we
01:19:20 are looking at a negative balance. We
01:19:22 have-I dont know where we'll get the money
01:19:26 but think it goes back to again, going
01:19:28 back to the standard of care and what we
01:19:33 are doing in terms of maximizing our
01:19:36 operating revenues, and what is being done
01:19:38 to make sure that this facility is doing
01:19:44 what it is supposed to do and that is
01:19:46 generate money, not just for the tenant
01:19:49 but for the city as well. And y do have
01:19:53 concerns about this 1.1 buffet expense
01:19:58 that has popped out of no where and like
01:20:01 to who the 900 people are because we are
01:20:04 season ticket holders and have club level
01:20:07 seats so I like to know if we are a part
01:20:09 of the 900 people too. I also had other
01:20:11 questions, but based on what you just said
01:20:14 that regarding the naming right, I have
01:20:19 concerns about them as well, so I will
01:20:22 just leave it until the next item. That's
01:20:25 all I have. Thank you.
01:20:31 >> I have a few simple questions for the
01:20:35 stadium authority director and stadium
01:20:37 authority attorney. So, the first is, are
01:20:40 we getting the documents that we are
01:20:43 legally entitled to get?
01:20:47 >> We are not getting all all of them, no.
01:20:53 >> Are we getting the financial
01:20:55 information we are legally entitled to
01:20:58 get?
01:20:59 >> Obviously not.
01:21:00 >> Have we made reasonable request for the
01:21:02 information?
01:21:03 >> I think all the requests have been
01:21:04 reasonable.
01:21:05 >> Have we given manco a reasonable period
01:21:08 of time to fulfill our request?
01:21:11 >> Plenty of time.
01:21:13 >> Do you believe that manco has been
01:21:17 cooperative?
01:21:22 >> You've been in the front line on that
01:21:25 one.
01:21:26 >> I think of areas-
01:21:29 >> An honest truthful answer.
01:21:32 >> I think an areas that are of particular
01:21:35 interest for them they are certainly the
01:21:38 cooperation. Whether it's deploying out
01:21:41 for an event, the recent developments of
01:21:43 the stand alone financial management
01:21:45 system which is now of interest to them,
01:21:48 however, on very reasonable requests we
01:21:52 ask for purposes with strong business
01:21:55 case, foundation, there is a absence of
01:21:59 cooperation at times, and some of which
01:22:02 you'll see in responses on the marketing
01:22:04 plan where we are making very reasonable
01:22:08 request that help inform future decision
01:22:13 making that went unresponded to.
01:22:16 >> You believe manco fulfilled the legal
01:22:21 obligations to us under our agreements and
01:22:23 helped us comply with measure J?
01:22:28 >> Not really sure about measure J, but I
01:22:32 think if we go back to the standard of
01:22:37 care slide, we presented a lot of
01:22:44 information today and I think that
01:22:51 manco will be judged whether they are in
01:22:53 legal compliance and if they dont step up
01:22:56 to the plate and provide the information
01:22:58 they are required, as I said before, it
01:23:01 does not feel like they have been
01:23:03 operating in good faith at least in terms
01:23:05 of the budget process. I wonder-I don't
01:23:11 know how other NFL stadiums operate with
01:23:15 respect to non NFL events but would be
01:23:18 shocked if there are public owners of the
01:23:21 stadiums treated the way we are treated in
01:23:24 terms of the kind of information we are
01:23:30 getting. I dont think it doesn't appear
01:23:34 they are controlling the expenses well.
01:23:36 We are veering all different directions in
01:23:38 terms of what these expenses are supposed
01:23:41 to be. I think in a lot of ways they've
01:23:46 created expenses on their side for the
01:23:50 sole purpose of preventing us getting
01:23:54 information. We spent years, the two
01:23:57 years I have been here we have been trying
01:24:00 to get access to accurate financial
01:24:01 information and it is only just recently
01:24:03 they finally appeared to be going in the
01:24:06 direction of giving us what we asked for
01:24:11 which is access to our accounting of ow
01:24:14 facility in a way we can see what is going
01:24:17 on. I think this-the explanation as to
01:24:23 this year's budget and next years budget
01:24:25 doesn't seem to be operating maximizing
01:24:29 operating revenues and so they haven't
01:24:33 given a explanation as to why they
01:24:36 suddenly have reduced revenues to the
01:24:39 point of all most nothing after having the
01:24:43 first 4 years have at least significant
01:24:47 revenue. That's worthy. There is a
01:24:54 public investment in each event and if you
01:24:57 only get $175 thousand you have to wonder
01:25:01 why would we have non NFL event that
01:25:04 require city resources. It makes sense to
01:25:07 have event that don't require city
01:25:09 resources but the larger event the extent
01:25:12 we send people out and put wear and tear
01:25:14 on the public safety forces to not make
01:25:16 any money, you got to wonder why we would
01:25:18 do that. That was what the standard of
01:25:24 care was that they agreed to and certainly
01:25:28 appears there are problems with how they
01:25:31 are performing to the standard of care.
01:25:34 >> Thank you, I think it is clear from the
01:25:38 answers and past experience with the 49ers
01:25:40 that we have a serious problem. It is
01:25:43 also clear from your answers that we've
01:25:46 tried to be reasonable in the approach
01:25:49 even though some may say we have not been
01:25:52 nice to them or it is something personal.
01:25:54 I think the facts speak for themselves in
01:25:56 terms of what we are trying to do. Some
01:25:59 things that really concern me about what
01:26:02 you've just presented was that they have
01:26:06 slashed the revenues and sky rocketed the
01:26:09 expenses with no supporting documentation.
01:26:12 They are not even here tonight. They are
01:26:15 managers of the stadium and know the
01:26:19 budget and not here to answer the
01:26:22 questions. There are strategies they
01:26:23 deployed for non NFL event but the
01:26:26 strategies by the property manager has
01:26:28 resulted in them continuing to book huge
01:26:32 money losing events at the stadium for us.
01:26:36 And they are non responsive provided
01:26:39 budget and other information on throwing
01:26:41 everything including the kitchen sink in
01:26:44 at the very last minute is not
01:26:47 professional in any way shape or form.
01:26:49 There's all of that information there. We
01:26:52 must have supporting documentation. I'm
01:26:54 not going to support a single time dime
01:26:56 until we see what the supporting
01:26:58 documentation is, so I can only conclude
01:27:02 that if we want to do our duty as elected
01:27:05 officials and protect the Santa Clara
01:27:08 taxpayers we have to take more serious and
01:27:10 possibly more formal action against this.
01:27:18 If anybody disagrees with the approach I
01:27:20 like to suggest a better way how we manage
01:27:22 this public asset, because with our
01:27:25 present interaction and lack of
01:27:28 responsiveness where we have to project
01:27:30 what we think the non NFL event revenue
01:27:33 will be, I'm doubting anyone can come up
01:27:35 with a better solution to try to manage
01:27:38 this, but it is our responsibility at this
01:27:41 point to see-nobody would manage their own
01:27:46 personal property in this fashion much
01:27:47 less a billion dollar asset for the
01:27:50 public. Nobody would accept this type of
01:27:54 management for anything, so I think we
01:27:59 have some big issues. Talking about the
01:28:03 new financial system that we can separate
01:28:07 all the stadium authority expenses and
01:28:10 revenues and all the businesses and
01:28:11 stadium authority I'm all for that but I
01:28:14 want to stadium authority to be the leader
01:28:17 and controller of what happens, the one
01:28:20 setting and coordinating the whole system
01:28:24 and being in charge of system because that
01:28:27 is the only way that will work and in
01:28:28 other words, we will be in the same
01:28:30 situation. I know stadium authority
01:28:32 director you said they appear to be
01:28:35 cooperating, but until it is actually done
01:28:38 there is no cooperation, so hopefully they
01:28:41 will be here at the next meeting of the
01:28:44 budget to answer a lot of these questions
01:28:47 and supply all the documentation for
01:28:51 their-I'm going to call kitchen sink
01:28:54 expenses they through in at the last
01:28:56 minute unprofessionally, but absence their
01:29:00 coming to answer and providing that
01:29:02 information I'm not in favor of putting
01:29:04 any additional expenses into the budget
01:29:08 without justification. Not even the
01:29:10 additional $200 thousand that you are
01:29:12 recommending. I think that we have to be
01:29:15 very serious about this and really look at
01:29:18 that management agreement because they are
01:29:20 responsible for a lot of issues, a lot
01:29:25 of-they have a lot of responsibility in
01:29:27 the management agreement so if they are
01:29:29 asking additional money above and beyond
01:29:32 what is in the agreement we have to look
01:29:34 at the additional things because they are
01:29:36 responsible for many things in the
01:29:38 agreement so we have to look closely. I
01:29:40 think is a shame because you know, like I
01:29:45 said i would like to know where the
01:29:46 conc