Audit Committee
September 30, 2022

City of Santa Clara
Meeting Agenda
Audit Committee
Virtual Meeting11:00 AMFriday, September 30, 2022
Pursuant to California Government Code Section 54953(e) and City of Santa Clara Resolution 22-9142, the Audit Committee meeting will be held by teleconference only. No physical location will be available for this meeting; however, the City of Santa Clara continues to have methods for the public to participate remotely:

Join from a PC, Mac, iPad, iPhone or Android device:

Please click this URL to join: https://santaclaraca.zoom.us/j/99199624617 Webinar ID: 991 9962 4617
Or join by phone:

US: +1 669 900 6833

CALL TO ORDER AND ROLL CALL

CONSENT CALENDAR

1. Audit Committee Minutes22-1089
Approve the Audit Committee minutes of March 14,
2022.

Recommendation:

PUBLIC PRESENTATIONS
[This item is reserved for persons to address the body on any matter not on the agenda that is within the subject matter jurisdiction of the body. The law does not permit action on, or extended discussion of, any item not on the agenda except under special circumstances. The governing body, or staff, may briefly respond to statements made or questions posed, and appropriate body may request staff to report back at a subsequent meeting.]

GENERAL BUSINESS

2. Overview of Santa Clara Stadium Authority Fiscal Year 2021/22 Annual Financial Statements and Audit Results Presentation by

KPMG, LLP
22-1218
Accept the Santa Clara Stadium Authority Fiscal Year
2021/22 Annual Financial Statements and
recommend that the Stadium Authority note and file
the report at the October 18, 2022 Joint Council and
Authorities Concurrent and Stadium Authority
meeting.

Recommendation:

Audit Committee Meeting Agenda September 30, 2022

3. Overview of the City Auditor ’s Office Semi -Annual Status Report as of September 30, 2022
22-349
Accept the City Auditor ’s Office Semi -Annual Status
Report as of September 30, 2022 recommend that
the report be forwarded for note and file to the full
Council at the October 18, 2022 Council and
Authorities Concurrent meeting.

Recommendation:

ADJOURNMENT
Future Audit Committee Meetings will be scheduled at a later date.

MEETING DISCLOSURES

Audit Committee Meeting Agenda September 30, 2022
The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Santa Clara, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.

If a member of the public submits a speaker card for any agenda items, their name will appear in the Minutes. If no speaker card is submitted, the Minutes will reflect "Public Speaker."
In accordance with the requirements of Title II of the Americans with Disabilities Act of 1990 ("ADA"), the City of Santa Clara will not discriminate against qualified individuals with disabilities on the basis of disability in its services, programs, or activities, and will ensure that all existing facilities will be made accessible to the maximum extent feasible. The City of Santa Clara will generally, upon request, provide appropriate aids and services leading to effective communication for qualified persons with disabilities including those with speech, hearing, or vision impairments so they can participate equally in the City’s programs, services, and activities. The City of Santa Clara will make all reasonable modifications to policies and programs to ensure that people with disabilities have an equal opportunity to enjoy all of its programs, services, and activities.

Agendas and other written materials distributed during a public meeting that are public record will be made available by the City in an appropriate alternative format.

Contact the City Clerk’s Office at 1 408-615-2220 with your request for an alternative format copy of the agenda or other written materials.

Individuals who require an auxiliary aid or service for effective communication, or any other disability-related modification of policies or procedures, or other accommodation, in order to participate in a program, service, or activity of the City of Santa Clara, should contact the City’s ADA Coordinator at 408-615-3000 as soon as possible but no later than 48 hours before the scheduled event.

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-1089 Agenda Date: 9/30/2022

REPORT TO AUDIT COMMITTEE

SUBJECT
Audit Committee Minutes

RECOMMENDATION
Approve the Audit Committee minutes of March 14, 2022.

City of Santa Clara Printed on 9/27/2022Page 1 of 1
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City of Santa Clara
Meeting Minutes
Audit Committee
Draft
3:30 PM Virtual Meeting03/14/2022
Pursuant to California Government Code Section 54953(e) and City of Santa Clara Resolution 22-9058, the Audit Committee meeting will be held by teleconference only. No physical location will be available for this meeting; however, the City of Santa Clara continues to have methods for the public to participate remotely:

Join from a PC, Mac, iPad, iPhone or Android device:

Please click this URL to join: https://santaclaraca.zoom.us/j/99199624617 Webinar ID: 991 9962 4617
Or join by phone:

US: +1 669 900 6833

CALL TO ORDER AND ROLL CALL
Chairperson Park called the meeting to order at 3:32 P.M.

Kevin Park, Kathy Watanabe, and Suds JainPresent 3 -

CONSENT CALENDAR

1. 22-347 Audit Committee Minutes
Recommendation: Approve the Audit Committee minutes of November 30, 2021.

A motion was made by Member Jain, seconded by Member
Watanabe, to approve staff recommendation. The motion carried by the following vote:

Aye: Park, Watanabe, and Jain3 -

PUBLIC PRESENTATIONS
None.

GENERAL BUSINESS

03/14/2022Audit Committee Meeting Minutes

2. 22-348 Overview of the Single Audit Report for Fiscal Year Ended June 30, 2021 Recommendation: Accept the Single Audit Report for Fiscal Year Ended June 30, 2021 and recommend that the reports are forwarded to note and file to the full Council at the March 22, 2022 Council and Authorities Concurrent meeting.

A motion was made by Member Jain, seconded by Member
Watanabe, to approve staff recommendation. The motion carried by the following vote:

Aye: Park, Watanabe, and Jain3 -

ADJOURNMENT
Chairperson Park adjourned the meeting at 3:53 P.M.

A motion was made by Member Jain, seconded by Member
Watanabe, to adjourn the meeting. The motion carried by the following vote:

Aye: Park, Watanabe, and Jain3 -
Future Audit Committee Meetings will be scheduled at a later date.

03/14/2022Audit Committee Meeting Minutes
The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Santa Clara, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.

If a member of the public submits a speaker card for any agenda items, their name will appear in the Minutes. If no speaker card is submitted, the Minutes will reflect "Public Speaker."
In accordance with the requirements of Title II of the Americans with Disabilities Act of 1990 ("ADA"), the City of Santa Clara will not discriminate against qualified individuals with disabilities on the basis of disability in its services, programs, or activities, and will ensure that all existing facilities will be made accessible to the maximum extent feasible. The City of Santa Clara will generally, upon request, provide appropriate aids and services leading to effective communication for qualified persons with disabilities including those with speech, hearing, or vision impairments so they can participate equally in the City’s programs, services, and activities. The City of Santa Clara will make all reasonable modifications to policies and programs to ensure that people with disabilities have an equal opportunity to enjoy all of its programs, services, and activities.

Agendas and other written materials distributed during a public meeting that are public record will be made available by the City in an appropriate alternative format.

Contact the City Clerk’s Office at 1 408-615-2220 with your request for an alternative format copy of the agenda or other written materials.

Individuals who require an auxiliary aid or service for effective communication, or any other disability-related modification of policies or procedures, or other accommodation, in order to participate in a program, service, or activity of the City of Santa Clara, should contact the City’s ADA Coordinator at 408-615-3000 as soon as possible but no later than 48 hours before the scheduled event.

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-1218 Agenda Date: 9/30/2022

REPORT TO AUDIT COMMITTEE

SUBJECT
Overview of Santa Clara Stadium Authority Fiscal Year 2021/22 Annual Financial Statements and Audit Results Presentation by KPMG, LLP

BACKGROUND
The Santa Clara Stadium Authority (Stadium Authority), the Stadium Funding Trust, and Goldman Sachs Bank USA entered into a Credit Agreement on June 19, 2013. Section 5.1(a) of the Credit Agreement requires that the Stadium Authority Annual Financial Statements be audited by independent certified public accountants within 180 days after the end of each fiscal year. On June 25, 2021, the Stadium Authority entered into a professional services agreement with KPMG, LLP (KPMG) to perform the annual financial audit of the Stadium Authority’s Fiscal Year 2021/22 Annual Financial Statements.

The Annual Financial Statements include: (1) the Independent Auditors’ Report which describes the auditors’ responsibility and their opinion of the Financial Statements, (2) Management’s Discussion and Analysis which provides an overall review of the Stadium Authority’s financial activities, (3) the Basic Financial Statements, and (4) the Notes to the Financial Statements which have additional information pertaining to the Stadium Authority’s operations and financial position.

The Financial Statements being discussed with this report cover the Stadium Authority’s 2021/22 fiscal year, which runs from April 1, 2021 to March 31, 2022.

DISCUSSION
The role of the audit committee is to provide oversight of the Stadium Authority’s financial reporting processes, internal controls and independent auditors. KPMG will present the Stadium Authority audit results to the audit committee to provide a brief overview of the audit. This includes their audit report, financial statement disclosures, internal control related matters and other items.

Stadium Authority staff will be providing an overview of the Stadium Authority Fiscal Year 2021/22 Annual Financial Statements including year-over-year comparison of the Stadium Authority financial position.

Lisa Avis, Managing Director, and Stanislav Brytskyi, Manager, from KPMG will be presenting the Stadium Authority Audit Results.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a City of Santa Clara Printed on 9/27/2022Page 1 of 2
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22-1218 Agenda Date: 9/30/2022
potential significant impact on the environment.

FISCAL IMPACT
Costs associated with the preparation of this report are included in the Stadium Authority Operating Budget.

COORDINATION
This report has been coordinated with the Stadium Authority Counsel’s Office.

PUBLIC CONTACT
Public contact was made by posting the Audit Committee agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Accept the Santa Clara Stadium Authority Fiscal Year 2021/22 Annual Financial Statements and recommend that the Stadium Authority note and file the report at the October 18, 2022 Joint Council and Authorities Concurrent and Stadium Authority meeting.

Reviewed by: Kenn Lee, Treasurer
Approved by: Rajeev Batra, Executive Director

ATTACHMENTS

1. FY 2021/22 Santa Clara Stadium Authority Financial Statements Draft City of Santa Clara Printed on 9/27/2022Page 2 of 2
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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Financial Statements
March 31, 2022 and 2021
(With Independent Auditors’ Report Thereon)
DRAFT
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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Table of Contents
Page
Independent Auditors’ Report 1
Management’s Discussion and Analysis (Unaudited) 3
Basic Financial Statements:

Statements of Net Position 8
Statements of Revenues, Expenses, and Changes in Net Position 9 Statements of Cash Flows 10
Notes to Financial Statements 11
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DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 Independent Auditors’ Report
The Board of Directors
Santa Clara Stadium Authority
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the Santa Clara Stadium Authority (the Stadium Authority), a component unit of the City of Santa Clara, California, as of and for the years ended March 31, 2022 and 2021, and the related notes to the financial statements, which collectively comprise the Stadium Authority’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the Stadium Authority as of March 31, 2022 and 2021, and the changes in its financial position and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.

Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Stadium Authority and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Stadium Authority’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from DRAFT
1 2
18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Stadium Authority’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Stadium Authority’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Required Supplementary Information
U.S. generally accepted accounting principles require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Report on Other Legal and Regulatory Requirements
In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2022 on our consideration of the Stadium Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Stadium Authority’s internal control over financial reporting or on compliance. That report is an integral part DRAFT
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sco, California
September 30, 2022
DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2022 and 2021
4 (Co
ntinued)
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DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 The management’s discussion and analysis of the Santa Clara Stadium Authority (Stadium Authority) provides an overall review of the Stadium Authority’s financial activities for the fiscal years ended March 31, 2022 and 2021. The intent of this discussion and analysis is to look at the Stadium Authority’s financial performance as a whole. Readers should review the discussion and analysis in conjunction with the basic financial statements, including the notes to the basic financial statements to enhance their understanding of the Stadium Authority’s financial performance.

The Stadium Authority has elected to provide comparative financial statements to better assist the reader. The Stadium Authority’s fiscal year runs from April 1 through March 31 to conform to the fiscal year of the Stadium Funding Trust (FinanceCo). The Stadium Authority is a component unit of the City of Santa Clara, California (City) whose fiscal year is July 1 through June 30.

The Stadium Authority exists as a public body, separate and distinct from the City. It was established to provide for development and operation of Levi’s Stadium.

Financial Highlights
Key financial highlights for the fiscal year ended March 31, 2022 are as follows:
 The carrying value of Levi’s Stadium at March 31, 2022, net of depreciation, is $699,633,308.  During the fiscal year, there were ten National Football League (NFL) games, zero ticketed Non-NFL eve
nts and twelve smaller special events held at Levi’s Stadium.  The Stadium Authority recognized $58,444,137 in operating revenue and $50,412,330 in operating e
xpenses.

The revenues from the Non-NFL events were $1,232,956 and the related expenses were $1,521,697 resulting in n
et Non-NFL event loss of $288,741.

Debt service payments during the fiscal year totaled $31,728,139. Overall remaining outstanding debt was redu
ced by $16,481,867. The Stadium Authority paid $17,353,477 for both the Term A and Subordinate Loan a
nd incurred an additional $871,610 in principal balance for the CFD Advanced Loan. 
The assets of the Stadium Authority exceeded its liabilities by $76,019,326 due to income from the operation of L
evi’s Stadium.

The City received $425,000 for stadium ground rent. Additionally, the City is required to be fully reimbursed for all of its administration and public safety costs by either the Stadium Authority for Non-NFL events or Forty
Niners SC Stadium Company LLC (StadCo) for NFL events.

Overview of the Financial Statements
This annual report consists of a series of financial statements and the notes to those statements. These statements are organized so the reader can understand the Stadium Authority as a financial whole. The basic financial statements provide both a short-term and long-term view of the Stadium Authority’s financial activities and financial position.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2022 and 2021
5 (Continued)
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DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 The basic financial statements are comprised of the Statements of Net Position, the Statements of Revenues, Expenses, and Changes in Net Position, the Statements of Cash Flows, and the notes to the financial statements. The Statements of Net Position provide information about the financial position of the Stadium Authority as a whole, including all of its long-term liabilities on the full accrual basis. The Statements of Revenues, Expenses, and Changes in Net Position provide information about all revenue and expenses. The Statements of Cash Flows provides information about cash activities for the period.

Financial Analysis of the Stadium Authority as a Whole
The Stadium Authority’s net position at March 31, 2022, March 31, 2021, and March 31, 2020 is as follows:

FY 2022 FY 2021
increase increase
FY 2022 FY 2021 FY 2020 (decrease) (decrease)
Assets:

Capital assets $ 702,507,201 718,014,273 734,131,303 (15,507,072) (16,117,030) Other assets 108,413,669 104,012,504 107,604,034 4,401,165 (3,591,530) Total assets $ 810,920,870 822,026,777 841,735,337 (11,105,907) (19,708,560) Liabilities:

Current unearned revenue $ 15,076,480 14,871,452 14,220,515 205,028 650,937 Other current liabilities 42,667,273 29,128,592 34,338,194 13,538,681 (5,209,602) Long-term unearned revenue 425,271,742 416,092,910 408,765,985 9,178,832 7,326,925 Other long-term liabilities 251,886,049 284,264,912 308,908,054 (32,378,863) (24,643,142) Total liabilities $ 734,901,54 4 744,357,866 766,232,748 (9,456,322) (21,874,882) Net position:

Net investment in capital assets $ 427,976,288 426,650,943 412,092,180 1,325,345 14,558,763 Restricted for:

Debt service 21,453,314 20,126,006 19,791,856 1,327,308 334,150 Capital projects and other
agreements 41,272,892 38,565,485 31,599,800 2,707,407 6,965,685 Unrestricted deficit (414,683,168) (407,673,523) (387,981,247) (7,009,645) (19,692,276) Total net position $ 76,019,326 77,668,911 75,502,589 (1,649,585) 2,166,322 Fiscal Year 2021-22 Anal
ysis
Capital assets decreased when compared to the prior year by $15,507,072 due to annual depreciation, partially offset by equipment and buildings additions. Other assets increased when compared to the prior year by $4,401,165. This was due mainly to the net effect of increase in cash and restricted cash offset by a decrease in accounts receivable as result of the August 31, 2022 Settlement Agreement between Stadium Authority, StadCo and Management Co. [See Note 8.] . Liabilities decreased by $9,456,322 mainly due to principal prepayment of long-term debt, partly offset by an increase in unearned Stadium Builder License (SBL) revenue due to collection of SBL principal that is amortized over the life of the SBL. Total net position for the Stadium Authority, as a whole, decreased between March 31, 2021 and March 31, 2022 to $76,019,326. This decrease of $1,649,585 is primarily due a decrease in capital assets.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2022 and 2021
6 (Co
ntinued)
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Capital assets decreased when compared to the prior year by $16,117,030 due to annual depreciation, partially offset by equipment and buildings additions. Other assets also decreased when compared to the prior year by $3,591,530. This was due mainly to the net effect of increases in cash and accounts receivable offset by a decrease in cash with restricted agents associated with the annual funding distributions. Liabilities decreased by $21,874,882 mainly due to principal prepayment of long-term debt, partly offset by an increase in unearned Stadium Builder License (SBL) revenue due to collection of SBL principal that is amortized over the life of the SBL. Other current liabilities also decreased by $5,209,602 primarily due to a decrease in interest payable and accrued liabilities related to timing of a debt payment. Total net position for the Stadium Authority, as a whole, increased between March 31, 2020 and March 31, 2021 to $77,668,911. This increase of $2,166,322 is primarily due to a decrease in total liabilities.

The Stadium Authority’s revenues, expenses, and changes in net position for the fiscal years ended March 31, 2022, March 31, 2021, and March 31, 2020 are as follows:

FY 2022 FY 2021
increase increase
FY 2022 FY 2021 FY 2020 (decrease) (decrease)
Operating revenues $ 58,444,137 38,373,955 83,937,765 20,070,182 (45,563,810) Operating expenses (50,412,330) (25,937,991) (62,794,043) (24,474,339) 36,856,052 Operating income 8,031,807 12,435,964 21,143,722 (4,404,157) (8,707,758) Nonoperating revenues 4,128,756 4,691,577 7,347,984 (562,821) (2,656,407) Nonoperating expenses (14,895,722) (15,243,240) (16,744,903) 347,518 1,501,663 Income before contributions
and other revenues (2,735,159) 1,884,301 11,746,803 (4,619,460) (9,862,502) Contributions and other revenues 1,085,574 282,021 3,613,498 803,553 (3,331,477) Increase in net position (1,649,585) 2,166,322 15,360,301 (3,815,907) (13,193,979) Total net position – beginning of fiscal
period 77,668,911 75,502,589 60,142,288 2,166,322 15,360,301 Total net position – end of fiscal period $ 76,019,326 77,668,911 75,502,589 (1,649,585) 2,166,322 Fiscal Year 2
021-22 Analysis
Stadium Authority operating revenues increased when compared with the prior year by $20,070,182. This was mainly due to increase in charges for services from NFL Games and smaller special events being held and increase in rents and licenses. The Operating expenses increased by $24,474,339 compared to the prior year.

This increase is primarily because, pursuant to the August 31, 2022 Settlement Agreement between StadCo, ManagementCo, and Stadium Authority, Stadium Authority paid Shared Stadium Expenses and Other Expenses from prior fiscal years' that were previously withheld from payment (see note 8).

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2022 and 2021
7 (Continued)
18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 Nonoperating revenues decreased by $562,821 mainly due to a decrease in interest income from SBL.

Nonoperating expenses decreased by $347,518 mainly due to a decrease in interest expense. Significant prepayments were made on the StadCo Subordinated Loan in the prior year decreasing principal and resulting in lower interest expense.

Contributions and other revenues were $1,085,574, an increase of $803,553 over the prior fiscal year. These represent special hotel tax revenues collected to pay the CFD Advance Loan. While the overall hotel tax revenues increased significantly in the current year as we continue recover from COVID-19 revenues were insufficient to cover the accrued interest on the loan.

Fiscal Year 2020-21 Analysis
Stadium Authority operating revenues decreased when compared with the prior year by $45,563,810. This was mainly due to NFL Games being held with zero attendance and zero Non-NFL events that resulted in zero ticket surcharge revenues and a net loss in Non-NFL events, minimally offset by an amortization of SBL revenue. Operating expenses decreased by $36,856,052 primarily due to a decrease in Non-NFL events expenses and Stadium Manager Expenses the Stadium Authority agreed to pay (see note 7). These decreases in operating expenses were partially offset by increases in SCSA General and Administrative costs and SBL Sales and Service expenses.

Nonoperating revenues decreased by $2,656,407 due to an overall decrease in interest rates over the past year resulting in a decrease in bank interest revenue. Nonoperating expenses decreased by $1,501,663.

Significant prepayments were made on the StadCo Subordinated Loan in the prior year decreasing principal and resulting in lower interest expense.

Contributions and other revenues were $282,021, a decrease of $3,331,477 over the prior fiscal year. These represent special hotel tax revenues collected to pay the CFD Advance Loan. The overall hotel tax revenue collections continued at a significantly depressed level in fiscal year 2021-22 due to limited travel as a result of COVID-19.

Capital Assets
The capital assets of the Stadium Authority are those which are used in the performance of the Stadium Authority’s functions, including but not limited to infrastructure-related assets. These assets do not include StadCo’s tenant improvements. At March 31, 2022, capital assets totaled $702,507,201.

Further detail may be found in note 4 to the financial statements.

Debt Administration
At March 31, 2022, the Stadium Authority had total debt outstanding of $280,313,692, as shown in detail in note 5 to the financial statements. Stadium Authority’s debt was comprised of Stadium Funding Trust Term A loan of $230,138,239, the CFD Advance Loan of $30,374,503, and the StadCo Subordinated Loan of $19,800,950.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2022 and 2021
8 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 Economic and Financial Overview
Over the last few years, Silicon Valley has seen job growth that has outpaced the rest of the state. This growth has led to rising home prices and a significant increase in commercial and residential development, including several projects in the vicinity of Levi’s Stadium. Major financial factors impacting the Stadium Authority are:
 In May 2013, a Naming Rights Agreement with Levi Strauss & Co. (Levi’s) was approved. The name of the Stadium is “L
evi’s Stadium”. The naming rights agreement calls for Levi’s to pay a total of $154.2 million to the Stadium Authority o
ver a 20-year period. The agreement requires the Stadium Authority to hold at least 36 “Maj
or Events” (with 25,000+ attendees) every three contract years. The Second Amendment to the Stadium Man
agement Agreement states that ManagementCo would pay the Stadium Authority as liquidated d
amages the amount owed by the Stadium Authority to Levi’s® in the event the required number of event
s is not met. As of March 31, 2022, the Stadium Authority has received $54.7 million in naming rights re
venue.

Stadium Builders Licenses (SBLs) entitle the license holder to priority rights to buy tickets for events at Levi’
s Stadium. The total value of the currently active SBL holders’ licenses is $539.3 million. Through March 31, 20
22, $501.4 million in SBL principal payments have been collected since inception. This is due in part to a nu
mber of SBL holders paying off or prepaying a large portion of their SBL, and defaulted SBLs being resold
at full price. In addition to SBL collections, the Stadium Authority has collected $63.0 million in interest from license holders who financed their SBLs since inception. 
The Stadium Authority generated $25.3 million in lease revenue during the NFL season and a $289 thousand n
et loss associated with hosting Non-NFL events for the fiscal year ended March 31, 2022. 
The Stadium Authority collects a 10% surcharge on the price of admission to all NFL games and a $4 per ticket surcha
rge for all ticketed Non-NFL events. There were ten regular season NFL games held at Levi’s Stadium duri
ng fiscal year March 31, 2022. Additionally, there was no ticketed Non-NFL events in fiscal yea
r 2022.

Con
tacting the Stadium Authority’s Financial Management
This financial report is designed to provide our residents, taxpayers, investors, and creditors with a general overview of the Stadium Authority’s finances and to demonstrate the Stadium Authority’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the City of Santa Clara Finance Department at 1500 Warburton Avenue, Santa Clara, CA 95050-3796.

DRAFT
DRAFT 9/26/2022 3:13 PM SantaClaraStadiumAuthority FY21-22_FS v3

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Statements of Net Position
March 31, 2022 and 2021
Assets 2022 2021
Current assets:

Cash $ 20,039,971 15,236,364
Restricted cash 35,722,544 32,986,213
Restricted cash with fiscal agent 27,003,662 25,705,278 Accounts receivable 13,095,258 18,548,414
Materials, supplies and prepaids 1,015,999 —
Total current assets 96,877,434 92,476,269
Capital assets:

Buildings, net 699,633,308 716,181,316
Machinery and equipment, net 2,405,127 1,426,780
Construction in progress 468,766 406,177
Total capital assets 702,507,201 718,014,273
Long-term restricted cash with fiscal agent 11,536,235 11,536,235 Total noncurrent assets 714,043,436 729,550,508
Total assets $ 810,920,870 822,026,777
Liabilities
Current liabilities:

Accounts payable and accrued liabilities $ 1,229,217 3,798,998 Interest payable 5,753,456 6,104,006
Due to other City of Santa Clara funds 131,278 123,306
Deferred rent, current portion 460,000 425,000
Term A loan payable, current portion 30,182,000 14,022,000 Subordinated loan payable, current portion 4,911,322 4,655,282 Unearned revenue, current portion 15,076,480 14,871,452 Total current liabilities 57,743,753 44,000,044
Deferred rent 6,665,679 6,146,635
Term A loan payable 199,956,240 230,138,240
CFD advance loan payable 30,374,502 29,502,893
Subordinated loan payable 14,889,628 18,477,144
Unearned revenue 425,271,742 416,092,910
Total noncurrent liabilities 677,157,791 700,357,822
Total liabilities $ 734,901,544 744,357,866
Net Position
Net investment in capital assets $ 427,976,288 426,650,943 Restricted for:

Debt service 21,453,314 20,126,006
Capital projects and other agreements 41,272,892 38,565,485 Unrestricted deficit (414,683,168) (407,673,523)
Total net position $ 76,019,326 77,668,911
See accompanying notes to financial statements.
9 DRAFT
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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Statements of Revenues, Expenses, and Changes in Net Position Years ended March 31, 2022 and 2021
2022 2021
Operating revenues:

Charges for services $ 11,720,968 390,696
Rents and licensing 46,723,169 37,983,259
58,444,137 38,373,955
Operating expenses:

Leases 1,215,019 979,044
Materials, services and supplies (note 3a) 30,651,977 7,024,214 Selling, general, and administrative expenses 1,565,865 1,189,341 Depreciation 16,979,469 16,745,392
50,412,330 25,937,991
Operating income 8,031,807 12,435,964
Nonoperating revenues (expenses):

Interest revenue 4,128,756 4,665,147
Other revenue — 26,430
Interest expense (14,895,722) (15,243,240)
Income (loss) before contributions and other revenues (2,735,159) 1,884,301 Contributions and other revenues:

Contribution from Community Facilities District 1,085,574 282,021 Change in net position (1,649,585) 2,166,322
Net position – beginning of period 77,668,911 75,502,589 Net position – end of period $ 76,019,326 77,668,911
See accompanying notes to financial statements.
10 DRAFT
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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Statements of Cash Flows
Years ended March 31, 2022 and 2021
2022 2021
Cash flows from operating activities:

Receipts from customers $ 21,804,776 (2,429,940)
Payments to suppliers (35,270,548) (8,204,081)
Rents and licensing received 41,840,919 37,045,208
Net cash provided by operating activities 28,375,147 26,411,187 Cash flows from noncapital financing activities:
(Decrease) increase in due to other City of Santa Clara funds 7,972 (139,039) Net cash (used in) provided by noncapital financing
activities 7,972 (139,039)
Cash flows from capital and related financing activities:

Contribution from Community Facilities District 818,906 965,177 Acquisition and construction of capital assets (1,064,907) (628,362) Principal payments on capital debt (17,353,477) (29,519,797) Interest paid on capital debt (14,374,662) (16,399,236) Net cash used in capital and related financing activities (31,974,140) (45,582,218) Cash flows from investing activities:

Interest and dividends 4,123,966 4,715,533
Net cash provided by investing activities 4,123,966 4,715,533 Net increase (decrease) in cash and restricted cash 532,945 (14,594,537) Cash and restricted cash, beginning of period 85,464,090 100,058,627 Cash and restricted cash, end of period $ 85,997,035 85,464,090 Reconciliation of operating income to cash provided by operating activities:

Operating income $ 8,031,807 12,435,964
Depreciation 16,979,469 16,745,392
Change in operating assets and liabilities:

Accounts receivable (4,182,302) (11,736,549)
Accounts payable and accrued liabilities (1,375,732) 399,474 Prepaid expenses (1,015,999) —
Unearned revenue 9,383,860 7,977,862
Deferred rent 554,044 589,044
Net cash provided by operating activities $ 28,375,147 26,411,187 See accompanying notes to financial statements.
11 DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
12 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 (1) Organization and Reporting Entity
(a) Organi
zation
On June 8, 2010, residents of Santa Clara voted to adopt Measure J, the Santa Clara Stadium Taxp
ayer Protection and Economic Progress Act, resulting in the approval to construct a new 68,500
-seat football stadium (the Stadium) to be leased to the San Francisco 49ers (49ers). In addition, Measure J ca
lled for the creation of the Santa Clara Stadium Authority to own, develop, construct, operate, and
maintain the Stadium project. The City of Santa Clara, California (City) and the City of Santa Cla
ra Redevelopment Agency (Agency) entered into a Joint Exercise of Powers Agreement (JPA Agreem
ent) establishing the Santa Clara Stadium Authority (Stadium Authority). The JPA Agreement wa
s later amended to add the Bayshore North Project Enhancement Authority as a member of the Stadium Authority. On
June 28, 2011, the Governor signed into law Assembly Bill No. X1 26 (ABX1 26), whic
h called for the dissolution of Redevelopment Agencies throughout the State. The California State Supreme
Court upheld ABX1 26, and as a result, on February 1, 2012, all California Red
evelopment Agencies were dissolved. The Successor Agency of the City of Santa Clara (Succe
ssor Agency) then assumed the obligations of the Agency under the JPA Agreement. (b)
Financial Reporting Entity
As defined by U.S. generall
y accepted accounting principles (GAAP), the financial reporting entity con
sists of a primary government, as well as its component units, which are legally separate orga
nizations for which the elected officials of the primary government are financially accountable.

Finan
cial accountability is defined as:
1)
Appointment of a voting majority of the component unit’s board and either (a) the ability to impose will by the p
rimary government or (b) the possibility that the component unit will provide a financial benefit to or impose a fina
ncial burden on the primary government; or
2)
Fiscal dependency on the primary government.

Based u
pon the application of these criteria, the Stadium Authority has no component units. However, the Stadium Authority is a component unit of the City because the Mayor and City Council serve as the Board of the Stadium Authority. The City Manager serves as the Executive Director. The debt which was incurred for the construction of the Stadium is the responsibility of the Stadium Authority. The City is not a party to the debt nor has the City guaranteed such debt. (2)
Summary of Significant Accounting Policies
(a)
Basis of Presentation
The financial statements of the Stadium Authority have been prepared in conformity with GAAP, as applied to gov
ernmental units. The Governmental Accounting Standards Board (GASB) is the accepted stand
ard setting body for establishing government accounting and financial reporting principles. The Stadium Authority is in
cluded as an enterprise fund in the City’s Annual Financial Report, and therefo
re, these financial statements do not purport to represent the financial position and changes in financi
al position of the City.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
13 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 (b) Basis of Accounting and Measurement Focus
The Stadium
Authority reports its activities as a business-type activity. The financial statements include statement
s of net position, statements of revenues, expenses, and changes in net position, and statement
s of cash flows, and are accounted for using the “economic resources” measurement focus and the a
ccrual basis of accounting. Accordingly, all assets and liabilities (whether current or non
current) are included on the statements of net position. Reported net position is segregated into three catego
ries – net investment in capital assets, restricted and unrestricted. The statements of revenu
es, expenses, and changes in net position present increases (revenues) and decreases (expen
ses) in total net position. Under the accrual basis of accounting, revenues are recognized in the perio
d in which they are earned while expenses are recognized in the period in which a liability is incu
rred.

Operating revenues are those revenues that are generated from the primary operations of the Stadium Authority. All other revenu
es are reported as nonoperating. Operating expenses are those expenses that are e
ssential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.
(c) Year-End
An amendm
ent was made to the JPA Agreement on November 13, 2012 in part to change the fiscal yea
r of the Stadium Authority from a July 1 through June 30 fiscal year to an April 1 through March 31 fiscal
year to conform with the fiscal year of Stadium Funding Trust. (d)
Cash, Restricted Cash, and Restricted Cash with Fiscal Agent The Stadium
Authority’s cash is not pooled with the City but is held in separate bank and trust accou
nts.
(i)
Composition of Cash, Restricted Cash, and Restricted Cash with Fiscal Agent Cash, restricted cash, and restricted cash with fiscal agent at March 31, 2022 and 2021 consist of ca
sh deposits in banks.

Restricted cash includes revenue that has not yet been transferred to Stadium Funding Trust accou
nts. On the 15th of the following month all revenue is swept into the Stadium Funding Trust accou
nts as required by the Deposit and Disbursement Agreement and becomes restricted cash with fiscal ag
ent. It also includes cash dedicated to construction and the capital expenditure and operating reserve acco
unts.

Re
stricted cash with fiscal agent consists of stadium deposits pledged to a syndicate of lenders and de
posits for stadium construction. The application of these deposits is restricted to fund stadium con
struction and Stadium Authority operations and debt service.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
14 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 (ii) Investments Authorized by Debt Agreements
Stadium Authority mai
ntains required amount of cash and investments with trustees or fiscal agent
s under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledg
ed reserves to be used if Stadium Authority fails to meet its obligations under these debt issues. The California Government Code 53601 (L) allows these funds to be invested in accordan
ce with the statutory provisions governing the issuance of those bonds, indebtedness, other a
rrangements, or certificates of participation in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance. (iii) Custodial
Credit Risk
Cu
stodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government
will not be able to recover its deposits or will not be able to recover collate
ral securities that are in the possession of an outside party. Under California Government Cod
e Section 53651, depending on specific types of eligible securities, a bank must deposit eligible se
curities posted as collateral with its agent having a fair value of 105% to 150% of the Stadium Authority’
s cash on deposit. All of the deposits are either insured by the Federal Depository Insuran
ce Corporation (FDIC) or collateralized with pledged securities held in the trust department of the financi
al institutions.
(e) Acco
unts Receivable
Accounts receivable are recorded in the Stadium Authority’s accounts at the amounts that are contractu
ally due. Accounts receivable include payments due from the Forty Niners Stadium Manag
ement Company, LLC (ManagementCo) as a result of the operations of non-National Football Leag
ue (NFL) events held at the Stadium and the overpayment of stadium manager expenses. Naming Rights revenue due from Levi’s Strauss & Co., special tax proceeds collected by the Community Facilities Di
strict (CFD) and not yet paid to Stadium Authority pursuant to the CFD Reimbursement Agreem
ent, and other miscellaneous receivables are also included as accounts receivable in the statement
s of net position.
(f) C
apital Assets
Capital a
ssets are valued at historical cost or estimated historical cost if actual historical cost is not avail
able. Contributed capital assets are valued at their estimated fair value on the date contributed.

Dep
reciation is recorded on a straight-line basis over the estimated useful lives of the assets with a valu
e over $1,000 and is charged as an expense against operations.

Useful lives
(years)
Buildings 20–50
Machinery and equipment 2–25
The co
st of maintenance, repairs, minor replacements, and renewals are charged to operations as incurred. Major replacements, renewals, and betterments are capitalized. Sales and retirements of depreciable property are recorded by removing the related cost and accumulated depreciation from the DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
15 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 accounts. Gains or losses on sales and retirements of property are reflected in the statements of revenues, expenses, and changes in net position.

Interest is capitalized on construction in progress in accordance with applicable guidance. (g)
Unearned Revenue and Revenue Recognition
Stadium Builder License (SBL) proceeds and payments received for other license agreements are initially re
corded as unearned revenue and are recognized as revenue over the term of the contracts.

Rental in
come is recognized as revenue on a straight-line basis over the term of the Stadium Lease (note 6
(b)).

Non-NFL event revenue, NFL ticket surcharge, Non-NFL ticket surcharge, and other operating revenues are recognized as they are earned.
(h) R
isk Management
Per the term
s of the Stadium Lease, during operations, the Forty Niners SC Stadium Company LLC pro
cures insurance and the Stadium Authority pays a proportionate share to StadCo. The Fairly Group is the insura
nce broker for Stadium operations.
(i) Income
Taxes
The Stadium
Authority falls under the purview of Internal Revenue Code, Section 115 and corre
sponding California Revenue and Taxation Code provisions. As such, the Stadium Authority is not s
ubject to federal or state income taxes.
(j) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting prin
ciples requires management to make estimates and assumptions that affect the reported amounts of assets an
d liabilities and disclosures of contingent assets and liabilities at the date of the financial statement
s and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
(3) Stadiu
m Development
(a) Transa
ction Overview
During fiscal year 2011-12, the Stadium Authority and StadCo entered into a series of agreements in con
nection with the construction of the Stadium. The Stadium was constructed and is owned by the Stadium Authority; certain t
enant improvement components are owned by StadCo. Construction on the Stadium beg
an in April 2012 and it was substantially completed in July 2014, in time for the 2014 NFL s
eason.

The Cit
y owns the land on which the Stadium was constructed. The City has leased the land to the Stadium Authority un
der a ground lease, and the Stadium Authority has leased the Stadium to StadCo for the si
x-month period from August through January (the NFL season) of each year, for an initial lease term of 40 ye
ars. The stadium lease commenced in August 2014 upon substantial completion of c
onstruction.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
16 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 The Stadium Authority retained a design-build firm to complete the design and construction of the Stadium pursuant to a guaranteed maximum price contract. The Stadium Authority was generally responsible for amounts due to the design-builder, except that StadCo was responsible for payment of costs of tenant improvements. StadCo acted as construction agent for the Stadium Authority, with primary responsibility for administering the design-build contract.

The Stadium Authority and StadCo have engaged ManagementCo, an affiliate of StadCo, to manage the Stadium on a year-round basis. The Stadium Management Agreement has an initial term of 25 years, plus a 15-year renewal option. The Stadium Authority pays ManagementCo for services related to its operations on behalf of the Stadium Authority. For the year ending March 31, 2022 and 2021, ManagementCo charged the Stadium Authority $6.8 million and $6.6 million in Shared Expenses and $7.8 million and $7.5 million in Other Operating and Management Expenses, respectively. Due to concerns over violations of State laws, including but not limited to, California’s Prevailing Wage statutes and regulations of the California Department of Industrial Relations, and concerns regarding ManagementCo’s procurement process, the Stadium Authority partially suspended payments to ManagementCo starting in June 2019, until ManagementCo provided records showing legal and contractual compliance. As certain expenses billed by ManagementCo could not be validated based on records provided, the Stadium Authority only paid $6.1 million in Other Operating Expenses as of March 31, 2021. These partially suspended payments were the subject of an arbitration filed by StadCo and ManagementCo against Stadium Authority. That arbitration and dispute also included the remaining unpaid balance of $6.4 million, which includes interest expenses under the Revolving Loan of $159,112, and a prior year true-up offset of $1.4 million. The Stadium Authority paid $3.9 million in Shared Expenses and $6.4 million in Other Operating Expenses as of March 31, 2022. The remaining unpaid balance of $3.2 million which includes interest expense of $193,522 and a prior year true-up offset of $1.3 million was part of the parties' arbitration and dispute (see footnote 7b).

On August 31, 2022, Stadium Authority, StadCo and ManagementCo settled the arbitration and disputes regarding the partially suspended Shared Expenses and Operating and Management Expenses. As part of the settlement, under section 11(b)(iii), Stadium Authority agreed to recognize the $15.8 million unpaid expenses along with the $426 thousand interest expenses under the Revolving Loan incurred from fiscal year 2019-20 through fiscal year 2021-22, ManagementCo's prior unauthorized payments of the unpaid expenses through the Revolving Loan are now treated as timely Stadium Authority payments, but without Stadium Authority agreeing to ManagementCo's actions or draws under the Revolving Loan (see footnote 8). The $16.3 million in ManagementCo expenses were recorded in fiscal year ending March 31, 2022. These are the Shared Expenses and Operating and Management Expenses that were previously withheld in 2020 and 2021. (b) Cons
truction Funding
Funding for construction of the Stadium, excluding tenant improvements funded by StadCo, falls into three maj
or categories: an initial construction loan from a bank syndicate, which was refinanced during DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
17 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 2013 as described below; funding from the StadCo Subordinated Loan; and construction period and other revenues.
(i) Stadium
Construction Loan Facility
The initial financi
ng included a delayed draw term loan facility (the Construction Facility) provided by a syn
dicate of banks (the Lenders) to Stadium Funding Trust (FinanceCo). FinanceCo, a Dela
ware statutory trust, entered into the Construction Facility with the Lenders and then issued a loan facilit
y to the Stadium Authority in the amount of $450 million (the Authority Loan). The Con
struction Facility had a maturity date of September 1, 2015. In June 2013, FinanceCo and the Stadium Authority refinanced the
Construction Facility, resulting in FinanceCo paying off the Construction
Facility and entering into a new debt structure that includes 26-year fixed rate notes and a del
ayed draw 5-year loan facility. FinanceCo then issued a new loan facility to the Stadium Authority in th
e amount of $450 million. The Stadium Authority’s loan facilities are discussed in note 5.
(ii)
StadCo Subordinated Loan
In March 2012, StadCo agreed to loan the Stadium Authority up to $500 million (the Subloan) to be use
d for the construction of Levi’s Stadium. During the refinance process in June 2013, the interest rate on the S
ubloan was fixed and part of the then outstanding Subloan was paid down. The Subloan i
s discussed in note 5.
(iii) Construction
Period and Other Revenues
Certai
n revenues were collected by the Stadium Authority while the Stadium was under con
struction. These construction period and other revenues primarily consist of SBL and Naming Right
s revenues collected by the Stadium Authority.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
18 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 (4) C apital Assets
Capital a
sset activity for the year ended March 31, 2022 was as follows:

Balance Balance
March 31, March 31,
2021 Additions Reductions 2022
Nondepreciable assets:

Construction in progress $ 406,177 247,001 (184,412) 468,766 Total nondepreciable
assets 406,177 247
,001 (184,412) 468,766
Capital assets being depreciated:

Buildings 826,249,132 —
(21,248) 826,227,884
Machinery and equipment 2,560,605 1,431,056 — 3,991,661 Less accumulated depreciation for:

Buildings (110,067,816) (16,526,760) — (126,594,576)
Machinery and equipment (1,133,825) (452,709) — (1,586,534) Net depreciable assets 717,608,096 (15,548,413) (21,248) 702,038,435 Net capital assets $ 718,014,273 (15,301,412) (205,660) 702,507,201 Capital a
sset activity for the year ended March 31, 2021 was as follows:

Balance Balance
March 31, March 31,
2020 Additions Reductions 2021
Nondepreciable assets:

Construction in progress $ 416,730 4,447 (15,000) 406,177 Total nondepreciable
assets 416,730 4,
447 (15,000) 406,177
Capital assets being depreciated:

Buildings 826,227,888 21,
244 — 826,249,132
Machinery and equipment 1,942,934 617,671 — 2,560,605
Less accumulated depreciation for:

Buildings (93,541,056) (16,526,760) — (110,067,816)
Machinery and equipment (915,193) (218,632) — (1,133,825) Net depreciable assets 733,714,573 (16,106,477) — 717,608,096 Net capital assets $ 734,131,303 (16,102,030) (15,000) 718,014,273 DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
19 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 Interest expense incurred during the years ended March 31, 2022 and 2021 totaled $14,469,722 and $15,243,240, respectively. No interest was capitalized.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
20 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 (5) Long-Ter m Debt
(a)
Long-Term Debt Summary
Cha
nges in long-term debt for the year ended March 31, 2022 consisted of the following:

Outstanding Outstanding Amounts
as of as of due
Interest March 31, March 31, within one
Type of indebtedness Issue date Due date rates 2021 Additions Reductions 2022 year Business type activity debt:

Stadium Funding Trust
Loan:

Term A Loan 6/19/2013 4/1/2039 5.00 % $ 244,160,240 — (14,022,001) 230,138,239 30,182,000 StadCo CFD Advance 4/1/2013 12/31/2054 5.73 29,502,893 871,610 (1) — 30,374,503 — StadCo Subordinated Loan 3/28/2012 3/31/2043 5.50 23,132,426 — (3,331,476) 19,800,950 4,911,322 Total $ 296,795,559 871,610 (17,353,477) 280,313,692 35,093,322 (1) The addition to the StadCo CFD Advance is interest being added to principal due to the timing of the quarterly payments. (see note 5(c)).

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
21 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 Changes in long-term debt for the year ended March 31, 2021 consisted of the following:

Outstanding Outstanding Amounts
as of as of due
Interest March 31, March 31, within one
Type of indebtedness Issue date Due date rates 2020 Additions Reductions 2021 year Business type activity debt:

Stadium Funding Trust
Loan:

Term A Loan 6/19/2013 4/1/2039 5.00 % $ 257,514,240 — (13,354,000) 244,160,240 14,022,000 StadCo CFD Advance 4/1/2013 12/31/2054 5.73 28,832,979 1,050,753 (1) (380,839) 29,502,893 — StadCo Subordinated Loan 3/28/2012 3/31/2043 5.50 38,917,384 — (15,784,958) 23,132,426 4,655,282 Total $ 325,264,603 1,050,753 (29,519,797) 296,795,559 18,677,282 (1) The addition to the StadCo CFD Advance is interest being added to principal due to the timing of the quarterly payments. (see note 5(c)).

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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
22 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 (b) Stadium Funding Trust Loan
The Re
stated Credit Agreement by and among FinanceCo, the Stadium Authority and Goldman Sachs Bank was e
ntered into on June 19, 2013. FinanceCo agreed to loan the Stadium Authority up to $450 millio
n. Under the Restated Credit Agreement, the loan from FinanceCo consists of the Term A Loan a
nd the Term B Loan. On March 31, 2016, the Stadium Authority paid the remaining amount due on the Term B Loan.
(i)
Term A Loan
The Term A Loan was made in the amount of $282.79 million. This loan bears interest at a fixed rate of 5%, p
ayable semi-annually, with annual principal payments due beginning in April 2018. It has a matu
rity date in 2039 and is subject to certain prepayment premiums. The loan was fully dra
wn at closing. As of March 31, 2022, $230.1 million was outstanding. Debt service on this loan is se
cured by a pledge of available SBL Revenues of Stadium Authority.

In the event of default under the loan agreement, FinanceCo has the right, upon written notice to the Stadium Authority, to accele
rate and declare the Stadium Authority’s obligation to repay the related lo
an to FinanceCo to be immediately due and payable.
(c) StadC
o CFD Advance
In May of 2010, the City completed the proceedings to establish CFD for the purpose of financing certai
n publicly owned facilities and public services associated with the Stadium.

On Ju
ne 11, 2013, the CFD, the Stadium Authority, and StadCo entered into a Reimbursement Agreem
ent under which the CFD would agree to reimburse the Stadium Authority for costs of the publi
cly owned facilities and public services constructed for the Stadium. The reimbursement can only be made fro
m the special tax generated by the CFD, as and when received by the CFD.

StadCo has agreed to advance to the Stadium Authority funds to pay for the CFD Infrastructure (StadCo CF
D Advance). To evidence the Stadium Authority’s obligation to repay the StadCo CFD Advan
ce, the Stadium Authority and StadCo also executed a note on June 11, 2013. The StadCo CFD Advan
ce has a maximum principal of $38 million and an interest rate of 5.73%.

During the year ended March 31, 2022, as the special CFD tax was submitted to the Stadium Authority, a numbe
r of payments were made on the StadCo CFD Advance. StadCo CFD Advance payments were mad
e mid-way through each quarter. The interest that accrued between the last StadCo CFD Advan
ce payment and the end of the year is added to principal. The amount of payment due for the yea
r was $1.7 million, which included $1.7 million in interest and $0 in principal. The Stadium Authority made $8
19 thousand in payments and added the remaining unpaid balance to the principal during the yea
r. As of March 31,2022, and 2021, $30.4 million and $29.5 million was outstanding respectively, whi
ch includes $872 thousand of interest added to principal as of March 31, 2022. (d)
StadCo Subordinated Loan
The Restated StadCo Obligations Agreement dated as of June 19, 2013 was entered into by and betwe
en StadCo and the Stadium Authority as part of the take-out financing process. Under the DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
23 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 Restated StadCo Obligations Agreement, StadCo will loan the Stadium Authority an amount not to exceed $500 million with a fixed 5.50% interest rate. Required principal repayments started in March 2016 and the Stadium Authority may prepay the loan at any time.

Payments totaling $4.6 million were made on the loan during the year. This included a $3.3 million in principal prepayment and $1.3 million in interest. As of March 31, 2022 and 2021, $19.8 million and $23.1 million, respectively, was outstanding. Debt service on this loan is secured by a pledge of available Stadium Authority revenues on a basis subordinate to outstanding senior loans, if any.

In the event of default under the loan agreement, StadCo has the right, upon written notice to the Stadium Authority, to accelerate and declare the Stadium Authority’s obligation to repay the related loan to StadCo to be immediately due and payable.
(e)
Management Company Revolving Loan
The Man
agement Company Revolving Loan dated as of March 28, 2012 was entered into by and betwe
en the Stadium Authority and ManagementCo. The Management Company Revolving Loan pro
vides borrowing to the Stadium Authority in an amount not to exceed $25 million through the earlier of the end of the term of the Stadium Le
ase or the expiration of the Stadium Management Agreement, with intere
st at the prime rate payable quarterly. The Management Company Revolving Loan may be use
d solely for the purpose of enabling the Stadium Authority to pay Covered Stadium Authority Operating Expen
ses (as defined in the agreement) to the extent, and only to the extent, that funds are not otherwise
available.

On July 3, 2019, ManagementCo began issuing certificates of loan to the Stadium Authority under the Manag
ement Company Revolving Loan and with Sections 5.2 and 5.3 of the Stadium Management Agreem
ent. The Management Agreement engages ManagementCo for services rendered related to its operation
s on behalf of the Stadium Authority. The Management Company Revolving Loan may be use
d solely for the purpose of enabling the Stadium Authority to pay covered Stadium Authority operating e
xpenses, as defined in the agreement, to the extent, and only to the extent, that funds are not otherwise
available. During fiscal year 2019-20, certain operating expenses came into question by the Stadium Authority and as such, were partially withheld from payment to ManagementCo until Manag
ementCo provided documentation to show the services were legally procured and complied with appli
cable laws (see footnote 3a). Subsequently, ManagementCo triggered the Revolving Loan pro
visions to draw monies for the payment of operating expenses not paid to date by the Stadium Authority. As
of March 31, 2021 and 2022, the amount outstanding reported in the Management Company Revolving Loan by ManagementCo was $6.7 million and $0, respectively. ManagementCo wa
s able to pay off the Revolving Loan balance with the year-end excess cash from operations.

Stadium Authority di
sputed these draws and the application of Stadium Authority's excess cash to pay off the balance, and these disp
utes were part of the parties' arbitration regarding Shared Stadium E
xpenses.

On August 31, 2022, Stadium Authority, StadCo and ManagementCo entered into a settlement agre
ement, which included terms addressing these disputes. Specifically, under section 11(b)(iii) of the Settlement Agree
ment, Stadium Authority agreed to recognize the prior unpaid expenses incurred from fiscal
year 2019-20 through fiscal year 2021-22, and ManagementCo's prior unauthorized payments of DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
24 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 the unpaid expenses through the Revolving Loan are treated as timely Stadium Authority payments, but without Stadium Authority agreeing to ManagementCo's actions or draws under the Revolving Loan.
(f)
Pledge of Future Revenues
The pledge of future revenues ends upon repayment of the $267 million in outstanding principal on the Term A and
Subordinate Loan which is scheduled to occur in fiscal year 2039-40 and 2042-43, respe
ctively. For fiscal year 2021-22, revenues including operating revenues and non-operating intere
st earnings amounted to $62.6 million and operating costs including operating expenses, but not intere
st, depreciation or amortization amounted to $33.4 million. Net revenues available for debt servi
ce amounted to $29.2 million which represented a coverage ratio of 1.6 on the $18.6 million of debt se
rvice.
(g)
Long-Term Debt Maturities
Future principal and interest amounts due on long-term debt are as follows as of March 31, 2022:

Principal Interest
Year ending March 31:
2023 $ 19,634,322 13,600,273
2024 20,640,446 12,557,201
2025 12,766,322 11,907,226
2026 12,079,850 11,214,668
2027 8,404,934 10,561,125
Thereafter 206,787,818 108,747,350
Total $ 280,313,692 168,587,843
(6) Lease
s
(a) Ground
Lease
On February 28, 2012, the Stadium Authority entered into a lease (the Ground Lease) with the City whe
reby the City leases the Stadium site to the Stadium Authority. The Ground Lease was amended on Ju
ne 19, 2013.

The Ground Lease has an initial term of 40 years. The first lease year commenced on the first day followin
g the substantial completion of construction (August 1, 2014) and ended on the next following March 31. The subsequent lease years will start on April 1 and end on the following March 31. The Stadium Authority will have five successi
ve extension options, each four years in duration, which would comm
ence following the initial term expiration date.

The Ground Lease provides that the City will receive a fixed ground rent (Fixed Ground Rent) of $180 tho
usand for the first year of Stadium operations payable by the Stadium Authority. Beginning in the se
cond year of Stadium operations and annually thereafter through the tenth year of Stadium operation
s, the Fixed Ground Rent will increase annually by $35 thousand. Beginning in the 11th year DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
25 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 of Stadium operations, Fixed Ground Rent will be increased to equal $1 million, and thereafter will be increased by $100 thousand every five years through the end of the initial term of the Ground Lease. If the term of the Ground Lease is extended, then, during the first extension term, the Fixed Ground Rent will equal $1.58 million; and if and to the extent the Ground Lease is further extended, the Fixed Ground Rent will be increased by $80 thousand every four years thereafter through the expiration of the term of the Ground Lease. While the Fixed Ground Rent payments vary over the course of the Ground Lease, Ground Lease expense is recorded on a straight-line basis. Therefore $979 thousand of ground lease expense was reported in each of the fiscal years ended March 31, 2022 and 2021.

The Ground Lease also provides that the City will receive a performance-based rent equal to 50% of the net income from Non-NFL events, less certain credits including 50% of the Fixed Ground Rent, payable by the Stadium Authority. If certain of the credits are not used within the year incurred or the next five succeeding years, the credits will expire.

Future minimum payments due under the lease are as follows:

Year ending March 31:
2023 $ 460,000
2024 495,000
2025 1,000,000
2026 1,000,000
2027 1,000,000
Thereafter 34,500,000
$ 38,455,000
(
b) St
adium Lease
On March 2
8, 2012, the Stadium Authority entered into a lease with StadCo whereby the Stadium Authority le
ases the Stadium to StadCo. On June 19, 2013, the same parties entered into an Amended and Restate
d Stadium Lease Agreement (the Stadium Lease).

The Stadium Lease has an initial term of 40 years commencing on the first day following the substantial compl
etion of construction (August 1, 2014) and includes five successive options to extend the term by four years each. The Stadium Lease is divided into two seasons:
 The Tenant Season, which includes the NFL season (including preseason, regular season, and post
season NFL games) and runs from August 1 through January 31; and  The Stadium Authority Season, which runs from February 1 through July 31.

Pursuant to the Stadium Lease, the Stadium Authority and StadCo will be entitled to receive and collect separate revenues. Initially, rent payable by StadCo to the Stadium Authority was $24.5 million per year. This amount was established pursuant to the Stadium Lease in connection with the take-out financing, which occurred on June 19, 2013. The Stadium Lease allowed for one opportunity to adjust the rent if operating or debt service expenses are either more or less than projected in determining the initial rent. Based on the changes to the projected operating and debt service expenses, the provisions DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
26 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 for a one-time rent adjustment were triggered. At the Stadium Authority Board (Board) meeting held on March 22, 2016, the Board decided not to adjust the rent, and instead passed a motion to pursue the informal dispute resolution procedures and to proceed to the arbitration process if necessary.

Thereafter, on May 3, 2016, StadCo filed for arbitration with the Stadium Authority.

On June 18, 2018, the arbitrator entered an Arbitration Award in favor of the Stadium Authority and against StadCo. This award adjusted the facility rent from $24.5 million to $24.76 million, an increase of $262,000. This increase is retroactive to the first lease year resulting in a total amount owed to the Stadium Authority of $1.31 million for the first five lease years, through March 31, 2020. In addition to the adjustment to the facility rent, the Stadium Authority was entitled to reimbursement of its legal fees, determined by the arbitrator to be $2.28 million. The lease also provides for a fair market rent adjustment in year 33.

The Stadium Authority received $25.3 million and $17.3 million in stadium rent from StadCo in each of the fiscal years ended March 31, 2022 and 2021, respectively. There were seven additional NFL events in fiscal year 2021-22, therefore; lease revenues in fiscal year 2021-22 were higher than the prior year.

The Stadium Authority may elect to expand the Tenant Season to consist of the entire lease year, from April 1 through the next succeeding March 31 (Stadium Authority Put Right), by delivering written notice to StadCo. The Stadium Authority Put Right may be exercised at any time during lease year 13, or at any time that the Management Company Revolving Loan balance exceeds $20 million. The expansion of the Tenant Season will be effective as of the applicable Tenant Season Expansion Date as set forth in the Stadium Lease. Effective from and after the Tenant Season Expansion Date, and continuing through the remainder of the Stadium Lease term, the Tenant Season will consist of the entire lease year.
(7) Con
tingencies
(a) Asset Retirement Obligat ion
Pursuant to the Gro
und Lease, the Stadium Authority may be required to demolish the Stadium and other imp
rovements at the end of the lease term, upon written notice from the City. Pursuant to the Stadium Lease, the Stadium Authority
will establish reserves to fund the cost of demolishing the stadium at th
e end of the lease term. While such reserves are projected to cover the entire demolition cost, StadCo
will be responsible for funding any shortfall.
(b) Manag
ementCo Expense Litigation
On June 13, 2019, the Stadium Authority partially suspended payments to ManagementCo for Operating an
d Management Expenses and Shared Expenses incurred by ManagementCo, based on Stadium Authority'
s obligations to protect public funds and due to concerns over ManagementCo's compli
ance with contractual obligations and violations of State laws, including but not limited to, California’
s Prevailing Wage statutes, California Department of Industrial Relations regulation, and pro
curement requirements. The partially suspended payments would be released when Manag
ementCo provided records showing legal and contractual compliance.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
27 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 StadCo and ManagementCo initiated arbitration proceedings to dispute the Stadium Authority’s position. Based on Stadium Authority's reasonable justification for the partial suspension of payments and because the dispute was subject to litigation, the Stadium Authority did not recognize the suspended payments as an expense in fiscal years 2020 and 2021.

On July 3, 2019, ManagementCo, acting independently, began issuing certificates of loan to the Stadium Authority under the Management Company Revolving Loan and with Sections 5.2 and 5.3 of the Stadium Management Agreement, to pay for the suspended Shared Expenses of approximately $6,634,000, which covers expenses from June 2019 thru February 2020. The draw incurred $109,436 in interest expense and increased the Management Company Revolving Loan balance amount to $6,300,653 in principal and interest for fiscal year 2019-20 (see footnote 5e). Stadium Authority objected to and disputed the use and draws of the Revolving Loan, and did not recognize at that time the principal or interest claims under the Revolving Loan as an expense.

On April 1, 2020, the Stadium Authority completed the Trust Excess Cash Flow funding instructions and provided it to the FinanceCo and StadCo to complete fiscal year 2019-20’s year-end Trust Excess Cash Flow funding distribution per the Deposit and Disbursement Agreement. The Trust Excess Cash Flow instruction specifically excluded payments to the Revolving Loan of $6,300,653 because the Stadium Authority did not recognize this as an expense, as explained above. StadCo deviated from the funding instructions and took the Excess Revenues from the distribution to pay off the Management Company Revolving Loan. The Stadium Authority was informed of this deviation in a letter dated April 27, 2020. On May 18, 2020, the Stadium Authority notified StadCo and the Trust that the deviation is in direct contravention of the Stadium Authority’s instructions to the Trustee with regards to the use of Excess Revenue. Subsequently, the Stadium Authority has recorded a receivable from StadCo for $6,300,653.

In fiscal year 2020-21, ManagementCo continued to issue certificates of loan under the Revolving Loan to the Stadium Authority for the suspended Shared Expenses of approximately $7,249,747, which covers expenses from March 2020 through March 2021. ManagementCo also issued a certificate of loan for $1,601,538 to pay for a portion of the $2,741,014 invoice from fiscal year 2019-20’s Non-NFL events’ net loss reported by ManagementCo. The remaining balance of $1,139,476 in the Non-NFL events’ net loss invoice was from the City’s Public Safety costs, which ManagementCo had requested that the City recoup the costs directly with the Stadium Authority. The Stadium Authority included the Non-NFL events’ net loss of $1,601,538 in the overall dispute with ManagementCo.

On March 31, 2021, the Stadium Authority completed the Trust Excess Cash Flow funding instructions and provided it to the FinanceCo and StadCo to complete fiscal year 2020-21’s year-end Trust Excess Cash Flow funding distribution per the Deposit and Disbursement Agreement. The Trust Excess Cash Flow instruction requested that the Trust pay the StadCo Subordinated Loan in the amount of $5,796,711. However, StadCo deviated from the funding instructions and used $2,167,689 from the distribution to pay off the Management Company Revolving Loan instead. The Stadium Authority was informed of this deviation in a letter dated May 18, 2021. Subsequently, the Stadium Authority recorded a receivable from StadCo for $2,167,689.

In fiscal year 2021-22, ManagementCo issued a certificate of loan to the Stadium Authority for $4,874,745, which includes unpaid Shared Expenses of $4,291,056 from April 2021 through March DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
28 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 2022, fiscal year 2020-21 Non-NFL events’ depreciation expense of $32,689, and fiscal year 2021-22 Non-NFL events’ net loss of $551,000. ManagementCo also invoiced the Stadium Authority $193,522 for Revolving Loan interests and applied $1,319,976 in credits to the Revolving Loan for prior years expense true-ups. As a result, the amount outstanding in the Management Company Revolving Loan increased by $3,748,291, from $6,683,597 to $10,431,888 before StadCo deviated from the fiscal year 2021-22 Trust Excess Cash Flow funding instruction and fully paid off the Revolving Loan.

On March 31, 2022, the Stadium Authority completed the Trust Excess Cash Flow funding instructions and provided it to the FinanceCo and StadCo to complete fiscal year 2021-22’s year-end Trust Excess Cash Flow funding distribution per the Deposit and Disbursement Agreement. The Trust Excess Cash Flow instruction requested that the Trust pay the StadCo Subordinated Loan in the amount of $15,035,648. However, StadCo deviated from the funding instructions and used $10,431,888 from the distribution to pay off the Management Company Revolving Loan instead. The Stadium Authority was informed of this deviation in a letter dated April 13, 2022. Subsequently, the Stadium Authority recorded a receivable from StadCo for $10,431,888.

Stadium Authority objected to and disputes ManagementCo's draws and use of the Revolving Loan, as explained above, as well as the use of Stadium Authority's excess cash each year to pay Revolving Loan principal and interest. These disputes were part of the parties' arbitration matter. On August 31, 2022, Stadium Authority, StadCo and ManagementCo entered into a settlement agreement, which included terms addressing these disputes. Specifically, under section 11(b)(iii) of the Settlement Agreement, Stadium Authority agreed to recognize the prior unpaid expenses incurred from fiscal year 2019-20 through fiscal year 2021-22, and ManagementCo's prior unauthorized payments of the unpaid expenses through the Revolving Loan are treated as timely Stadium Authority payments, but without Stadium Authority agreeing to ManagementCo's actions or draws under the Revolving Loan (c)
Historical SBL Buffet Costs
On April 30, 2020, the Stadium Authority received an invoice in the amount of $4,388,709 for previously un-bill
ed “complimentary” buffet costs associated with certain SBL holders for the NFL seasons from 2014 thru 20

18. On May 13, 2020, the Stadium Authority issued a response letter disputing the newly billed cost
s citing that the costs were not presented in a reasonable manner relative to the financial planni
ng and reporting requirements of the Lease Agreement and Stadium Management Agreement and there is n
o justification for delaying presentment and demand for payment. The invoices presented also la
ck sufficient supporting documentations in order to confirm the validity of the costs and charges unde
r the Lease Agreement terms. StadCo and ManagementCo have initiated arbitration proceedings to dispute the
Stadium Authority’s position and the dispute is still outstanding.

As of March 31, 2022, ManagementCo invoiced an additional $902,081 in new buffet costs to the Stadium Authority throug
h the fiscal year 2021-22 Non-NFL events’ net loss. ManagementCo also issued a
certificate of loan to the Stadium Authority under the Management Company Revolving Loan for the buffet amount an
d subsequently paid off the loan through the year-end excess cash distribution.

Stadium Authority obj
ected to and disputes ManagementCo's unauthorized payment of these buffet co
sts through the Revolving Loan, and also the payment of that loan through year-end excess cash.

Pursuant to the partie
s' August 31, 2022 settlement agreement and stipulation, ManagementCo's draw unde
r the Revolving Loan will be treated as a timely Stadium Authority payment, under protest, and DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2022 and 2021
29 18922289.1
DRAFT 9/26/2022 4:41 PM SantaClaraStadiumAuthority FY21-22_FS v4 with a full reservation of Stadium Authority's rights and claims. The Stadium Authority recorded a $902,081 receivable from ManagementCo for the loan draw on the buffet costs as of March 31, 2022. (8) Subsequ
ent Events
On August 31, 2022, the Stadium Authority entered into a settlement agreement with StadCo and Manag
ementCo over disputes regarding the Operating and Management Expenses and Shared Expenses th
at were previously withheld. As part of the settlement, the Stadium Authority agreed to recognize the $15.8 million
of unpaid ManagementCo expenses along with the $426 thousand interest expenses from the Revolving Loan. The Stadium Authority will not have to pay for the unpaid expenses since ManagementCo alrea
dy paid for the expenses through the Revolving Loan draws and year-end excess cash. Additionally, the Stadium Authority
will reverse the receivable balances previously recorded for the year-end excess ca
sh diversions that ManagementCo took to pay off the Revolving Loan balance. As part of the settlement, Stadium Authority did n
ot confirm or agree to ManagementCo's prior actions or draws under the Revolving Loan. The u
npaid expenses were properly recognized in fiscal year ending March 31, 2022.

DRAFT
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-349 Agenda Date: 9/30/2022

REPORT TO AUDIT COMMITTEE

SUBJECT
Overview of the City Auditor’s Office Semi-Annual Status Report as of September 30, 2022

BACKGROUND
Per Section 900 of the City Charter, the City Auditor’sduties and responsibilities include conducting in-depth financial and performance audits, overseeing the City’sperformance management system, auditing and approving all bills, invoices, payrolls, demands or charges against the City government before payment and, with the advice of the City Attorney, making reports to the City Council as to the regularity, legality and correctness of such claims, demands or charges. The City Auditor’sOffice conducts its work under the auditing standards prescribed by the Institute of Internal Auditors (IIA).

The IIA International Standards for the Professional Practice of Internal Auditing (Standards) requires the City Auditor to periodically report to the Audit Committee on the internal audit activity’s performance relative to the Audit Work Plan.

In accordance with the adopted Internal Audit Charter, the City Auditor prepares an annual work plan and reports semi-annually to the City Council via the Audit Committee describing the status and progress towards completion of the work plan. This report summarizes reports issued, other activities, assignments in process, and the status of the current work plan as of September 30, 2022.

DISCUSSION
The role of the Audit Committee (Committee) is to provide oversight of the City’sfinancial reporting processes, internal controls, and independent auditors. The City Auditor’sOffice will present the audit status report as of September 30, 2022. Staff will provide an update of the audit projects within the existing work plan.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project”within the meaning of the California Environment Quality Act (“CEQA”)pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.

FISCAL IMPACT
Costs associated with the preparation of this report are included in the City’sFY 2022/23 Adopted Operating Budget.

COORDINATION
This report has been coordinated with the City Manager’s Office.

City of Santa Clara Printed on 9/27/2022Page 1 of 2
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22-349 Agenda Date: 9/30/2022

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Accept the City Auditor’sOffice Semi-Annual Status Report as of September 30, 2022 recommend that the report be forwarded for note and file to the full Council at the October 18, 2022 Council and Authorities Concurrent meeting.

Reviewed and Approved by: David Noce, Audit Manager

ATTACHMENTS

1. Semi-Annual Status Report as of September 30, 2022
City of Santa Clara Printed on 9/27/2022Page 2 of 2
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Semi-Annual Audit Status Report – Fiscal Year 2022/23
As of September 30, 2022

OVERVIEW

The mission of the City Auditor’s Office is to promote honest, efficient, effective, and fully accountable city government through accurate, independent, and objective audits. We conduct performance audits and reviews of City departments, programs, and services. We provide oversight of external auditors regarding the City’s annual financial audit, single audit, annual compliance review with the City’s Inve stment Policy, performance audits and related financial audits.

The Audit Committee and City Council approve a flexible annual Audit Work Plan with a risk - based methodology. The most recent Semi -Annual Status Report (as of June 30, 2021 ) was delivered to the Audit Committee in September 2021. The internal audit work has had some delays due to internal staff availability and contracted audit firms scheduling issues.

The Auditor’s Office also would like to formalize the semi-annual reporting timeline to the Audit Committee, to align with the September and March meeting dates, where other financial reporting requirements already trigger Audit Committee meetings. For the current reporting period, the Auditor’s Office will also come before the Committee in December of 2022 to review and seek approval of additional audit work that is recommended as part of the Citywide risk assessment project. This will set the Annual Audit Work Plan for calendar year 2023.

This Semi -Annual Audit Status Report summarizes the status of items from the previously approved Annual Audit Workplan and includes other items that have been proposed for review.

ACTIVITY HIGHLIGHTS – PERIOD ENDING SEPTEMBER 30, 2022:

 Completed a review of the City’s Conference and Travel Policy. Changes were made to bring the City into compliance with GSA guidelines and strengthen controls around pre - travel approvals as well as clarify previously inconsistent language.

 Launched “Speak Up Santa Clara” the City’s whistleblower hotline for employees to report anything related to fraud, waste, and abuse or other areas of concern they feel the Auditor’s Office needs to know about. The hotline was authorized in relation with the Fraud, Waste, and Abuse Policy that was also approved by Council during this reporting period.

 Over the previous year, the Auditor’s Office staff has placed an emphasis on training related to internal audit functions and have attended a number of training event s offered by the Institute of Internal Auditors (IIA) and the Association of Local Government Auditors (ALGA) to strengthen core internal audit skills.

 Completed the procurement of Maze & Associates to perform the annual external financial audit and Single Audit of federal funds for the City for a period of five years.

Audit Status Report – Fiscal Year 2022/23 As of September 30, 2022 (continued)

ASSIGNMENTS COMPLETED SINCE PREVIOUS STATUS REPORT

The following table lists completed assignments from the previous Audit Work Plan:

Project Name Project Description Start
Date(1)
Status Issuance /
Completion
Date

1. Fraud, Waste, and
Abuse Policy
(Fraud Policy)
The Policy sets out policies and procedures to encourage and facilitate the reporting of fraud , waste, or abuse and any other questionable practices.

June 2021 Completed January 2022

2. Update of the City’s
Travel Policy
The City Auditor’s Office reviewed the City Travel Policy to define the City’s expectations regarding employees
who travel in connection with their work responsibilities.

The update brings the policy in line with US General
Services Administration (GSA) guidelines and clears up
previous inconsistencies.

June 2021 Completed July 2022

3. Annual Review of
Internal Audit
Charter
The City Auditor’s Office reviewed the Internal Audit
Charter in conjunction with its o ngoing citywide risk
assessment project and determined no revisions were
necessary at this time. Charter is reviewed annually, and any proposed revisions are subject to review and
approval by the Audit Committee.

June 2021 Completed June 2022

4. Fraud, Waste, and
Abuse - Whistle
Blower Hotline
The City has retained a third -party vendor to provide a comprehensive solution for employees to report any
concerns related to fraud, waste, or abuse. This function provides continuous monitoring of any issues raised and provides a case management platfor m to track reported
issues and produce statistical reporting which will help inform areas of focus for future audit plans.

June 2021 Completed September 2022

5. Annual External
Financial Audit and
Single Audit for the
City (contracted
audit service)
The City Charter requires an annual external audit of the City’s financial transactions to be performed by an
independent certified public accountant. The City
Auditor’s Office administers the audit contract and works with the Finance Department and the external audit firm to coordinate this effort.

June 2021 Completed December 2021
Audit Status Report – Fiscal Year 2022/23 As of September 30, 2022 (continued)

Project Name Project Description Start
Date(1)
Status Issuance /
Completion
Date

6. Annual External
Financial Audit for
the Stadium
Authority
(contracted audit
service)
The Santa Clara Stadium Authority (Stadium Authority),
the Stadium Funding Trust, and Goldman Sachs Bank
USA entered into a Credit Agreement on June 19, 2013
to finance the stadium. Section 5.1(a) of the Credit
Agreement requires that the Stadium Authority Annual
Financial Statements be audited by independent certified public accountants within 180 days after the end of each fiscal year. The City Auditor’s Office administers the audit contract and works with the Finance Department
and the external audit firm to coordinate this effort.

June 2021 Completed September 2022

ASSIGNMENTS IN PROCESS:

The following table lists all Assignments in Process from the previous Audit Work Plan:

Project Name Project Description Start
Date(1)
Status Issuance/
Completion
Date

7. Review of Financial
Procedures and
Controls for the
Santa Clara Stadium
Authority (contracted
service)
Review past Construction Fund and Public Safety
transactions and provide feedback on the allocation of
staff charges. Contracted to JS Held. A draft of this report was just received by the Auditor’s Office and will be
presented at the next Committee meeting in December
2022.

June 2021 In Process

October 2022

8. Audit of the 2019
College Football
Playoff National
Championship Game
(contracted audit
service)
An analysis of the revenue and expense classification and review of the completeness of the supporting documents
for the 2019 College Football Playoff game. Contracted to The PUN Group. This had been delayed due to a need
for a non -disclosure agreement between MANCO and
The PUN Group as well as contractual and staffing issues that had to be addressed with the time extension of the PUN Group contract. The PUN Group has identified the
staff resource needed and has communicated to MANCO
the documentation they require finish the review.

June 2021 In Process December 2022
Audit Status Report – Fiscal Year 2022/23 As of September 30, 2022 (continued)

Project Name Project Description Start
Date(1)
Status Issuance/
Completion
Date

9. Annual Risk
Assessment and
Development of
Internal Audit Annual
Workplan
The City Auditor’s Office is to perform an annual risk assessment as required by internal audit standards to
identify and prioritize the potential audit subjects for the Audit Work Pl an. The annual workplan is designed to
improve the effectiveness of risk management, internal controls, and governance processes. The City contracted with Baker Tilly, Inc. to perform the assessment. They are a nationally respected firm with many munici pal internal audit clients. The initial data gathering, and interviews have recently completed, and a draft of both the risk
assessment report and proposed annual audit work plan
are in process.

June 2021 In Process December 2022

10. Semi-Annual Audit
Status Report
The City Auditor’s Office prepares and issues semi -
annual status and progress update reports on the
approved audit assignments in the audit work plan. The
staff also reports on any changes (e.g. assignment
addition or deletion) to the audit work plan.

June 2021 In Process September
2022 &
December 2022

11. Annual Audit
Recommendation
Status Report
The City Auditor’s Office tracks audit recommendations
and issues reports on the implementation status of all
open audit recommendations. The staff also meets with
the auditee to discuss the progress of the audit
recommendations.

June 2021 In Process December 2022

12. City Auditor’s Cash
Disbursement Audit
The City Charter requires the City Auditor to audit and approve bills, invoices, payrolls, demands or charges
against the City before payment.

June 2021 In Process December 2022
Audit Status Report – Fiscal Year 2022/23 As of September 30, 2022 (continued)

Project Name Project Description Start
Date(1)
Status Issuance/
Completion
Date

13. Internal Audit Annual
Work Plan
The City Auditor is responsible for developing an annual internal audit work plan based on the results of an annual citywide risk assessment designed to improve the
effectiveness of risk management, internal control, and governance processes.

The annual work plan is presented to the Audit Committee to recommend to the City Council for approval, which is required prior to the start of any audit work.

June 2021 In Process December 2022

14. Annual Continuing
Education Training
The City Auditor’s Office is committed to attending regular continuing professional education (CPE) training and
maintaining a minimum of 40 CPE hours a year for each
staff.

June 2021 In Process Ongoing

ASSIGNMENTS NOT YET STARTED:

The following table lists all Assignments Not Yet Started as of September 30, 2022 for the current Audit Work Plan:

Project Name Project Description Start
Date(1)
Status Projected
Issuance /
Completion
Date

15. Review of Financial
Procedures and
Controls for the
Santa Clara Stadium
Authority (contracted
service)
Staff has asked the City Auditor’s Office to provide
advice on several policies, procedural and internal
control issues for the Stadium Authority. Proposed
reviews include:
 Analyzing the Stadium Authority’s review
procedures for Non -NFL Event revenues and
provide feedback on procedure and control
issues, if any.
 Reviewing the Stadium Authority Financial
Reporting Policy with staff and external auditors
and providing feedback on best practices
June 2021 Deferred until
the SCSA
implements
the new
financial
management
system.

Spring 2023

Audit Status Report – Fiscal Year 2022/23 As of September 30, 2022 (continued)

Project Name Project Description Start
Date(1)
Status Projected
Issuance /
Completion
Date

16. Performance Audit of
Vendor Master File
and 1099 Reporting
The purpose of this audit is to assess and evaluate
whether the City has adequate controls regarding its
master vendor file setup and if the City is effectively monitoring and maintaining its vendor information.

This audit has been deferred due to conflicts of interest with current audit staff having been in accounting
operations. We plan to co-source this audit with an
external CPA firm.

June 2021 Per IIA
Standards,
project has to
wait until at
least a year
has passed
since current
audit staff
was in
operations.

Summer 2023

17. Citywide Fraud Risk
Assessment
(contracted service)
This is a citywide fraud risk assessment for all the
departments including utility departments. This is
separate from the annual Citywide risk assessment. An
RFP is planned for early 2023 after the Citywide risk
assessment has been completed.

June 2021 Pending Summer 2023

18. Review of SCSA net
income related to
Non-NFL events.
(NEW - contracted
audit service)
The City Auditor’s Office originally contracted with JS Held to perform a review of the year -end net income for Non-NFL events for a three-year period. Amendment #3
of this contract has been approved to allow for additional reviews. The review is to identify reasons for the
differences in overall net income versus the sum of net income for individual events, while also determining if revenues and expenditures for each event were
recorded accurately.

June 2021 Pending Spring 2023
Notes:
(1) The start date column indicates the period where the project was either re-started from the original work plan (June 2021) after the Auditor’s Office was staffed again, or the date where new projects were added to the audit work plan.