📋

Extracted from Consolidated Report

This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.

Santa Clara County Grand Jury • 2010-2011

Cc#fmc Santa Clara County Fairgrounds Management Corp. The Fair • Community Events • San Jose Fair Downs Satellite*

Published: June 22, 2011 27 pages

View PDF View Full Original

⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.

⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

Findings 8 findings

F1 Page 1

The County established FMC as a nonprofit to operate the Fairgrounds; however, FMC has not been successful. FMC has operated at a loss and has required County bailout in all but one of the past sixteen years. 5. FMC Response to GJ

F2 Page 1

In the last sixteen years, the FMC Board has not commissioned – nor has the County requested the Board to commission – an independent performance audit of FMC, even though FMC's poor performance warrants this type of audit. 9. FMC Response to GJ

F3 Page 1

The County does not hold the FMC Board accountable for its lack of oversight in ensuring FMC meets its contractual obligations, and the FMC Board does not demonstrate the business acumen necessary to effectively oversee the FMC. There is a seat vacant (to be filled by the District 4 Supervisor) on the FMC Board. ì 15. FMC Response to

F4 Page 1

The County, supported by the Office of the County Executive, appears to have only a "land management" concern when FMC is required by contract to pay all expenses of the fair. 21. FMC Response to

F5 Page 1

FMC has not optimized its supplier contracts and has demonstrated inability to fully perform its own contract to effectively manage the Fairgrounds, costing the taxpayers in the form of County bailouts. 25. FMC Response to

F6 Page 1

FMC paid bonuses to employees in 2010. The reason for these bonuses has no apparent connection to any operational decisions that would ensure continued profitability. Rather, the bonuses looked like a distribution of an unexplained windfall. 35. FMC Response to

F7 Page 1

The FMC Board does not adequately perform its oversight function of FMC. 39. FMC Response to

F8 Page 1

The County is undercharging communications tower renters, effectively diluting potential revenue to FMC. 45. FMC Response to

Recommendations 14

R1
Page 1

The County should reconsider whether the nonprofit model is the best way to operate the Fairgrounds. 1 7. FMC response to GJ
R2A
Page 1

The County should request the FMC Board to commission an independent performance audit of FMC and the FMC Board. 11. FMC Response to
R2B
Page 1

The FMC Board should require FMC to comply with its contractual requirement to produce an annual budget and business plan and financial audit. 13. FMC Response to
R3A
Page 1

District 4 Supervisor Yeager should recruit to fill the vacancy with an individual with strong business acumen. 17. FMC Response to
R3B
Page 1

The FMC Board should hold the FMC Executive Director accountable for ensuring appropriate actions are taken to operate FMC as a well-run, break-even or profitable operation. 19. FMC Response to
R4
Page 1

The County should modify its contractual agreement with FMC stipulating that FMC be required to sustain a break-even or positive cash flow operation. 23. FMC Response to
R5A
Page 1

The FMC Board should require FMC to prepare plans and implement changes geared toward increasing revenue to cover costs. 27. FMC Response to
R5B
Page 1

The FMC Board should require FMC to restructure the concessionaire contract to a best practices model, such as paying FMC a percentage on sales, not profits, and should seek competitive bids for this and all other contracts as a means to increase revenue and profits. 29. FMC Response to
R5C
Page 1

The FMC Board should require FMC to seek to increase short- and long-term use agreements to improve the positive cash operation. 31. FMC Response to
R5D
Page 1

The FMC Board should require FMC to be in compliance with the contractual management agreement. 33. FMC Response to
R6
Page 1

The FMC Board should not permit bonuses to be paid unless FMC demonstrates the ability to consistently run a profitable operation, as measure against specific goals. To this end, the FMC Board should require FMC to develop and implement a business plan with measurable goals specifically tied to the operational success of the Fairgrounds. 37. FMC Response to
R7A
Page 1

The FMC Board should require that FMC provide a training program with orientation for current and future incoming Board members, defining roles, duties and fiduciary responsibilities. This would familiarize board members on how this nonprofit business can be managed. 41. FMC Response to
R7B
Page 1

The FMC Board should review and approve all requests for proposals and bid documents that would precede issuing a contract to ensure that the best interests of the Fairgrounds are reflected in such requests. 43. FMC Response to
R8
Page 1

The County should increase communications tower rental fees in line with local rates for similar services. 47. FMC Response to

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.