Santa Clara Cuts Ties With Chamber of Commerce, Citing Potential Conflicts, Self-Dealing

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.”

Send a tip to The Fly

The Fly is a weekly column written by San Jose Inside staff that provides a behind-the-scenes look at local politics.

14 Comments

  1. > “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.

    What is the self-dealing?

    $45,000 sounds like a small amount for an annual “management fee” for a Convention and Visitors Bureau in Silicon Valley.

    Not enough information here to know what the hell is going on.

    • I’ve been following this issue closely and reporting about it. $45,000 may not sound like a lot for a management fee. But the Chamber could provide little evidence that they were doing anything to justify it. But when the fee was increased by an additional $100,000 with no visible value added, that’s what set off the alarms. Then, the Council asked staff to investigate and a lot of evidence of special perks and self-dealing came out — things that cost the city even more money. Add to that the recent findings that the Chamber did not have a conflict of interest policy and possibly filed incorrect state and federal tax forms. The Council did the right thing by cutting off the bleeding of tax dollars. It’s also consistent with the move in the last couple of years to reform and clean up the city’s interaction with major private vendors who have been operating unchecked in the past (i.e. 49ers). If you want to read more, here are some links on the Chamber story:

      https://santaclaranews.org/2018/05/23/council-recap-chamber-management-fee-suspended/

      https://santaclaranews.org/2018/06/27/chamber-loses-control-of-convention-and-visitors-bureau-because-of-mismanagement-and-malfeasance/

      • I don’t live in Santa Clara, I wasn’t there, so I don’t know what happened.

        All I know is that if you throw together a bunch of amateur hour local politicians with a bunch of wheeler dealer big business types who have lots of money riding on the whims of people who probably got thrown out of the homeowners association, well . . . things can happen.

        “Character is how people behave when no one’s looking; local politics is what happens when people without much character discover that people ARE looking.”

        WHOOPS!

  2. I do believe Watanabe and Gillmor. The Chamber makes endorsements which seems awkward for a organization with a city contract. Imagine the endorsements. ONEILL who invites lobbyists for parties, and meets with them on dozens of issues which should be more the territory of constituents. The Chamber political committee has people on it that are really WACKO, not really diamonds at all, so I apt to side with the City Council here. Too many times Council members are trying to get city contracts for supporters, like Davis who wanted to move city pension funds out of a bank, to an online company under investigation because she lunches with their salesman.

    Best to keep things separate.

  3. Is it just me, or does anyone else think that since 2010. Santa Clara has become less like Mayberry and more like Phonix City? (Richard Kiely movie) Is really due to the stadium? Sure, it is wonderful Slice of New York is headed to be awarded the best pizza award, and civic engagement is a great thing, and the Super Bowl is great. But there is less joy in the birds that sing there, and more darkness than sun kissed skies.

  4. Whatever the 49ers want, the 49ers get….The NFL is the closest thing to the mafia with their underhanded dealings and control of local politicians. Since the 49ers took control of Santa Clara politicians we have been sold out to these thugs.

    • Huh? With a majority of council members riding here? Gillmor, Watanabe, Davis, and ONeill may do things people disagree with, but all four are very Independent of the 49ers, which is why they are popular.

  5. For the casual reader – you should take these articles with a grain of salt. You may have noticed lots more ‘articles’ lately on this website and other blog websites regarding Santa Clara issues. The City has hired a PR firm to spin the goings on and promote the opinions of the Council majority bloc. Such articles are part of the PR strategy, planted to sway public opinion in a certain direction. The Fly is actually sitting on the wall in the council chambers conference room when the council majority bloc is telling the PR firm to tell the Metro et al what to write. They all actually became embarrassed recently when it became known that these secret meetings were occurring but not being reported on council members’ calendars (counter to the heavy marketing push for transparency). What is most concerning is the use of public funds for political purposes – paying a PR firm with public funds through a city contract for political messaging. Just because money is flowing through a city contract – from the direct contracting party to a 3rd party – does not wash it, and is a FPPC risk. I would not be surprised if this blows up into a big issue ahead of the November (or next) election. I only mention this to encourage readers to know the source of their news and develop their own informed opinions.

    • Well, I will concede a point that Jude Barry., the insidious toady, is directing the selection of city legal staff. The Weekly did mention Stephen Churchwell, who losing the voting rights lawsuit for the City, was a business partner with Barry. Now in 2006, Barry formed a Federal Election Committee. Draft Obama. The money raised went right into Churchwell’s pocket. Not a button, bumper sticker or sign was purchased for Obama. Churchwell filed depositions from Barry associated claiming to be citizens adversely affected by the solutions. While Barry stood outside, asking “Got the money?”

  6. The Federal Election Commission documents show Jude Barry used this unaffiliated committee not to support Obama but to pay his company to support Obama.

    • > documents show Jude Barry used this unaffiliated committee not to support Obama but to pay his company to support Obama.

      My delicate conscience would regard this as “wrong”. But in this day and age it’s necessary to ask “is this illegal?”

      And if it IS illegal, who’s going to do anything about it?

      • Good question. Ask the Council members who back him, or Related who employs him. Or, according to Civas in North Carolina about his voter fraud.

  7. There has been a PR push by the City to spin this that the budget for the Chamber of Commerce-Convention Visitors Bureau was ‘spiked’ by staff inside the City and the Council did not know about it. They are currently trying to place the blame on former City manager Rajeev Batra. This is a lie. The budget has been stable and consistent for at least as long as the records they post on their City website, http://santaclaraca.gov/government/departments/finance. Look up the annual operating budgets, and search for the “Outside Group Funding” page inside each budget, and you will see how much money goes to the CCC-CVB each year. It has not been spiked over the budget years that are available on the website, and certainly not spiked in the past few years. In fact, in one of the budget narratives, there is even a self-congratulations note for the City that the Convention Center is moving from being subsidized to being self-funding due to increased revenues from events. As to the fact that Council was unaware of the budget – it is right there on paper in the budget, and Council approves the budget. How can you not know the budget you are approving?

Leave a Reply

Your email address will not be published. Required fields are marked *