49ers Respond to Draft Stadium Audit: Shoot the Messenger
By Robert Haugh
We finally got a copy of the Harvey Rose Audit for the 49ers stadium operation and Measure J compliance. Thanks to Ramona Giwargis of the Mercury News who got three documents leaked to her:
- The draft audit
- The 49ers’ response
- The City staff response
(Note to our sources: you let us down. But we’ll still take your calls.)
We haven’t read in detail the 169-page draft audit. It’s clearly thorough. We’re not surprised. The Harvey Rose firm has been doing local government audits throughout California for decades and has a solid reputation.
But not everyone likes them. 49er General Counsel Hannah Gordon doesn’t. In her letter she says:
Throughout the report, Harvey Rose, which is neither a law firm nor a certified public accounting firm qualified to perform an audit or give legal advice, draws legal conclusions and gives legal counsel.
Ouch. That’s a body slam. But we couldn’t help but smile at the irony when an NFL team lawyer, who is neither a public servant, nor a guardian of tax dollars feels qualified to say at the end of her letter that the audit is “a waste of public time and funds.”
If the city spent $200,000 on an audit that yields $2 million (or anything above $201,000 really), most Santa Clarans would say that’s a good use of public time and funds. And remember, this is just the first phase of the audit. The 49ers are withholding documents that the City will have to go to court to get. The next audit could find more money for the City.
Gordon isn’t the only 49er exec taking shots at Harvey Rose. 49er President Al Guido said “… the mayor hand-picked a consultant against the city recommendation.”
Fact Check: Harvey Rose was selected unanimously by the City Council not just the Mayor in June, 2016. Councilwoman Teresa O’Neill suggested Harvey Rose for the RFP process and made the motion to pick them. City staff recommended Grant Thorton who could not complete the City’s ethics forms since they were fined $3 million by the Securities and Exchange Commission for “multiple audit failures” just six months prior.
That brings us to City staff. We’ve previously complimented the City’s acting finance director Angela Kraetsch for delivering more stadium financial information to the public than her predecessor.
So, we had a hard time understanding her response to the draft audit. This line from Kraetsch’s email was troubling: “We have not received any legal opinions on whether the terms of Measure J are binding or not.” Huh? Measure J, passed in 2010, is the law that prohibits using general fund money for the stadium. Now City staff is saying that Santa Clara residents voted for it and it may not be legal?
We understand the draft audit lays some of the blame on City staff for weak oversight. It’s hard to argue with the obvious. Most of the top City staff who were responsible have left the city or announced retirement.
But wouldn’t it be better for City staff to embrace the audit as a fix rather than try to cover it up?
We’ll see how Harvey Rose responds. The final report is expected at an August council meeting. Stay tuned, wrestling fans.
This whole fiasco would be comical if it wasn’t so CRIMINAL! I, personally, have been ringing the alarm for YEARS saying the information we, the public, were receiving was a joke. We have been made a fool of … But no one wanted to listen to the truth … Oh no, the 49ers are “our partners”, “our neighbors” and “do SOOO much for the community”! HOG WASH! And, I’ve been saying it to deaf ears for literally years!
City Hall is flooded with staff that is, has been, and continues to, suck up to the 49ers! They are NOT working for the people who are paying their salary … US! The people of Santa Clara! Until we, the people, finally get off our couches and insist on City Staff AND an entire City Council that work for us, we will be stuck in this quagmire for decades. We had an ex-mayor give away the farm, and a ex-city manager and an ex-director of finance that all defended the 49ers instead of waking FOR the City of Santa Clara.
We need to insist on a whole lot more EX employees to be escorted out of city hall immediately! People … The City of Santa Clara is on the verge of bankruptcy and no one is willing to tell the truth or even say the words … But I am. We have more debt and NO foreseeable way to cover our expenses or maintain our infrastructure but we keep dead wood and continue to whistle in the wind as though everything is beautiful … IT IS NOT!!! We lot millions of revenue and all the cronies kept their buddies instead of laying off excess staff. We have the fox in charge of the henhouse and they are all rearranging the chairs on the Titanic!!
I am not exaggerating … I am not crazy … I am a very educated person with the knowledge and courage to tell the truth when no one else is willing to do so …
THE CITY OF SANTA CLARA IS ON THE VERGE OF BANKRUPTCY!!! This is not a test …
I agree with some of MikeOH’s statements. A lot of this was the fault of city staff. But if it were not for this audit, we the public — and yes even city staff — would never have discovered the problems. It’s amazing that city staff never figured out the invoicing. Was in incompetence or intentional?
We should thank the auditors immensely for their work.
Great to finally have all of these documents. Thanks, Robert.
Now what do we do?
Let’s fix things! rather than prolong the anxieties (although there will always be complainers).
I’m disappointed in the adversarial tone of the 49ers response, but regardless, points are raised in all 3 reports that can be used to address specific issues regarding accuracies, corrections to be made, or clarifications for all parties for future communications.
Although there is a fixed contract, there may be items, as HMR has outlined, that can be negotiated to the satisfaction of the Stadium Authority (i.e., the City) and the 49ers “entities”. The objective should be to move forward, not simply to correct past payments, much of which seem to be invoicing issues by City staff. Those corrections will also be clarifications with which to move forward.
I feel the $200k for the HMR audit was appropriate EVEN if it yields less than $201k, though I assume it will, mostly as a result of City action and invoices, which “the entities” seem to agree, although I guess there’s an argument of possible overpayments.
We are at the (long) start of a long contract involving millions, actually billions, of dollars. It’s good to get these all clarified and straightened out versus this spending of City time & money and all the political positioning that diverts attention from the many other community issues that need to be addressed, housing and traffic, parks and commercial development.
The annual lease payment can be a separate issue currently being arbitrated at the cost of $750k in attorney billings to the City (and now authorized to be $750k more). I agree, with what I interpret of Mayor Gillmore’s point, that that provision should be looked at in a longer term stream of costs and revenues vs. simply year one. Regardless of how the Court’s might ultimately decide, hopefully the 49ers can agree to some compromise recognizing, even at $3M per year, a pittance to their other operating costs, that the Stadium and good relations with the City are worth more than the litigation.
Thank you for your comprehensive coverage. I don’t read the Mercury News so I appreciate it when you reference their stories about Santa Clara. I read the Santa Clara Weekly when I can find it. But they don’t publish regularly.
The city should be asking for a check to be delivered ASAP. City staff should be walking out the door if Measure J isn’t legal.