Final Convention Center Audit: City Lost Revenue and Subsidized $37 million in Last 10 Years

By Robert Haugh

The final Santa Clara Convention Center audit by TAP International is done and it wasn’t pretty. If you add up all the money the city put into the Convention Center or the Convention and Visitors Bureau (CVB), the total is $37 million over the last 10 years. But if you give them credit for generating TOT (hotel tax) and sales tax it’s still a big loss. They brought in about $17 million in the last decade. So net revenue is MINUS $20.5 million. Wow.

This is a lot different picture than what former Santa Clara Chamber of Commerce President Joe Siecinski and Director Chris Boyd told the City Council in May.

They tried to make the case that the Chamber was managing the Convention Center so well that they made money for the City and the Council shouldn’t terminate their contract. Looks like they were off by about $2 million per year. Whoops.

The City Council did stop payments to the Chamber after the preliminary audit findings because of mismanagement and malfeasance. It looks like it was a good thing that they did. Here’s some stuff we learned in the final report:

  • Convention Center management gave more than $16 million in discounts to all kinds or groups, including Chamber members.
  • The auditor says there was weak financial management.
  • The management gave out over $300,000 in commissions that were never disclosed.
  • They gave out $27,000 in bonuses that may be illegal.
  • Funds were co-mingled between the Convention Center and the CVB.
  • They used the same credit card, and the Chamber did, too.
  • There are multiple examples of conflict of interests and self-dealing.
  • The Santa Clara Weekly is one example because Miles Barber is a Chamber director.
  • Another example involves Chamber director Ravinder Lal for mailing and shipping services.
  • Each year, about 50 events were not charged a fee for using the facility.
  • In 2012, the CVB got checks and made a $8,000 contribution to the Santa Clara Chamber PAC. That’s a big no-no.

Some Councilmembers were not happy. Mayor Lisa Gillmor says she has ‘’grave, underline grave, concerns of the fiscal management.” Vice Mayor Kathy Watanabe said it was good that they’re “cleaning house.” Councilwoman Teresa O’Neill said she wanted to start with a “clean slate.”

Only Councilwoman Patty Mahan defended the Chamber and Convention Center management. Pat Kolstad made the motion to accept the staff report. It officially terminates the Chamber contract and starts next steps. It passed 4-1. Mahan voted against. Councilwoman Debi Davis was absent.

On October 9, the Council will discuss next steps including putting out an RFP for Convention Center management. The Chamber and current Convention Center management will have a chance to defend themselves then. They’ll have a chance to bid on the RFP too if they want to. Don’t bet on it.

Good News

The Council did hear some positive things last night from City Manager Deanna Santana.

She reported that the 49ers made a $3.34 million payment to the city for their stadium rent including a “true up” payment for the big $180 million arbitration case the City won when the team tried to lower its own rent.

NYU’s Tisch Institute for Global Sport has selected Santa Clara for a free consulting about Levi’s Stadium. They’ll look at community engagement and do a financial analysis of large events. NYU decided to do this after Gillmor spoke at the U.S. Conference of Mayors in January. The Tisch Institute has a good reputation we hear. We’re glad for the free help and that Gillmor got on a red-eye flight to represent the Mission City.

Santa Clara Chamber and CVB

5 comments

  1. Let’s hope that we get a better operator that will be good for Santa Clara and not just themselves. There were so many conflicts of interests that one wonders if there could be enough for the police and the County District Attorney to investigate and potentially bring charges up against the operators. Because there are strong hints of fraud, purposeful or otherwise.

    So glad that you’re reporting has kept this front and center. I think this is a key reason why the Mayor and some of the City Council and the City Manager can systematically be looking at what’s been mismanaged for years or even decades. The public service you as a local journalist is invaluable.

    I do hope that you’re feeling better and have some good news. And that you continue to have guest writers from time to time to help take the burden off of you to make Santa Clara News more “sustainable.”

  2. I am sad to read this about the Convention Center and now we know about the Chamber management details. Thank you Robert. The one insight I see visible now is that our City allowed this to happened throughout the 30 years – no routine accounting audit of their asset. The other, is that this was a project of the Redevelopment Agency. Yet, I agree, the City did not manage the asset correctly. As a front line worker of Tech Events providing customer experience, who knew the back story? As a Assistant Controller with integrity, it hurts to see this unveil. I am hopeful we get this straightened out and go forward managing this asset correctly. We need a good accounting office in place with internal control.

  3. Glad you are recharged and have returned. During the week I check your blog every day to learn about what’s going on in the City of Santa Clara.

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