Team San Jose, the quasi-public, hotel tax-funded labor-business coalition that that runs city-owned entertainment facilities, has lost its access to public money after overrunning its budget by more than $750,000.
On Wednesday, Scott P. Johnson, the city’s finance chief, sent a notice of default to Team San Jose CEO Dan Fenton. The notice says the organization is being cut off and audited for consistently failing to meet the financial goals laid out in its contract.
“As a result of this Default, the City will restructure TSJ’s account access of the Convention Facilities Bank Accounts,” Johnson writes in the notice. “This restructuring, effective immediately, will limit TSJ’s access to the Receipts Account…Pending the results of the Audits, the city reserves the right to notify Team San Jose of any further corrective action.”
In a courtesy “heads-up” e-mail sent to Fenton by the finance director the same day, he wrote that he had made contact with Team San Jose Chief Financial Officer Janette Divoll the day the default was issued.
Johnson wrote that Divoll is currently “pro-actively working through an internal review of TSJ’s policies, procedures, management reports and financial transactions.”
“It is important that the partnership between the City and TSJ continue in a collaborative manner with strong fiscal controls and procedures in place,” Johnson wrote in the e-mail. “It is imperative that the City is assured that TSJ, per the Agreement, has complete understanding and appropriate technical skills necessary to operate the City’s Convention Center and cultural facilities in addition to appropriate controls, procedures, policies and reports to account for and report on the operations.”
This is not the first time that Team San Jose has been chastised for not complying to its contract with the city. In 2007 a civil grand jury found that the city failed to hold Team San Jose accountable. Earlier this year, the civil grand jury again questioned the city for continuing to give money to Team San Jose.