Santa Clara city officials are cutting ties with the local chamber of commerce, citing a preliminary audit that identified potential self-dealing and conflicts of interest in its management of the convention center and visitors bureau.
Last month, the City Council—led by Mayor Lisa Gillmor’s majority bloc—voted to let the decades-old contract with the Santa Clara Chamber of Commerce expire, giving the business advocacy group two months to wrap things up and pay off the 15 employees funded by the $1.5 million-a-year deal to oversee the Convention and Visitors Bureau.
“We did not want those people to lose their jobs, but the chamber put us in a bad position,” Councilwoman Kathy Watanabe tells Fly about the decision, which stems from the city’s realization that the chamber’s yearly management fee soared from about $45,000 to $145,000 a year sometime in 2015 with little to no justification.
But sources at the chamber, which for the past year or so has been led by CEO Nick Kaspar, claim that the city jumped the gun by casting the nonprofit in a bad light without giving it a chance to fully respond to concerns raised by independent auditors, whose review—for what it’s worth—has yet to even be finalized.
“The city painted us in this awful light, saying we were misusing public funds,” says a chamber source who spoke to Fly on condition of anonymity because the nonprofit is still trying to craft a formal response to the city’s allegations of mismanagement. “But that’s not the case. ... Our name is being dragged through the mud here.”
Sources at the chamber say the city was notified about the change in management fees, which went from a flat rate for three decades to a percentage that led to an overall increase. Chamber officials say the fee change stemmed from a conversation with Mayor Gillmor, Councilwoman Debi Davis and several board members a few years back.
“We submitted emails to the city between the chamber board directly following the meeting stating the conversation to increase the management fee,” the chamber source says, “however, the city did not put it in writing.”
He says the chamber submitted slides showing the management fee as a line item ahead of a May 22 council meeting, but it never made it into the staff presentation.
Watanabe disputes that version of events. She says the chamber has been far from transparent and waited until minutes before the May meeting on the issue to submit the above-mentioned documentation. And though the audit remains a work in progress, Watanabe says the city had enough information to make a judgment call.
“We don’t want to continue to throw money at them knowing that there’s been self-dealing and questionable management practices,” the councilwoman says. “We may not know the extent of the problem right now, but we know enough not to risk giving them any more of our money.”