Agenda packet — Audit Committee, September 3, 2024

City of Santa Clara
Meeting Agenda
Audit Committee
Hybrid Meeting
Council Conference Room/Virtual
City Hall - East Wing
1500 Warburton Avenue
Santa Clara, CA 95050
9:00 AMTuesday, September 3, 2024
The City of Santa Clara is conducting the Audit Committee meetings in a hybrid manner (in-person and 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
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CALL TO ORDER AND ROLL CALL

CONSENT CALENDAR

1. Audit Committee Minutes24-797
Approve the Audit Committee minutes of February 28,
2024.

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

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Audit Committee Meeting Agenda September 3, 2024

2. Overview of Santa Clara Stadium Authority Fiscal Year 2023/24 Annual Financial Statements and Audit Results Presentation by

KPMG, LLP
24-798
Accept the Santa Clara Stadium Authority Fiscal Year
2023/24 Annual Financial Statements and
recommend that the Stadium Authority note and file
the report at the September 10, 2024 Joint Council
and Authorities Concurrent and Stadium Authority
meeting.

Recommendation:

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

MEETING DISCLOSURES

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Audit Committee Meeting Agenda September 3, 2024
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.

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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
24-797 Agenda Date: 9/3/2024

REPORT TO AUDIT COMMITTEE

SUBJECT
Audit Committee Minutes

RECOMMENDATION
Approve the Audit Committee minutes of February 28, 2024.

City of Santa Clara Printed on 8/30/2024Page 1 of 1
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City of Santa Clara
Meeting Minutes
Audit Committee
Draft
11:00 AM Hybrid Meeting
Council Conference Room/Virtual
City Hall - East Wing
1500 Warburton Avenue
Santa Clara, CA 95050
02/28/2024
The City of Santa Clara is conducting the Audit Committee meetings in a hybrid manner (in-person and 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
Chair Watanabe called the meeting to order at 11:05 AM.

Kathy Watanabe, Suds Jain, and Kevin ParkPresent 3 -

CONSENT CALENDAR

1. 24-162 Audit Committee Minutes
Recommendation: Approve the Audit Committee minutes of November 27, 2023.

A motion was made by Member Jain, seconded by Member Park, to approve the Audit Committee minutes of November 27, 2023. The motion carried by the following vote:

Aye: Watanabe, Jain, and Park3 -

PUBLIC PRESENTATIONS
None.

GENERAL BUSINESS

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02/28/2024Audit Committee Meeting Minutes

2. 24-163 Overview of the Single Audit Report for Fiscal Year Ended June 30, 2023 Recommendation: Accept the Single Audit Report for Fiscal Year Ended June 30, 2023 and recommend that the reports are forwarded to note and file to the full Council at the March 19, 2024 Council and Authorities Concurrent meeting.

Director of Finance, Kenn Lee, gave a short introduction.

Auditor Grace Zhang, Maze & Associates, gave a PowerPoint presentation.

Committee Members' questions and comments followed.

Auditor Zhang, Housing & Community Services Division Manager, Adam Marcus, Assistant Director of Community Development, Reena Brillot, and Assistant Finance Director, Linh Lam, addressed the Committee Members' questions.

A motion was made by Member Jain, seconded by Member Park, to accept the Single Audit Report for Fiscal Year Ended June 30, 2023 and recommend that the reports are forwarded to note and file to the full Council at the March 19, 2024 Council and Authorities Concurrent meeting. The motion carried by the following vote:

Aye: Watanabe, Jain, and Park3 -

ADJOURNMENT
Chair Watanabe adjourned the meeting at 11:35 AM.

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

Aye: Watanabe, Jain, and Park3 -
Future Audit Committee Meetings will be scheduled at a later date.

MEETING DISCLOSURES

Page 2 ends

02/28/2024Audit 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.

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.

Page 3 ends

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
24-798 Agenda Date: 9/3/2024

REPORT TO AUDIT COMMITTEE

SUBJECT
Overview of Santa Clara Stadium Authority Fiscal Year 2023/24 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 2023/24 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 2023/24 fiscal year, which runs from April 1, 2023 to March 31, 2024.

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 2023/24 Annual Financial Statements including year-over-year comparison of the Stadium Authority financial position.

Jaime Cavin, Managing Director, and Alexander Pfeiffer, 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 8/30/2024Page 1 of 2
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24-798 Agenda Date: 9/3/2024
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 2023/24 Annual Financial Statements and recommend that the Stadium Authority note and file the report at the September 10, 2024 Joint Council and Authorities Concurrent and Stadium Authority meeting.

Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director

ATTACHMENTS

1. FY 2023/24 Santa Clara Stadium Authority Financial Statements Draft

2. SCSA staff presentation

3. KPMG presentation
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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Financial Statements
March 31, 2024 and 2023
(With Independent Auditors’ Report Thereon)
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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) 4
Basic Financial Statements:

Statements of Net Position 9
Statements of Revenues, Expenses, and Changes in Net Position 10 Statements of Cash Flows 11
Notes to Financial Statements 12
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1 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx 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, as of and for the years ended March 31, 2024 and 2023, and the related notes to the financial statements, which collectively comprise the Stadium Authority’s basic financial statements for the years then ended 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, 2024 and 2023, 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 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 DRAFT

2 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx 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 ac counting 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 audit 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.

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3 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated _______ __, ____ 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 of an audit performed in accordance with Government Auditing Standards in considering the Stadium Authority’s internal control over financial reporting and compliance.

Sacramento, California
Date
~(signed) KPMG LLP~
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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2024 and 2023
4 (Continued)
DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx 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, 2024 and 2023. 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, 2024 are as follows:
 The carrying value of Levi’s Stadium, net of depreciation, is $670,543,336.  During the fiscal year, there were twelve National Football League (NFL) games, seven ticketed Non-NFL events, and fifty-three smaller special events held at Levi’s Stadium.  The Stadium Authority recognized $81,107,805 in operating revenue and $79,482,331 in operating expenses.
 The revenues from the Non-NFL events were $24,935,722 and the related expenses were $16,669,037 resulting in net Non-NFL event profit of $8,266,685.
 Debt service payments during the fiscal year tota led $28,683,618. Overall remaining outstanding debt was reduced by $16,606,911.
 The assets of the Stadium Authority exceeded it s liabilities by $123,615,907 due to income from the operation of Levi’s Stadium.
 The City received $495,000 for stadium ground rent. A dditionally, 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.

The basic financial statements comprise 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 DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2024 and 2023
5 (Continued)
DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx changes in net position provide information about all revenue and expenses. The statements of cash flows provide information about cash activities for the period.

During the fiscal year ended March 31, 2023, the Stadium Authority implemented Governmental Accounting Standards Board (GASB) Statement No. 87 (GASB 87), Leases, which requires the Stadium Authority to recognize leases receivable and deferred inflows of resources related to lease arrangements where the Stadium Authority is a lessor. Further, the Stadium Authority is required to recognize a lease liability and an intangible right-to-use leased asset for lease arrangements where the Stadium Authority is a lessee.

Financial Analysis of the Stadium Authority as a Whole
The Stadium Authority’s net position at March 31, 2024, March 31, 2023, and March 31, 2022 is as follows:

FY 2024 FY 2023
increase increase
FY 2024 FY 2023 FY 2022 (decrease) (decrease)
Assets:

Capital assets $ 678,569,448 689,075,880 702,507,201 (10,506,432) (13,431,321) Other assets 759,807,570 749,514,166 749,179,327 10,293,404 334,839 Total assets $ 1,438,377,018 1,438,590,046 1,451,686,528 (213,028) (13,096,482) Liabilities:

Current unearned revenue $ 16,900,628 16,374,980 15,076,480 525,648 1,298,500 Other current liabilities 37,184,066 22,962,052 27,1 77,126 14,2 22,014 (4,2 15,074) Long-term unearned revenue 431,418,058 432,484,579 425,271,742 (1,066,521) 7,212,837 Other long-term liabilities 250,689,036 2 59,136,843 2 90,000,476 (8 ,447,807) ( 30,863,633) Total liabilities $ 736,191,788 730,958,454 757,525,824 5,233,334 (26,567,370) Deferred inflows of resources
Deferred inflows leases related 578,569,323 595,586,067 612,602,812 (17,016,744) (17,016,745) Total deferred inflows of resources $ 578,569,323 595,586,067 612,602,812 (17,016,744) (17,016,745) Net position:

Net investment in capital assets $ 456,438,951 449,951,997 422,193,509 6,486,954 27,758,488 Restricted for: —
Debt service 12,298,802 20,844,381 21,453,314 (8,545,579) (608,933) Capital projects and other —
agreements 81,938,065 52,822,516 47,055,671 29,115,549 5,766,845 Unrestricted deficit (427,059,911) (411,573,369) (409,144,602) (15,486,542) (2,428,767) Total net position $ 123,615,907 112,045,525 81,557,892 11,570,382 30,487,633

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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2024 and 2023
6 (Continued)
DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Fiscal Year 2023-24 Analysis
Capital assets decreased when compared to the prior year by $10,506,432 due to annual depreciation, partially offset by equipment and buildings additions. Other assets increased when compared to the prior year by $10,293,404. This was due to increases in cash deposits from excess revenue distributions at year-end and naming rights accounts receivable resulting from a naming rights agreement extension offset by a reduction in lease receivables. Liabilities increased by $5,233,334 compared to the prior year. This is primarily due to the recognition of public safety costs and performance-base rent (notes 7 and 8), partially offset by decreases in long-term debt and unearned Stadium Builder License (SBL) revenue. Total net position for the Stadium Authority, as a whole, increased between March 31, 2023 and March 31, 2024 to $123,615,907. This increase of $11,570,382 is primarily due to a decrease in long-term liabilities and deferred inflows of lease resources.

Fiscal Year 2022-23 Analysis
Capital assets decreased when compared to the prior year by $13,431,321 due to annual depreciation, partially offset by equipment and building additions. Other assets increased when compared to the prior year by $334,839. This was due mainly to the implementation of GASB 87 for leases, offset by increases in accounts receivables for Non-NFL event revenues and cash deposit from excess revenue distributions at year-end.

Liabilities decreased by $26,567,370 compared to the prior year. The decrease was due to principal prepayment of long-term debt and implementation of GASB 87 for leases, partly offset by an increase in unearned 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, increased between March 31, 2022 and March 31, 2023 to $112,045,525. This increase of $30,487,633 is primarily due to the payoff of the StadCo Subordinated Loan that financed the construction of the Stadium as well as decreases in other long-term liabilities and deferred inflows of lease resources.

The Stadium Authority’s revenues, expenses, and changes in net position for the fiscal years ended March 31, 2024, March 31, 2023, and March 31, 2022 are as follows:

FY 2024 FY 2023
increase increase
FY 2024 FY 2023 FY 2022 (decrease) (decrease)
Operating revenues $ 81,107,805 71,693,423 51,123,882 9,414,382 20,569,541 Operating expenses (79,482,331) (47,909,167) (50,478,807) (31,573,164) 2,569,640 Operating income (loss) 1,625,474 23,784,256 645,075 (22,158,782) 23,139,181 Nonoperating revenues 18,819,490 18,775,223 17,108,002 44,267 1,667,221 Nonoperating expenses (12,342,207) (14,198,663) (14,949,670) 1,856,456 751,007 Income before contributions
and other revenues 8,102,757 28,360,816 2,803,407 (20,258,059) 25,557,409 Contributions and other revenues 3,467,625 2,126,817 1,085,574 1,340,808 1,041,243 Increase in net position 11,570,382 30,487,633 3,888,981 (18,917,251) 26,598,652 Total net position – beginning of fiscal
period 112,045,525 81,557,892 77,668,911 30,487,633 3,888,981 Total net position – end of fiscal period $ 123,615,907 112,045,525 81,557,892 11,570,382 30,487,633

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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2024 and 2023
7 (Continued)
DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Fiscal Year 2023-24 Analysis
Stadium Authority operating revenues increased by $9,414,382 when compared with the prior year. This was mainly due to increases in revenue from ticketed Non-NFL events, rents and licenses and NFL ticket surcharge. The operating expenses increased by $31,573,164 compared to the prior year. This increase is primarily due to the 2024 Settlement Agreement (note 8), which resulted in an increase in buffet costs, performance-based rent and public safety costs. Non-NFL event expenses also increased due to larger ticketed Non-NFL events.

Nonoperating revenues increased by $44,267 mainly due to an increase in interest revenue offset by a decrease in miscellaneous other revenue. Nonoperating expenses decreased by $1,856,456 due to a decrease in interest expense resulting from lower debt balances.

Contributions and other revenues were $3,467,625, an increase of $1,340,808 over the prior fiscal year. These represent special hotel tax revenues collected to pay the CFD Advance Loan.

Fiscal Year 2022-23 Analysis
Stadium Authority operating revenues increased by $20,569,541 when compared with the prior year. This was mainly due to the implementation of GASB 87 and increases in rents and licenses, and charges for services from NFL Games, ticketed Non-NFL events and smaller special events being held. The operating expenses decreased by $2,569,640 compared to the prior year. This decrease is primarily due to higher Stadium Manager expenses and Non-NFL events expenses offsets by zero settlement expense true-up. The Stadium Authority recognized additional expenses for the unpaid shared stadium expenses and other expenses in fiscal year 2021-22 as part of a previous August 31, 2022 settlement agreement.

Nonoperating revenues increased by $1,667,221 mainly due to the implementation of GASB 87. Nonoperating expenses decreased by $751,007 mainly due to a decrease in interest expense.

Contributions and other revenues were $2,126,817, an increase of $1,041,243 over the prior fiscal year. These represent special hotel tax revenues collected to pay the CFD Advance Loan.

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, 2024, capital assets totaled $678,569,448.

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

Debt Administration
At March 31, 2024, the Stadium Authority had total debt outstanding of $228,667,826, as shown in detail in note 5 to the financial statements. Stadium Authority’s debt comprised Stadium Funding Trust Term A loan of $199,956,240 and the CFD Advance Loan of $28,711,586.

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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Management’s Discussion and Analysis (Unaudited)
March 31, 2024 and 2023
8 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Economic and Financial Overview
Over the last few years, the local economy continued to improve during the recovery from COVID-19.

Unemployment rates are near prepandemic rates and there continues to be commercial and residential development, including several projects in the vicinity of Levi’s Stadium. Large ticketed and small-scale Non- NFL events have recovered and are producing higher net revenues than prepandemic levels. The past few years have also seen increases in hotel nights resulting in increases to Community Facilities District (CFD) taxes that flow to the Stadium Authority to pay down debt. Major financial factors impacting the Stadium Authority are:
 In May 2013, a Naming Rights Agreement with Levi Strauss & Co. (Levi’s) was approved naming the Stadium “Levi’s Stadium” for a term of 20years. In January 2024, the First Amendment to Naming Rights Agreement with Levi’s was approved extending the initial term an additional 10years. The naming rights agreement and its first amendment calls for Levi’s to pay a total of $273.1 million to the Stadium Authority over the 30-year period. The agreement requires the Stadium Authority to hold at least 36 “Major Events” (with 25,000+ attendees) every three contract years. The Second Amendment to the Stadium Management Agreement states that Forty Niners Stadium Management Company, LLC (ManagementCo) would pay the Stadium Authority as liquidated damages the amount owed by the Stadium Authority to Levi’s in the event the required number of events is not met. As of March 31, 2024, the Stadium Authority has received $69.7 million in naming rights revenue.
 Stadium Builders Licenses (SBLs) entitle the license hol der to priority rights to buy tickets for events at Levi’s Stadium. The total value of the currently active SBL holders’ licenses is $555 million. Through March 31, 2024, $558.1 million in SBL principal payments have been collected since inception. This is due in part to a number 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 $70.8 million in interest from license holders who financed their SBLs since inception.  The Stadium Authority collected $24.8 million in lease revenue during the NFL season and $8.3 million net profit associated with hosting Non-NFL events for the fiscal year ended March 31, 2024.  The Stadium Authority collects a 10% surcharge on t he price of admission to all regular season NFL games and a $4 per ticket surcharge for all ticketed Non-NFL events. There were ten regular season NFL games held at Levi’s Stadium and two play-off games during fiscal year March 31, 2024, which resulted in $12.7 million in NFL ticket surcharge revenues. The Stadium Authority also recognized $1.6 million in Non-NFL event ticket surcharge revenues from the eight ticketed events held at the Stadium.

Contacting 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.

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Statements of Net Position
March 31, 2024 and 2023
Assets 2024 2023
Current assets:

Cash $ 18,485,558 11,286,692
Restricted cash 78,573,023 54,725,592
Restricted cash with fiscal agent 15,909,843 24,265,375 Accounts receivable 19,453,027 20,094,954
Lease receivable 11,926,763 11,669,804
Total current assets 144,348,214 122,042,417
Capital assets:

Buildings, net 670,543,336 683,106,548
Machinery and equipment, net 3,823,782 3,873,939
Construction in progress 4,202,330 2,095,393
Total capital assets 678,569,448 689,075,880
Right-to-use leased assets 21,097,730 21,718,252
Long-term restricted cash with fiscal agent 11,536,235 11,536,235 Long-term lease receivable 582,290,499 594,217,262
Long-term accounts receivable 534,892 —
Total noncurrent assets 1,294,028,804 1,316,547,629
Total assets $ 1,438,377,018 1,438,590,046
Liabilities
Current liabilities:

Accounts payable and accrued liabilities $ 23,637,965 1,357,581 Interest payable 5,773,075 6,002,575
Due to other City of Santa Clara funds 473,130 142,896 Term A loan payable, current portion 7,299,896 15,459,000 Unearned revenue, current portion 16,900,628 16,374,980 Total current liabilities 54,084,694 39,337,032
Lease liability 29,321,106 29,321,106
Term A loan payable 192,656,344 199,956,240
CFD advance loan payable 28,711,586 29,859,497
Unearned revenue 431,418,058 432,484,579
Total noncurrent liabilities 682,107,094 691,621,422
Total liabilities $ 736,191,788 730,958,454
Deferred Inflows of Resources
Deferred inflows leases related $ 578,569,323 595,586,067 Total deferred inflows of resources $ 578,569,323 595,586,067 Net Position
Net investment in capital assets $ 456,438,951 449,951,997 Restricted for:

Debt service 12,298,802 20,844,381
Capital projects and other agreements 81,938,065 52,822,516 Unrestricted deficit (427,059,911) (411,573,369)
Total net position $ 123,615,907 112,045,525
See accompanying notes to financial statements.
9 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, 2024 and 2023
2024 2023
Operating revenues:

Charges for services $ 40,611,283 33,161,155
Rents and licensing 40,496,522 38,532,268
81,107,805 71,693,423
Operating expenses:

Leases 7,574,722 250,000
Materials, services, and supplies (note 3a) 51,815,537 28,308,133 Selling, general, and administrative expenses 2,033,263 1,522,695 Depreciation 18,058,809 17,828,339
79,482,331 47,909,167
Operating (loss) income 1,625,474 23,784,256
Nonoperating revenues (expenses):

Interest revenue 18,819,490 18,157,312
Other revenue — 617,911
Interest expense (12,342,207) (14,198,663)
Income before contributions and other revenues 8,102,757 28,360,816 Contributions and other revenues:

Contribution from Community Facilities District 3,467,625 2,126,817 Change in net position 11,570,382 30,487,633
Net position – beginning of period 112,045,525 81,557,892 Net position – end of period $ 123,615,907 112,045,525 See accompanying notes to financial statements.
10 SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Statements of Cash Flows
Years ended March 31, 2024 and 2023
2024 2023
Cash flows from operating activities:

Receipts from customers $ 41,368,043 32,312,422
Payments to suppliers (38,995,500) (29,604,398)
Rents and licensing received 47,106,805 49,487,986
Net cash provided by operating activities 49,479,348 52,196,010 Cash flows from noncapital financing activities:

Net borrowings from other City of Santa Clara funds 330,234 629,529 Net cash provided by noncapital financing 330,234 629,529 Cash flows from capital and related financing activities:

Contribution from Community Facilities District 2,840,331 2,248,478 Acquisition and construction of capital assets (7,079,493) (3,108,564) Principal payments on capital debt (16,615,923) (35,038,955) Interest paid on capital debt (12,067,695) (13,918,397) Net cash used in capital and related financing (32,922,780) (49,817,438) Cash flows from investing activity:

Interest and dividends 5,803,963 4,503,381
Net cash provided by investing activity 5,803,963 4,503,381 Net increase in cash and restricted cash 22,690,765 7,511,482 Cash and restricted cash, beginning of period 101,813,894 94,302,412 Cash and restricted cash, end of period $ 124,504,659 101,813,894 Reconciliation of operating income to cash provided by operating activities:

Operating income $ 1,625,474 23,784,256
Depreciation 18,058,809 17,828,339
Lease revenues 7,250,256 7,285,255
Change in operating assets and liabilities:

Accounts receivable 657,660 (5,689,607)
Accounts payable and accrued liabilities 22,428,022 (539,569) Prepaid expenses — 1,015,999
Unearned revenue (540,873) 8,511,337
Deferred rent — —
Net cash provided by operating activities $ 49,479,348 52,196,010 Noncash operating and capital financing activities:

Equipment purchases included in accounts payable and accrued expense $ (147,638) 667,933 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, 2024 and 2023
12 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx (1) Organization and Reporting Entity
(a) Organization
On June 8, 2010, residents of Santa Clara voted to adopt Measure J, the Santa Clara Stadium Taxpayer 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 called 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 Clara Redevelopment Agency (Agency) entered into a Joint Exercise of Powers Agreement (JPA Agreement) establishing the Santa Clara Stadium Authority (Stadium Authority). The JPA Agreement was 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), which 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 Redevelopment Agencies were dissolved. The Successor Agency of the City of Santa Clara (Successor Agency) then assumed the obligations of the Agency under the JPA Agreement. (b) Financial Reporting Entity
As defined by US generally accepted accounting principles (GAAP), the financial reporting entity consists of a primary government, as well as its component units, which are legally separate organizations for which the elected officials of the primary government are financially accountable.

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

Based upon the application of these criteria, the Stadium Authority has no component units. However, the Stadium Authority is a component unit of the City due to the Mayor and City Council serving as the Board of the Stadium Authority and therefore meeting the financial accountability criteria. 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 governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing government accounting and financial reporting principles. The Stadium Authority is included as an enterprise fund in the City’s Annual Financial Report, and therefore, these financial statements do not purport to represent the financial position and changes in financial position of the City.

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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
13 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx (b) Basis of Accounting and Measurement Focus
The Stadium Authority reports its activities as a business-type activity. The financial statements include statements of net position, statements of revenues, expenses, and changes in net position, and statements of cash flows, and are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the statements of net position. Reported net position is segregated into three categories – net investment in capital assets, restricted, and unrestricted. The statements of revenues, expenses, and changes in net position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which a liability is incurred.

Operating revenues are those revenues that are generated from the primary operations of the Stadium Authority. All other revenues are reported as nonoperating. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.
(c) Year-End
An amendment was made to the JPA Agreement on November 13, 2012 in part to change the fiscal year 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 accounts.
(i) Composition of Cash, Restricted Cash, and Restricted Cash with Fiscal Agent Cash, restricted cash, and restricted cash with fiscal agent at March 31, 2024 and 2023 consist of cash deposits in banks.

Restricted cash includes revenue that has not yet been transferred to Stadium Funding Trust accounts. On the fifteenth of the following month, all revenue is swept into the Stadium Funding Trust accounts as required by the Deposit and Disbursement Agreement and becomes restricted cash with fiscal agent. It also includes cash dedicated to construction and the capital expenditure, operating, and renovation/demolition reserve accounts.

Restricted cash with fiscal agent consists of stadium deposits pledged to a syndicate of lenders and deposits for stadium construction. The application of these deposits is restricted to fund stadium construction and Stadium Authority operations and debt service. (ii) Investments Authorized by Debt Agreements
Stadium Authority maintains required amount of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if Stadium Authority fails to meet its obligations under these debt DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
14 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx issues. The California Government Code 53601 (L) allows these funds to be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, other arrangements, 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
Custodial 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 collateral securities that are in the possession of an outside party. Under California Government Code Section 53651, depending on specific types of eligible securities, a bank must deposit eligible securities 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 Insurance Corporation (FDIC) or collateralized with pledged securities held in the trust department of the financial institutions.
(e) Accounts Receivable
Accounts receivable are recorded in the Stadium Authority’s accounts at the amounts that are contractually due. Accounts receivable include payments due from ManagementCo as a result of the operations of non-National Football League (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 District (CFD) and not yet paid to Stadium Authority pursuant to the CFD Reimbursement Agreement, and other miscellaneous receivables are also included as accounts receivable in the statements of net position. (f) Capital Assets
Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair value on the date contributed.

Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets with a value over $5,000 and is charged as an expense against operations.

Useful lives
(years)
Buildings 20–50
Machinery and equipment 2–25
The cost 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 accounts. Gains or losses on sales and retirements of property are reflected in the statements of revenues, expenses, and changes in net position.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
15 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx (g) Unearned Revenue and Revenue Recognition
Stadium Builder License (SBL) proceeds and payments received for other license agreements are initially recorded as unearned revenue and are recognized as revenue over the term of the contracts.

Rental income is recognized as revenue based on GASB 87 over the term of the Stadium Lease (note 2(k)).

Non-NFL event revenue, NFL ticket surcharge, Non-NFL ticket surcharge, and other operating revenues are recognized as they are earned.
(h) Risk Management
Per the terms of the Stadium Lease, during operations, the Forty Niners SC Stadium Company LLC (StadCo) procures insurance and the Stadium Authority pays a proportionate share to StadCo. (i) Income Taxes
The Stadium Authority falls under the purview of Internal Revenue Code, Section 115 and corresponding California Revenue and Taxation Code provisions. As such, the Stadium Authority is not subject to federal or state income taxes.
(j) Use of Estimates
The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
(k) Lease Agreements
The Stadium Authority implemented GASB 87, Leases, during the year ended March 31, 2023. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.

Lessee – The Stadium Authority is a lessee for a noncancelable ground lease. The Stadium Authority recognizes any lease liability with an initial and individual value of $100,000, and an intangible right-to- use lease asset (lease asset) in the statement of net position financial statements.

At the commencement of a lease, the Stadium Authority initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
16 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

Key estimates and judgments related to leases include how the Stadium Authority determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:
 The Stadium Authority uses the interest rate ch arged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the Stadium Authority generally uses its estimated incremental borrowing rate as the discount rate for leases. The Stadium Authority used a

2.18% discount rate for the expected lease payments to present value.  The lease term includes the noncancelable period of the lease.  Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the Stadium Authority is reasonably certain to exercise.

The Stadium Authority monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. The Stadium Authority has the Ground Lease with the City (note 6). As of March 31, 2024, the balances related to the lease liability and right-to-use were $29.3 million and $21.1 million, respectively. As of March 31, 2023, the lease liability and right to use were $29.3 million and $21.7 million, respectively. The lease has remaining terms of 35 years as of April 1, 2023. As of March 31, 2023 and March 31, 2024, the Stadium Authority recognized $621 thousand in lease amortization expense and $652 thousand in interest expense related to this lease.

A summary of lease liability activity during the year ended March 31, 2024 is as follows:

March 31, March 31,
2023 Additions Reductions 2024
Lease liability $ 29,321,106 — — 29,321,106
Total lease liability $ 29,321,106 — — 29,321,106

A summary of lease liability activity during the year ended March 31, 2023 is as follows:

March 31, March 31,
2022 Additions Reductions 2023
Lease liability $ 29,321,106 — — 29,321,106
Total lease liability $ 29,321,106 — — 29,321,106

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
17 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Right-to-use leased assets for the years ended March 31, 2024 is as follows:

March 31, March 31,
2023 Additions Reductions 2024
Right-to-use leased assets
being depreciated:

Land $ 22,959,294 — — 22,959,294
Total right-to-use
leased assets 22,959,294 — — 22,959,294
Less accumulated
depreciation for:

Land (1,241,042) (620,522) — (1,861,564)
Total accumulated
depreciation (1,241,042) (620,522) — (1,861,564)
Total right-to-use
leased assets,
net $ 21,718,252 (620,522) — 21,097,730

Right-to-use leased assets for the years ended March 31, 2023 is as follows:

March 31, March 31,
2022 Additions Reductions 2023
Right-to-use leased assets
being depreciated:

Land $ 22,959,294 (1) — — 22,959,294
Total right-to-use
leased assets 22,959,294 — — 22,959,294
Less accumulated
depreciation for:

Land (620,521) (1) (620,521) (1) — (1,241,042)
Total accumulated
depreciation (620,521) (620,521) — (1,241,042)
Total right-to-use
leased assets,
net $ 22,338,773 (620,521) — 21,718,252
(1) Includes a prior period correction of an error (note 2(l)).

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
18 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Future principal and interest payments on the lease liability are as follows as of March 31, 2024:

Principal Interes t
Year ending March 31:
2025 $ 6,542 993,458
2026 354,518 645,482
2027 362,325 637,675
2028 370,303 629,697
2029 378,456 621,544
Thereafter 27,848,962 10,971,038
Total $ 29,321,106 14,498,894

Lessor – The Stadium Authority is a lessor for noncancelable leases of land and building. The Stadium Authority recognizes a lease receivable and a deferred inflow of resources in the financial statements.

At the commencement of a lease, the Stadium Authority initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue on a straight line basis over the life of the lease term.

Key estimates and judgments include how the Stadium Authority determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
 The Stadium Authority uses its estimated incr emental borrowing rate as the discount rate for leases. The Stadium Authority used a 2.18% discount rate for the expected lease payments to present value.
 The lease term includes the noncancelable period of the lease.  Lease receipts included in the measurement of the lease receivable comprises fixed payments from the lessee.

The Stadium Authority monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. The Stadium Authority has the Stadium Lease with StadCo (note 6). As of March 31, 2024, the balances related to the lease receivable and deferred inflow of resources were $594.2 million and $578.6 million, respectively. As of March 31, 2023, the lease receivable and deferred inflow of resources were $605.9 million and $595.6 million, respectively. The lease has remaining terms of 35 years as of April 1, 2023. As of March 31, 2024, the Stadium Authority recognized $17.0 million in lease revenue under rents and licensing revenue category and $13.1 million in interest revenue. Similarly, as of March DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
19 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx 31, 2023, the Stadium Authority also recognized $17.0 million in lease revenue under rents and licensing revenue category and $13.3 million in interest revenue.

A summary of lease receivable activity during the year ended March 31, 2024 is as follows:

March 31, March 31,
2023 Additions Reductions 2024
Lease receivable $ 605,887,066 — (11,669,804) 594,217,262 Total lease
receivable $ 605,887,066 — (11,669,804) 594,217,262

A summary of lease receivable activity during the year ended March 31, 2023 is as follows:

March 31, March 31,
2022 Additions Reductions 2023
Lease receivable $ 617,305,447 — (11,418,381) 605,887,066 Total lease
receivable $ 617,305,447 — (11,418,381) 605,887,066

A summary of deferred inflows of resources activity during the year ended March 31, 2024 is as follows:

March 31, March 31,
2023 Additions Reductions 2024
Deferred inflows $ 595,586,067 — (17,016,744) 578,569,323 leases related
Total deferred
inflows leases
related $ 595,586,067 — (17,016,744) 578,569,323

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
20 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx A summary of deferred inflows of resources activity during the year ended March 31, 2023 is as follows:

March 31, March 31,
2022 Additions Reductions 2023
Deferred inflows $ 612,602,812 — (17,016,745) 595,586,067 leases related
Total deferred
inflows leases
related $ 612,602,812 — (17,016,745) 595,586,067

Future principal and interest receipts from the lease receivable are as follows as of March 31, 2024:

Principal Interest
Year ending March 31:
2025 $ 11,926,763 12,835,237
2026 12,189,380 12,572,620
2027 12,457,780 12,304,220
2028 12,732,090 12,029,910
2029 13,012,439 11,749,561
Thereafter 531,898,810 186,199,190
Total $ 594,217,262 247,690,738

(l) Prior Period Correction of an Error
During the financial reporting process for March 31, 2024, the Stadium Authority reviewed the accounting and reporting for the GASB 87, Leases, implementation for the ground lease and the stadium lease as of April 1, 2022 and identified errors related to the implementation of the accounting standard as of April 1, 2022. The Stadium Authority determine the errors, summarized in the table below, to be an immaterial correction of prior period errors and has properly adjusted the financial statements for the year ended March 31, 2023.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
21 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx The statements of net position for fiscal year 2022-23 was adjusted as follows:

FY 2023
previously
reported
GASB 87
adjustment
FY 2023
as corrected
Current assets:

Accounts receivable $ 18,994,260 1,100,694 20,094,954 Noncurrent assets:

Right-to-use leased assets 27,934,663 (6,216,411) 21,718,252 Total change in assets $ (5,115,717)
Current liabilities:

Interest payable $ 5,948,285 54,290 6,002,575
Deferred rent, current portion 495,000 (495,000) —
Noncurrent liabilities:

Deferred rent 7,149,723 (7,149,723) —
Total change in liabilities (7,590,433)
Net position:

Unrestricted deficit (414,048,085) 2,474,716 (411,573,369) Total changes in liabilities and
net position $ (5,115,717)

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
22 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx The statements of revenues, expenses and changes in net position for fiscal year 2022-23 was adjusted as follows:

FY 2023
previously
reported
GASB 87
adjustment
FY 2023
as corrected
Operating revenues:

Rents and licensing $ 38,992,268 (460,000) 38,532,268
Operating expenses:

Leases 1,229,044 (979,044) 250,000
Depreciation 18,005,951 (177,612) 17,828,339
Total change in operating income $ 696,656
Nonoperating revenues (expenses):

Interest revenue $ 17,530,057 627,255 18,157,312
Interest expense (13,550,322) (648,341) (14,198,663)
Total change in net position $ 675,570
Net position - beginning of period 79,758,746 1,799,146 81,557,892 Net position - end of period $ 109,570,809 2,474,716 112,045,525

(3) Stadium Development
(a) Transaction Overview
During fiscal year 2011-12, the Stadium Authority and StadCo entered into a series of agreements in connection with the construction of the Stadium. The Stadium was constructed and is owned by the Stadium Authority; certain tenant improvement components are owned by StadCo. Construction on the Stadium began in April 2012 and it was substantially completed in July 2014, in time for the 2014 NFL season.

The City owns the land on which the Stadium was constructed. The City has leased the land to the Stadium Authority under a ground lease, and the Stadium Authority has leased the Stadium to StadCo for the six-month period from August through January (the NFL season) of each year, for an initial lease term of 40 years. The Stadium Lease commenced in August 2014 upon substantial completion of construction.

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.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
23 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx 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 years ended March 31, 2024 and 2023, ManagementCo charged the Stadium Authority $8.6 million and $8.1 million in shared expenses, and $8.5 million and $7.4 million in other operating and management expenses, respectively. (b) Construction Funding
Funding for construction of the Stadium, excluding tenant improvements funded by StadCo, falls into three major categories: an initial construction loan from a bank syndicate, which was refinanced during 2013 as described below; funding from the StadCo Subordinated Loan; and construction period and other revenues.
(i) Stadium Construc tion Loan Facility
The initial financing included a delayed draw term loan facility (the Construction Facility) provided by a syndicate of banks (the Lenders) to Stadium Funding Trust (FinanceCo). FinanceCo, a Delaware statutory trust, entered into the Construction Facility with the Lenders and then issued a loan facility to the Stadium Authority in the amount of $450 million (the Authority Loan). The Construction 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 delayed draw 5-year loan facility. FinanceCo then issued a new loan facility to the Stadium Authority in the 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 used for the construction of Levi’s Stadium. During the refinance process in June 2013, the interest rate on the Subloan was fixed and part of the then outstanding Subloan was paid down. The Subloan is discussed in note 5.
(iii) Construction Peri od and Other Revenues
Certain revenues were collected by the Stadium Authority while the Stadium was under construction. These construction period and other revenues primarily consist of SBL and naming rights 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, 2024 and 2023
24 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx (4) Capital Assets
Capital asset activity for the year ended March 31, 2024 is as follows:

Balance Balance
March 31, March 31,
2023 Additions Reductions 2024
Nondepreciable assets:

Construction in progress $ 2,095,393 7,029,295 (4,922,358) 4,202,330 Total nondepreciable
assets 2,095,393 7,029,295 (4,922,358) 4,202,330
Capital assets being depreciated:

Buildings 826,227,884 3,963,548 — 830,191,432
Machinery and equipment 6,141,531 861,370 — 7,002,901 Less accumulated depreciation for:

Buildings (143,121,336) (16,526,760) — (159,648,096)
Machinery and equipment (2,267,592) (911,527) — (3,179,119) Net depreciable assets 686,980,487 (12,613,369) — 674,367,118 Net capital assets $ 689,075,880 (5,584,074) (4,922,358) 678,569,448

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
25 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Capital asset activity for the year ended March 31, 2023 is as follows:

Balance Balance
March 31, March 31,
2022 Additions Reductions 2023
Nondepreciable assets:

Construction in progress $ 468,766 1,754,706 (128,079) 2,095,393 Total nondepreciable
assets 468,766 1,754,706 (128,079) 2,095,393
Capital assets being depreciated:

Buildings 826,227,884 — — 826,227,884
Machinery and equipment 3,991,661 2,149,870 — 6,141,531 Less accumulated depreciation for:

Buildings (126,594,576) (16,526,760) — (143,121,336)
Machinery and equipment (1,586,534) (681,058) — (2,267,592) Net depreciable assets 702,038,435 (15,057,948) — 686,980,487 Net capital assets $ 702,507,201 (13,303,242) (128,079) 689,075,880

(5) Long-Term Debt
(a) Long-Term Debt Summary
Changes in long-term debt for the year ended March 31, 2024 consisted of the following:

Outstanding Outstanding
as of as of Amounts due
Issue Due March 31, March 31, within one
date Date 2023 Additions Reductions 2024 year
Business type activity debt:

Stadium Funding Trust loan
Term A loan 06/19/13 04/01/39 5.00 % $ 215,415, 240 — (15,459,000) 199,956,240 7,299,896 StadCo CFD Advance 04/01/13 12/31/54 5.73 2 9,859,497 — (1,147,911) 28,711,586 — StadCo Subordinated loan 03/28/12 03/31/43 5.50 — — — — — Total $ 245,274,737 — (16,606,911) 228,667,826 7,299,896 Type of indebtedness rates
Interest

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
26 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Changes in long-term debt for the year ended March 31, 2023 consisted of the following:

Outstanding Outstanding
as of as of Amounts due
Issue Due March 31, March 31, within one
date Date 2022 Additions Reductions 2023 year
Business type activity debt:

Stadium Funding Trust loan
Term A loan 06/19/13 04/01/39 5.00 % $ 230,138,239 — (14,722,999) 215,415,240 15,459,000 StadCo CFD Advance 04/01/13 12/31/54 5.73 30,374,503 — (515,006) 29,859,497 — StadCo Subordinated loan 03/28/12 03/31/43 5.50 19,800,950 — (19,800,950) — — Total $ 280,313,692 — (35,038,955) 245,274,737 15,459,000 Interest
Type of indebtedness rates

(b) Stadium Funding Trust Loan
The Restated Credit Agreement by and among FinanceCo, the Stadium Authority and Goldman Sachs Bank was entered into on June 19, 2013. FinanceCo agreed to loan the Stadium Authority up to $450 million. Under the Restated Credit Agreement, the loan from FinanceCo consists of the Term A Loan and 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 $282.8 million. This loan bears interest at a fixed rate of 5%, payable semiannually, with annual principal payments due beginning in April 2018. It has a maturity date in 2039 and is subject to certain prepayment premiums. The loan was fully drawn at closing. As of March 31, 2024 and 2023, $200.0 million and $215.4 million was outstanding, respectively. Debt service on this loan is secured 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 accelerate and declare the Stadium Authority’s obligation to repay the related loan to FinanceCo to be immediately due and payable. (c) StadCo CFD Advance
In May 2010, the City completed the proceedings to establish CFD for the purpose of financing certain publicly owned facilities and public services associated with the Stadium.

On June 11, 2013, the CFD, the Stadium Authority, and StadCo entered into a Reimbursement Agreement under which the CFD would agree to reimburse the Stadium Authority for costs of the publicly owned facilities and public services constructed for the Stadium. The reimbursement can only be made from 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 CFD Advance). To evidence the Stadium Authority’s obligation to repay the StadCo CFD Advance, the Stadium Authority and StadCo also executed a note on June 11, 2013. The StadCo CFD Advance has a maximum principal of $38 million and an interest rate of 5.73%.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
27 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx During the year ended March 31, 2024, as the special CFD tax was submitted to the Stadium Authority, a number of payments were made on the StadCo CFD Advance. StadCo CFD Advance payments were made midway through each quarter. The interest that accrued between the last StadCo CFD Advance payment and the end of the year is added to principal. The Stadium Authority made $1.7 million in interest and $1.2 million in principal payments. As of March 31, 2024 and 2023, $28.7 million and $29.9 million was outstanding, respectively. (d) StadCo Subordinated Loan
The Restated StadCo Obligations Agreement dated as of June 19, 2013 was entered into by and between StadCo and the Stadium Authority as part of the take-out financing process. Under the 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. 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.

As of March 31, 2024 and 2023, there was no balance outstanding.

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 Management Company Revolving Loan dated as of March 28, 2012 was entered into by and between the Stadium Authority and ManagementCo. The Management Company Revolving Loan provides 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 Lease or the expiration of the Stadium Management Agreement, with interest at the prime rate payable quarterly. The Management Company Revolving Loan may be used solely for the purpose of enabling the Stadium Authority to pay Covered Stadium Authority Operating Expenses (as defined in the agreement) to the extent, and only to the extent, that funds are not otherwise available.

As of March 31, 2024 and 2023, there was no balance outstanding. (f) Pledge of Future Revenues
The pledge of future revenues ends upon repayment of the $200.0 million in outstanding principal on the Term A which is scheduled to occur in fiscal year 2039-40. For fiscal year 2023-24, revenues including operating revenues and nonoperating interest earnings amounted to $99.9 million and operating costs including operating expenses, but not interest, depreciation, or amortization amounted to $61.4 million. Net revenues available for debt service amounted to $38.5 million, which represented a coverage ratio of 5.27 on the $7.3 million of debt service.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
28 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx (g) Long-Term Debt Maturities
Future principal and interest amounts due on long-term debt are as follows as of March 31, 2024:

Principal Interes t
Year ending March 31:
2025 $ 7,299,896 11,277,991
2026 7,838,094 10,886,086
2027 8,404,934 10,465,840
2028 9,001,865 10,015,747
2029 9,630,410 9,534,226
Thereafter 186,492,627 86,553,218
Total $ 228,667,826 138,733,108

(6) Leases
(a) Ground Lease
On February 28, 2012, the Stadium Authority entered into a lease (the Ground Lease) with the City whereby the City leases the Stadium site to the Stadium Authority. The Ground Lease was amended on June 19, 2013.

The Ground Lease has an initial term of 40 years. The first lease year commenced on the first day following 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 successive extension options, each four years in duration, which would commence following the initial term expiration date.

The Ground Lease provides that the City will receive a fixed ground rent (Fixed Ground Rent) of $180 thousand for the first year of Stadium operations payable by the Stadium Authority. Beginning in the second year of Stadium operations and annually thereafter through the tenth year of Stadium operations, the Fixed Ground Rent will increase annually by $35 thousand. Beginning in the 11th year 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. Stadium Authority paid the City $495 thousand and $460 thousand in ground rent in each of the fiscal years ended March 31, 2024 and 2023.

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SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
29 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx Future minimum payments due under the lease are as follows:

Leas e
Payments
Year ending March 31:
2025 $ 1,000,000
2026 1,000,000
2027 1,000,000
2028 1,000,000
2029 1,000,000
Thereafter 32,500,000
Total $ 37,500,000

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. The Stadium Authority reported a net Non-NFL event profit of $8.3 million and $8.8 million in each of the fiscal years ended March 31, 2024 and 2023, which triggers a performance-based rent payment to the City. However, in the prior fiscal year the Stadium Authority did not pay the City any performance-based rent because there remained disputes and pending arbitration with StadCo as to potential credits that needed to be deducted from a performance-based rent amount due public safety costs in excess of a disputed threshold (note 7). The 2024 Settlement Agreement will resolve those disputes (note 8). The $7.3 million in performance- based rent due to the City for both fiscal years were accrued in fiscal year ended March 31, 2024.

However, the payment to the City will not occur until the Final Effective Date of the 2024 Settlement Agreement.
(b) Stadium Lease
On March 28, 2012, the Stadium Authority entered into a lease with StadCo whereby the Stadium Authority leases the Stadium to StadCo. On June 19, 2013, the same parties entered into an Amended and Restated Stadium Lease Agreement (the Stadium Lease).

The Stadium Lease has an initial term of 40 years commencing on the first day following the substantial completion 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 se ason (including preseason, regular season, and postseason NFL games) and runs from August 1 through January 31; and  The Stadium Authority Season, which ru ns 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 DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
30 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx 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 for a one-time rent adjustment were triggered. At the Stadium Authority Board (Board) meeting held on March 22, 2016, the Board disagreed with StadCo’s position to reduce the rent amount, 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 $24.8 million, an increase of $262 thousand. This increase is retroactive to the first lease year resulting in a total amount owed to the Stadium Authority of $1.3 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 $2.3 million. The lease also provides for a fair market rent adjustment in year 33.

The Stadium Authority received $24.8 million in stadium rent from StadCo in each of the fiscal years ended March 31, 2024 and 2023.

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) Contingencies
(a) Asset Retirement Obligation
Pursuant to the Ground Lease, the Stadium Authority may be required to demolish the Stadium and other improvements 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 the 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) Historical Complementary SBL Buffet Costs
On April 30, 2020, the Stadium Authority received an invoice in the amount of $4.4 million for previously unbilled “complimentary” buffet costs associated with certain SBL holders for the NFL seasons from 2014 thru 2018. On May 13, 2020, the Stadium Authority issued a response letter disputing the newly billed costs citing that the costs were not presented in a reasonable manner relative to the financial planning and reporting requirements of the Lease Agreement and Stadium Management Agreement, and there was no justification for delaying presentment and demand for payment. The invoices presented also lacked sufficient supporting documentations in order to confirm DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
31 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx the validity of the costs and charges under the Lease Agreement terms. StadCo and ManagementCo initiated arbitration proceedings to collect the buffet costs and dispute the Stadium Authority’s position, and Stadium Authority filed cross-claims.

In fiscal year 2021-22, ManagementCo invoiced an additional $902 thousand in new buffet costs to the Stadium Authority through 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 and subsequently paid off the loan through the year-end excess cash distribution.

Stadium Authority objected to and disputed ManagementCo’s unauthorized payment of these buffet costs through the Revolving Loan, and also the payment of that loan through year-end excess cash.

Pursuant to the parties’ August 31, 2022 Settlement Agreement, ManagementCo’s prior draw under the Revolving Loan would be treated as a timely Stadium Authority payment, under protest, and with a full reservation of Stadium Authority’s rights and claims. The Stadium Authority had recorded a receivable from ManagementCo for the loan draw on the buffet costs as of March 31, 2023.

ManagementCo also reported $1.2 million and $1.3 million in buffet costs to be charged to the Stadium Authority for the fiscal years 2022-23 and 2023-24, respectively. The Stadium Authority had not recorded a liability for this cost because the dispute was outstanding and in pending arbitration.

The parties’ 2024 Settlement Agreement resolved the buffet arbitration (note 8). Upon the Final Effective Date of the May 2024 Settlement Agreement, first, the parties agreed that the $902 thousand that was drawn from the Management Company Revolving Loan for fiscal year 2021-22 buffet costs would be treated as Stadium Authority’s reimbursement of those costs. Therefore, the Stadium Authority reversed the corresponding receivable from Management Co and recorded a $902 thousand complementary buffet operating expense in fiscal year ended March 31, 2024. Second, StadCo waived all other buffet expenses from fiscal year 2014-15 through 2023-24, and the parties confirmed that those were no longer an obligation of the Stadium Authority and that the reimbursement of those expenses was deemed fully satisfied for said lease years. (c) Historical NFL Public Safety Costs
In June 2019, StadCo filed an Arbitration Demand regarding alleged amounts due from the Stadium Authority under the public safety costs terms of the Stadium Lease, for fiscal year 2017-18. According to the Stadium Lease, StadCo is required to reimburse the City for the costs incurred for providing public safety services for NFL events that exceed the revenue from off-site parking permit fees. The Stadium Lease contains a provision that creates a “threshold” on the amount of public safety costs that StadCo must pay for each of the NFL seasons. If the total public safety costs exceed the threshold, then the Stadium Lease requires the Stadium Authority to reimburse StadCo the costs above the threshold or provide to StadCo a credit for those amounts in the form of rent credits. The Stadium Lease includes an obligation for StadCo to negotiate a threshold increase in good faith if the total costs amounts are over the threshold for three consecutive years. The Stadium Authority invoked the good faith negotiation process after costs exceeded the threshold for three seasons, which was in advance of the incurred public safety costs for fiscal year 2017-18. StadCo filed several amended Arbitration Demands and formal demand letters for public safety costs damages for the subsequent NFL seasons and fiscal years 2019-20, 2021-22, 2022-23, and 2023-24, and Stadium Authority filed related responses cross-claims in that arbitration.

DRAFT

SANTA CLARA STADIUM AUTHORITY
(a Component Unit of the City of Santa Clara, California) Notes to Financial Statements
March 31, 2024 and 2023
32 DRAFT 8/30/2024 2:22 PM SantaClaraStadiumAuthority_FY2324 FS_v18 - Copy.docx The Ground Lease contains provisions that provide, in the event that public safety costs exceed the threshold and those amounts are not paid by Stadium Authority’s Discretionary Fund, Stadium Authority is entitled to deduct credits from Stadium Authority’s performance-based rent payments to the City. Both the performance-based rent credit from the City and rent credit from the Stadium Authority expire in the next five succeeding years if not used within the year incurred. The public safety costs, threshold amount and calculations, and credits were part of the PSC arbitration with StadCo.

The 2024 Settlement Agreement will resolve the public safety cost arbitration (note 8). Upon the Final Effective Date, the parties agreed that approximately $14.8 million of NFL public safety costs over the threshold are owed to StadCo by the Stadium Authority related to fiscal years 2017-18 through 2023-

24. This number was approximate in the 2024 Settlement Agreement because, at the time that settlement was signed, the final FY 2023-24 actual NFL public safety costs had not been finalized. Per the 2024 Settlement Agreement, this specific past-due amount of public safety costs will be paid over time and it will not be considered or treated as “Credited Public Safety Costs” that affect performance- based rent and rent calculations going forward. This allows the Stadium Authority to pay the City the full performance-based rent owed for fiscal years 2022-23 and 2023-24 (note 6). Now that the FY 2023-24 NFL public safety costs have been finalized, the Stadium Authority has recorded a $14.7 million “Public Safety Cost 2024 Outstanding Balance” payable and operating expense as of March 31, 2024.
(8) Subsequent Events
On May 23, 2024, the Stadium Authority, the City, StadCo, and ManagementCo entered into the 2024 Settlement Agreement that resolved pending arbitration and disputes regarding the complementary SBL buffet costs and NFL public safety cost arbitration, as well as other miscellaneous terms and matters. The 2024 Settlement Agreement includes amendments to the Ground Lease and Stadium Lease. Those lease amendments, which have already been signed and approved by Stadium Authority Board, City Council, StadCo, and ManagementCo, need to be approved by the NFL and the Lenders. Once the NFL and Lenders approve the lease amendments, the 2024 Settlement Agreement will have a Final Effective Date, and the settlement terms can be implemented. To date, the NFL has approved the lease amendments. As part of the settlement, the Stadium Authority agreed to recognize the $902 thousand complementary SBL buffet expense for fiscal year 2021-22 and $14.7 million of NFL public safety costs over the threshold for fiscal years 2017-18 through 2023-24. The settlement of the NFL public safety cost disputes will also allow for the payment of the performance-based rent from the Stadium Authority to the City in the amount of $7.3 million for fiscal years 2022-23 and 2023-24 after the Final Effective Date of the 2024 Settlement Agreement.

Santa Clara Stadium
Authority
Overview of Santa Clara Stadium Authority Fiscal Year 2023/24 Annual Financial Statements and Audit Results Presentation by

KPMG, LLP
September 3, 2024
SCSA

SANTA CLARA STADIUM AUTHORITY
Agenda
• Audit Limitations and Methodology
• Overview
• Key Financial Highlights
• Management’s Discussion and Analysis (MD&A)
• Basic Financial Statements
• Statements of Net Position
• Statements of Revenues, Expenses, and Changes in Net Position • Notes to the Financial Statements
• Additional Disclosures
• Audit Results Presentation by KPMG, LLP
• Recommendation
2SCSA

SANTA CLARA STADIUM AUTHORITY
Audit Limitations & Methodology
• This was an audit of the Stadium Authority’s financial reports, processes, internal controls and the Stadium Authority’s shared expenses with Forty-Niners Stadium Management Company LLC (ManCo).
• This financial audit is an independent evaluation of the Stadium Authority’s financial reports and reporting processes to provide reasonable assurance that the financial statements are accurate and complete. This is not an absolute guarantee that there were no human errors or miscommunications that could lead to a mistake. • Through various audit processes and procedures, auditors determine if controls and processes are in place to produce accurate and reasonable financial statements. • KPMG will discuss the audit processes and procedures in more detail during their presentation.
3SCSA

SANTA CLARA STADIUM AUTHORITY
Overview
• KPMG has audited the Stadium Authority’s Financial Statements as required by section 5.1(a) of the Credit Agreement.
• The Financial Statements cover the 2023/24 fiscal year (April 1, 2023 to March 31, 2024) with comparative data from the 2022/23 fiscal year. • Unmodified (i.e., “clean”) opinion expressed by the auditors. • Reports will be available on the City’s Stadium Authority webpage. 4SCSA

SANTA CLARA STADIUM AUTHORITY
Key Financial Highlights
• Management’s Discussion and Analysis (page 4)
• Introduces the financial statements and provides an analytical overview of the SCSA financial activities.
• SCSA’s net position was $123.6 million, an increase of $11.6 million when compared to the prior year.
• Debt service payments during the fiscal year totaled $28.7 million and overall outstanding long-term debt decreased by $16.6 million. 5SCSA

SANTA CLARA STADIUM AUTHORITY
Key Financial Highlights
• Management’s Discussion and Analysis (page 4) continued • During this fiscal year, there were twelve National Football League (NFL) games, seven ticketed non-NFL events and fifty-three smaller special events held at Levi’s Stadium. The Stadium Authority recognized $81.1 million in operating revenue and $79.5 million in operating expenses.
• Revenue from Non-NFL events were $24.9 million, and the related expenses were $16.7 million resulting in net Non-NFL event profit of $8.2 million.
• ManCo provided the Non-NFL events’ year-end documents on June 28, 2024.
6SCSA

SANTA CLARA STADIUM AUTHORITY
Key Financial Highlights
• Statements of Net Position (page 8)
• Financial statement that reports the assets, liabilities, and net position of the Stadium Authority.
• Total Assets were $1.4 billion, with Levi’s Stadium being the largest asset with a carrying value of $670.5 million, net of depreciation.
• Total Liabilities were $736.2 million made up mostly of outstanding debt equaling $228.7 million and unearned revenues relating to Stadium Builder’s Licenses (SBL’s) of $440.5 million. 7SCSA

SANTA CLARA STADIUM AUTHORITY
Key Financial Highlights
• Statements of Revenues, Expenses, and Changes in Net Position (page 9)
• Financial statement that reports the increases and decreases in the Stadium Authority’s net position (revenues and expenses) • Operating Revenues – Total $81.1 million
• Charges for Services were $40.6 million including $24.9 million in Non- NFL event revenue, $12.7 million in NFL ticket surcharge, $1.6 million in Non-NFL event ticket surcharge, $835 thousand STR revenue and $250 thousand in senior/youth fees.
• Rents and Licensing revenues were $40.5 million including 24.8 million of lease revenue, SBL revenue recognition of $15.2 million, and naming rights revenue recognition of $8.1 million offset by $7.8 million from GASB 87 lease revenue adjustment.
8SCSA

SANTA CLARA STADIUM AUTHORITY
Key Financial Highlights
• Statements of Revenues, Expenses, and Changes in Net Position (cont.)
• Operating Expenses – Total $79.5 million
• Lease Expenses were $7.6 million including $7.3 million for performance- based rent for FYs 22/23 and FY23/24 and $250 thousand senior/youth fees.
• Materials, Services and Supplies were $51.8 million including $16.7 million for Non-NFL event expenses, $14.7 million of public safety costs over the threshold, Shared Stadium Expenses of $8.6 million, $3.3 million of insurance expenses, $2.4 million of SBL sales and service expenses and $1.4 million of utility expenses
• Selling, general, and administrative expenses were $2 million, and Depreciation totaled $18.0 million.
9SCSA

SANTA CLARA STADIUM AUTHORITY
Key Financial Highlights
• Notes to the Financial Statements (page 12)
• An integral part of the annual financial statements
• Note 4 – Capital Assets
• Note 5 – Long-Term Debt
• Note 7 – Contingencies
• Note 8 – Subsequent Events
10SCSA

SANTA CLARA STADIUM AUTHORITY
Audit Results Presentation by

KPMG, LLP
11SCSA

SANTA CLARA STADIUM AUTHORITY
Recommendation
• Accept the Santa Clara Stadium Authority Fiscal Year
2023/24 Annual Financial Statements and
recommend that the Stadium Authority note and file
the report at the September 10, 2024 Joint Council
and Authorities Concurrent and Stadium Authority
meeting.
12SCSA

SANTA CLARA STADIUM AUTHORITY
Santa Clara Stadium Authority
Santa Clara Stadium
Authority (the Authority)
Discussion with those
charged with governance
Audit results and strategy for the year ending March 31, 2024 September 3, 2024
~
2© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Required
communications to
those charged with
governance
Prepared on: 8/30/2024
Presented on: 9/3/2024
3© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Matters to communicate Response
Related parties  Page 12
Going concern X
Other information X
Subsequent events  Page 13
Noncompliance with laws and regulations X
Significant difficulties encountered during
the audit X
Significant findings or issues discussed, or
the subject of correspondence with
management
X
Management’s consultation with other
accountants
X
Disagreements with management X
Other significant matters X
Audit results required communications and other matters Matters to communicate Response
Significant unusual transactions X
Uncorrected audit misstatements X
Corrected audit misstatements  Pages 6 - 8
Financial statement presentation and disclosure
omissions
X
Non-GAAP policies and practices X
Significant deficiencies in internal control  Page 9
Auditors’ report  Draft report
provided
Changes to our risk assessment and planned
audit strategy
X
Significant accounting policies and practices  Page 10 Significant accounting estimates X
Significant financial statement disclosures  Page 11
 = Matters to report X = No matters to report
4© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Audit results required communications and other matters Consultations
We consulted with KPMG’s Department of Professional Practice regarding the correction of a prior period error in the comparative financial statement and the related evaluation of internal controls. See further consideration of this matter on page 9.

Illegal acts or fraud No actual or suspected fraud involving management, employees with significant roles in system of internal control, or where fraud results in a material misstatement in the financial statements were identified during the audit.

Written communications Engagement letter, management representation letter(s), including summary of uncorrected misstatements, internal control deficiency letter, and minutes representation letter to be distributed under separate covers.

Independence We hereby affirm that the engagement team and others in the firm as appropriate, the firm and its affiliated firms, have complied with relevant ethical requirements regarding independence.

Inquiries See page 14
Matters to communicate
5© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Pending Items
A summarized list of items still in progress or not yet received • Internal Controls over Financial Reporting Evaluation and Conclusion • Final Management Representation letter
• Final partner and manager sign offs
• Final sign off of KPMG DPP Consultation related to correction of prior year errors 6© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Corrected audit misstatements
Description of misstatement
Debit Credit
1) GASB 87 Prior year correction adjustment:

Eliminate deferred rent of ground lease as adjustment to ROU asset
FY23 Deferred Rent $7,644,723
FY24 Right-to-use leased assets $6,571,635
FY23 Beginning Net Position $554,044
FY23 Lease Expense $519,044
2) GASB 87 Prior year correction adjustment:

ROU amortization expense reduction in line with reduction in Gross ROU Asset reduction (item 1)
FY23 Right of use assets, net $335,224
FY24 Depreciation Expense $40,809
FY24 Accumulated Depreciation $40,809
FY23 Beginning Net Position $177,612
FY23 Depreciation Expense $177,612
3) GASB 87 Prior year correction adjustment:

Lessee Interest Expense – correction of presentation on Statements of Revenues, Expenses, and Changes in Net
Position
(no impact on net position)
FY23 Interest Expense $647,999
FY23 Interest Revenue $647,999
4) GASB 87 Prior year correction adjustment:

Lease Payment Expense Presentation - correction of
presentation on Statements of Revenues, Expenses, and
Changes in Net Position
(no impact on net position)
FY23 Rents and Licensing Revenue $460,000
FY23 Lease Expense $460,000
7© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Corrected audit misstatements, cont.

Description of misstatement
Debit Credit
5) GASB 87 Prior year correction adjustment:

Lessee Interest Expense – correction of 12-month expense calculation (1 month omitted in initial year)
FY23 Beginning Net Position $53,948
FY23 Interest Expense $342
FY24 Interest Expense $284
FY23 Interest Payable $54,290
FY24 Interest Payable $284
6) GASB 87 Prior year correction adjustment:

Lessor Interest Revenue – correction of 12-month calculation (1 month omitted in initial year)
FY23 Accounts Receivable $1,121,438
FY23 Interest Revenue $20,744
FY24 Interest Revenue $21,199
FY23 Accounts Receivable $20,744
FY24 Accounts Receivable $21,199
FY23 Beginning Net Position $1,121,438
7) Naming Rights Revenue:

Correction due to term extension in the agreement
amendment effective in the current year
FY24 Rents and Licensing (revenue) $1,645,460
FY24 Long Term Accounts Receivable $1,645,460
8© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Corrected audit misstatements, summary
Description of misstatement
Debit Credit Ending Net Position
Before Correction
Ending Net Position
As corrected
Change in Net Position
%
Summary of P&L
Impacts
2023 Beginning Net Position $1,799,146
2023 Change in Net Position $675,570
Total Net Increase of 2023
Ending Net Position $ 2,474,716 $109,570,809 $ 112,045,525 2.21% 2024 Change in Net Position $1,707,752 $121,908,155 $ 123,615,907 1.38% Total Net Increase of 2024
Ending Net Position $766,964
9© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Significant deficiencies in internal control
All other deficiencies in ICFR noted during the audit that are of a lesser magnitude than a material weakness or significant deficiency will be communicated to management in writing.

Significant deficiency
Description Potential effects Status
The adoption of the new
accounting pronouncement
(GASB 87) was not properly
implemented.

Resulted in the correction of prior period 2023
financial statements and corrected misstatements
in the 2024 financial statements
Management determined this matter to be an immaterial
correction of a prior year error. The prior year 2023
financial statements have been adjusted and a footnote
disclosure 2(L) summarizes the adjustments and effects
on the 2023 fiscal year.

Due to the nature of the error and the impact on the prior year issued financial statements, this is a significant deficiency in internal controls of which we recommend
that management develop a process to ensure all new
accounting pronouncements are properly assessed and
accurately accounted and presented in the year of
implementation.
10© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Significant accounting policies and practices
Description of significant accounting policies and practices Audit results • Cash and cash equivalent and restricted cash
• Accounts Receivable
• Unearned revenue and revenue recognition
• Leases
Qualitative aspects
• Refer to Note 2 of the financial statements for the detailed description of the significant accounting policies. Management has appropriately applied such policies to the Authority’s books and records as of and for the year ended March 31, 2024.
• Adoption of GASB 87 in the prior period.
11© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Significant financial statement disclosures
Description of significant financial statement disclosures Audit results • Prior Period Correction of Error Qualitative aspects
• We have evaluated the root cause, underlying detail, and presentation of the comparative financial statements & disclosure and consider the disclosure appropriate.
12© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Related parties
Identification of related parties Significant accounts or disclosures The City of Santa Clara Ground Lease
Shared staff and wage expenses
13© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Subsequent Events
Subsequent Event Procedures performed Results
Settlement Agreement • Inspection of executed settlement agreement • Review of City presentation explaining the
agreement & amendments to relevant lease and
management agreements
• Vouching of expense and liability recorded to
supporting documentation
• Inquiry with external and in-house counsel
Procedures performed without exception.
14© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Inquiries
Are those charged with governance aware of:
• Matters relevant to the audit, including, but not limited to, violations or possible violations of laws or regulations? • Any significant communications with regulators?
• Any developments in financial reporting, laws, accounting standards, corporate governance, and other related matters, and theeffect of such developments on, for example, the overall presentation, structure, and content of the financial statements, including the following:
- The relevance, reliability, comparability, and understandability of the information presented in the financial statements - Whether all required information has been included in the financial statements, and whether such information has been appropriately classified, aggregated or disaggregated, and presented?
Do those charged with governance have knowledge of:
• Fraud, alleged fraud, or suspected fraud affecting the Company? - If so, have the instances been appropriately addressed and how have they been addressed? Additional inquiries:
• What are those charged with governance’s views about fraud risks in the Company? • Who is the appropriate person in the governance structure for communication of audit matters during the audit? • How are responsibilities allocated between management and those charged with governance? • What are the Company’s objectives and strategies and related business risks that may result in material misstatements? • Are there any areas that warrant particular attention during the audit and additional procedures to be undertaken? • What are those charged with governance’s attitudes, awareness, and actions concerning (a) the Company’s internal controls and their importance in the entity, including oversight of effectiveness of internal controls, and (b) detection of or possibility of fraud? • Have there been any actions taken based on previous communications with the auditor? • Has the Company entered into any significant unusual transactions? • Whether the entity is in compliance with other laws and regulations that have a material effect on the financial statements? • What are the other document(s) that comprise the annual report, and what is the planned manner and timing of issuance of suchdocuments? • Have any subsequent events occurred that might affect the financial statements? Learn about us: kpmg.com
For additional information and audit committee resources, including National Audit Committee Peer Exchange series, a Quarterly webcast, and suggested publications, visit the KPMG Audit Committee Institute (ACI) at
www.kpmg.com/ACIQuestions?
This presentation to those charged with governance is intended solely for the information and use of those charged with governance and management and is not intended to be and should not be used by anyone other than these specified parties. This presentation is not intended for general use, circulation or publication and should not be published, circulated, reproduced or used for any purpose without our prior written permission in each specific instance.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. © 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331-1E The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. ~

Audit CommitteeSeptember 3, 2024

Audit Committee
September 3, 2024