Updates for Santa Clara Chamber of Commerce and Convention-Visitors Bureau Agreement

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Given the complexity of issues related to the Santa Clara Convention Center and the Convention Visitors Bureau, to increase the level of transparency and public awareness related to the Convention Center Management Agreement and the Convention-Visitors Bureau Agreement, this webpage has been created to provide background and current information on:

  • Santa Clara Convention Center
  • Convention and Visitor’s Bureau
  • Tourism Improvement District (TID)

This webpage contains information regarding: contracts; the performance audit; Council actions; and, other information as it becomes available. The TID information will soon be updated.

News

Beginning August 16, 2018, the Santa Clara Business community will receive a letter from City Manager Deanna J. Santana, acknowledging the City’s commitment to its strong partnership with the business community as we work together to accomplish the Council goal of promoting and enhancing economic and housing development and enhancing community engagement and transparency. It also references Council’s direction to staff to evaluate its contract management, audit, and procurement processes with various City services and the need to preserve the appropriate use of public funds and facilities. 

The letter also provides information and facts surrounding recent actions taken by the Council relative to the review of the Chamber of Commerce’s contracts and the preliminary observations from the performance and fiscal auditor. The final audit with findings is expected in September and this website will be updated with more information.

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Background

The City of Santa Clara owns the Santa Clara Convention Center has historically provided public funding to promote convention, tourism and visitor activity in the City of Santa Clara through three separate legal Agreements. The funds for all Agreements have been administered by the Santa Clara Chamber of Commerce/Convention-Visitors Bureau (Chamber/CVB)

Management Agreement for the Santa Clara Convention Center (Management Agreement)

The Management Agreement provides the Chamber/CVB with oversight and implementation responsibilities for all services necessary to direct, manage all Convention Center operations including marketing, advertising and promoting the center; booking of events; hiring of staff; and, daily operations of the center including accounting, catering, security, janitorial, and maintenance.


Key Provisions:

Expiration:  No expiration date.  Agreement can be terminated upon 180-day notice.

Fiscal: City keeps all revenue generated by the operation of the Convention Center and is responsible for all expenses.   

Management Fee: Although the City has historically paid a fee to the Chamber, there are no provisions in the Management Agreement for the payment of a fee. Payment of a fee has been City Council discussion topic (see below). Payment of a management fee has been suspended. The FY17/18 budget showed a $145,292 fee amount.

Convention-Visitors Bureau Agreement (CVB Agreement)

The CVB Agreement was an annual agreement with the Chamber/CVB that provided convention and visitor services through the Chamber’s Convention-Visitors Bureau operation. These services included marketing and sales of the Convention Center and Santa Clara to large groups and citywide events; visitor marketing and communication; and, operation of a City Store.

Key Provisions:

Expiration:  Annual contract. Contract FY 2017/18 expired on June 30, 2018.
Fiscal: FY 2017/18 contract $1,461,601.

During Redevelopment Dissolution there were significant questions and discussion about the ownership and future of the Convention Center. In an effort to minimize its liabilities, on April 22, 2015, the City delivered the Chamber a 180-day notice of termination of the Convention Center Management Agreement. This letter was followed by a June 4, 2015 letter advising that the Management Agreement would be terminated effective as of June 30, 2016 unless the City was able to maintain ownership of the Convention center and the City approved an extension of the Agreement. Concurrently, the Chamber advised the City of its desire to separate from the management of the Convention Center.

In January 2016, the City entered into a Settlement Agreement with other taxing agencies on Redevelopment Dissolution issues in which among other items the parties agreed that the ownership of the Convention Center belonged to the City of Santa Clara.

In January 2017, the City contracted with Jones Lang LaSalle (JLL) to provide general information about Convention Center management and operating models throughout the country. On April 18, 2017, the City Council approved an amendment to the JLL contract adding additional services to: 1) engage stakeholders and recommend an operating model for the Convention Center and 2) based upon Council direction, develop and implement a new management and operating model.

Following several presentations to the Economic Development Committee and the City Council on potential Convention Center operating models, on February 27, 2018 (see meeting information below), City Council held a study session regarding the status of Convention Center and policy issues for future Council consideration.

Summary of City Council Action since February 2018

Since February 27, 2018, several reports have been placed on Council agenda related to the City’s contracts with the Chamber regarding the Convention Center and the Convention & Visitors Bureau.  The staff report and video links can be found in the “Timeline of Public Meetings” section below.

May 22, 2018 – Convention Center Management Fee

Council action:  Directed the City Manager and City Attorney to: 1) begin process of exploring a term sheet for a new agreement with the Chamber for their management of the Convention Center; 2) begin process to execute a financial and performance audit; and 3) suspend management fee until such time as completed

June 12, 2018 – Update on Previous Council Direction regarding Convention Center Status of CVB Agreement

Identified auditor and advised of Council of the status of Convention Center and CVB matters.

June 26, 2018 – Convention Visitors Bureau (CVB) Annual Agreement

In addition to the discussion of the Chamber’s request to fund a FY18/19 contract with the Chamber for CVB services, staff provided an update on previous Council direction including the commencement of a performance audit by TAP International.  Preliminary audit observations were reported (see below) and apparent inconsistencies between written records and federal tax filings were also disclosed.

Council action:  Council did not fund a $1.5 million request from the Chamber for convention and visitor service activity.  Directed the City Manager to: 1) provide funds to Chamber for the sole purpose of funding salaries and specific related costs for up to 60 days; 2) retain JLL to assist the City in the development of options for the provision of convention and visitor services; and 3) obtain the return reserve funds from the Chamber to the City for the sole purpose of funding salaries.

Based upon the June 26, 2018 Council action, staff advised that there would be disruption in the delivery of convention and visitor services until an alternate service delivery method/provider  was identified and operational.

July 16, 2018 – Information Report regarding Convention Center Management Agreement and CVB Agreement

Information Report provides Council with an update on issues to be placed on an August or September City Council agenda for further action.  Two of Council’s previous actions require more clarity on the governance structure for and legal authority of oversight of the Convention Center.

Audit

Per Council’s May 12, 2018 direction, the City hired TAP International for a performance audit on Convention Center, and by extension, CVB processes and activities.  Denise Callahan, principal of TAP International, is the lead auditor for the contract.

Initial observations by TAP showed possible self-dealing by the Chamber and its members, undisclosed free use and reduced-rates for use of a public facility by the organization and its members.  When there is preliminary evidence of potential fraud, waste or abuse, it is an audit requirement to immediately report it to the client (in this case, the City).  The provision of discounts to Chamber members, including full discounts to the Chamber and other entities that use Convention Center facilities triggered this requirement.  Preliminary audit observations were presented to Council on June 26.

Frequently Asked Questions:

In response to several questions regarding TAP International:

Who is TAP?  What is Ms. Callahan’s experience?

TAP International has over 100+ years of combined experience conducting performance audits. Ms. Callahan has an extensive auditing background and has trained multiple local, state, federal and international audit organizations on performance auditing as well as provides on-going coaching and quality assurance reviews.  She serves on the Audit Committee for the American Society for Public Administration and has won awards for the quality of completed performance audits. View background summary.

Has the TAP audit and request to inspect documents exceeded their scope?

TAP has not gone beyond the scope of the audit.

Does TAP have a conflict of interest?

The City of Santa Clara has not identified any potential conflict of interest, real or perceived.

Timeline of Public Meetings:

February 27, 2018

Agenda Report (including PowerPoint presentation)
Post Meeting Material

May 22, 2018

Agenda Report (including PowerPoint presentation)
Post Meeting Material

June 12, 2018

Agenda Report (including PowerPoint presentation)

June 26, 2018

Agenda Report (including PowerPoint presentation)
Post Meeting Material

July 16, 2018

Informational Report

Press Releases:

Contact: 

For more information, please call the City Manager's Office at 408-615-2210.

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