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:
(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.