Santa Clara quietly settles lawsuit with chamber of commerce
An aerial image of part of the city of Santa Clara. File photo by The 111th Group.

This time last year, Santa Clara publicly threatened to sue its chamber of commerce for nearly $600,000 it claimed the city was overcharged—but the two sides quietly settled the dispute for about half that amount last fall.

The city and the Silicon Valley Central Chamber of Commerce reached a settlement that requires the business group to pay the City Manager’s Office $330,000 in four installments. That’s far less than the $580,000 a 2019 audit found the chamber overbilled the city while managing its convention center.

Christian Malesic, president and CEO of the chamber, told San José Spotlight the chamber had its own evidence that it had been overcharged by the city. Both parties want to “let bygones be bygones,” he added, since many of the people involved in the events that led to the dispute no longer work for the chamber or the city.

“There were some things said and maneuvers made years ago—we’re now talking about five years ago or more,” Malesic said. “Maybe those things were appropriate and important at the time, but we live in a very different world today.”

The chamber, which used to be known as the Santa Clara Chamber of Commerce, has faced its share of controversy and turnover. After its former CEO Nick Kaspar left in 2020 to lead San Jose Councilmember Maya Esparza’s office, the chamber tapped its board chair Christian Pellecchia to serve as interim CEO before Malesic was hired.

Pellecchia, who works for Slatter Construction and is rumored to be eyeing a run for City Council against Councilmember Karen Hardy, has lobbied Mayor Lisa Gillmor and her allies dozens of times, but is not a registered lobbyist according to city records. Pellecchia served on the chamber’s board of directors when the alleged mismanagement of funds happened. His company, meanwhile, received nearly $1 million in paycheck protection program funds over the last few years, records show.

Working things out

The chamber had been managing the Santa Clara Convention Center and Convention and Visitors Bureau for the city since 1975. That contract came to an end in 2019 after the release of a couple of audits by consulting firm TAP International. One found five years’ worth of questionable expenses, totaling $580,000. Another found the convention center wasn’t being managed “with appropriate stewardship, accountability and transparency.”

The Santa Clara City Council voted 5-1 in December 2019 to sue the chamber for overbilling the city, but no suit was ever filed with the Santa Clara County Superior Court. The last time the council discussed the “anticipated litigation” was in closed session, which isn’t open to the public, on May 4, 2021.

That was shortly after the chamber hired Malesic. He said one of the main reasons he was hired in early 2021 was to resolve the dispute.

“Our options at that point were either to go to court or to work it out,” Malesic said. “We had several meetings over five months, and the issue is completely and 100% settled.”

The settlement between the city and chamber was followed up by a memorandum of understanding stating it’s in both the city and chamber’s interest to have a good relationship and promote a healthy business environment.

Councilmember Suds Jain says he was initially skeptical about the agreement, and that it was unclear whether the memorandum included the chamber providing small business services for the city. He said City Manager Deanna Santana told him the memorandum is about collaboration and not the direct provision of services.

“We’re going to use that money to provide city services ourselves, but we’re collaborating with the chamber,” Jain told San José Spotlight.

In 2019, the chamber rebranded itself from the Santa Clara Chamber of Commerce to the Silicon Valley Central Chamber of Commerce. Malesic said the shift was to focus on businesses in the whole region instead of exclusively in the city.

The convention center is now being managed by Spectra Venue Management, but it hasn’t hosted events because of the COVID-19 pandemic and renovations. That means there hasn’t been any income from the convention center. Santana told the council last fall that officials are rebooking about 80% of the 52 events canceled during the year because of the pandemic. All 52 events would have netted the city $4.4 million. Seven more events are scheduled for the 2022-23 fiscal year.

Santana did not respond to a request for comment this week.

Contact Sonia Waraich at [email protected] or follow @soniawaraich on Twitter.

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