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Letter to the Community regarding UPS Store Lease at Santa Clara Convention Center

Post Date:08/01/2019 5:30 PM

From the Office of the City Manager

August 1, 2019

Dear Santa Clara Community,

On July 25, 2019, an opinion piece written by Santa Clara Weekly publisher Mr. Miles Barber contained misinformation pertaining to the Santa Clara Convention Center. This community letter provides corrections to the mistakes, which appear to be the result of a lack of understanding about delegation of a public entity’s contracting authority and the difference between a lease agreement and license. First and foremost, the power to lease City property rests with the City Council under Charter Section 714 and cannot be completed by any other entity absent express delegation of authority to do so.

The Management Agreement with the Santa Clara Chamber of Commerce – as the former operator of the Convention Center - did not contain a contract provision where the City authorized the Chamber to enter into a lease for any part of the Convention Center. Without that authorization, the Chamber (or Santa Clara Convention Center) was not allowed to engage in the activity but did so anyway. Under their contract, Spectra Venue Management (Spectra) Inc. is permitted to enter into license agreements only. Just as with the Chamber’s management contract, the Spectra agreement likewise does not permit them to enter into lease agreements at the Convention Center. Mr. Barber’s statements or suggestions to the contrary are simply wrong.

The Chamber of Commerce had no authority as the manager of the Convention Center from the City of Santa Clara (as the owner) to execute a lease agreement of City-owned property for the UPS store. Whether a third party – UPS Corporate, as cited by Mr. Barber – thought the lease was “by the book” is irrelevant. UPS Corporate does not appear to have reviewed the validity of the original lease for the UPS Store from the perspective of a public entity’s contracting authority: UPS Corporate does not speak for the City and its right to lease out space. 

It is still a fact that the Chamber’s lease agreement of City-owned land was invalid, and its mishandling of the UPS lease agreement is serious. Further, the manner in which the Chamber handled conflicts of interest (relative to Chamber Board members) and its contractual obligations regarding publicly-owned assets was the subject of discussion last year. In September 2018, the City reported concerns over the Chamber’s self-dealing and conflicts of interest to the Internal Revenue Service and the California Fair Political Practices Commission.

In the meantime, the transition of the operations at the Convention Center is going smoothly under Spectra as the new Convention Center manager/operator. Spectra determined that the UPS store provides an important service to many Convention Center clients. Through the authority provided in Spectra’s Management Agreement, the City authorized Spectra to finalize a license agreement with the UPS store for one year (with a potential one-year extension) until longer term decisions about space and services can be made. The UPS Store has not received any permanent, or even long-term, exclusive interest in the property. Rather, the UPS store operator has permission to provide services for one year. Mr. Barber’s lack of distinction between these two actions is misleading to the reader and attempts to establish justification for the Chamber’s actions.

Lastly, Spectra’s action to allow UPS to operate in the Convention Center is also conflict-free, as the UPS shop operator does not sit on the Spectra Board, nor has any control over the operations of the Convention Center. In the Chamber scenario, the UPS operator profited from business conducted in the Convention Center, while simultaneously holding a seat on the Chamber Board where he could potentially make decisions on the operations of the Convention Center that were profitable to him. That potential conflict is now eliminated, a fact that was entirely omitted from the article.

Contrary to the misinformation in the opinion piece, the City Council has acted with balance on behalf of the public, holding all of its contractors to the important standards of fairness, transparency and prudent fiscal management of public resources and funds.   

For questions about the Convention Center, contact the City Manager’s Office at 408-615-2210 or manager@santaclaraca.gov

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