VisitDallas agrees to financial reporting changes – but is that enough?

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Dallas

The Dallas Convention and Visitors Bureau has agreed to changes in the way it reports its finances in the wake of revelations that it failed to inform board members of advance payments made to its CEO.

However, the proposed remedies call for the bureau to be overseen by the same two departments that city auditors found had failed to properly monitor the bureau in the past. The proposal is scheduled to be formally pitched at a meeting on Tuesday of the city council’s Government Performance & Financial Management Committee

Those two departments, Convention and Operation Services and the Office of Economic Development, are to administer the solutions laid out in a 27-page corrective plan.

New measures include a requirement that the bureau, also known as VisitDallas, present its annual IRS filing to city staff; provide expense records to the city in an easily readable format; and meet quarterly with city staff to ensure its payroll is in keeping with state law.

VisitDallas will also pay a third party to address numerous issues found in a city audit released last month.

For some officials, it’s not enough.

“This is entirely insufficient,” said Dallas City Council member Philip Kingston. He said the proposal, assembled by Assistant City Manager Joey Zapata, caters to the interests of VisitDallas and its supporters.

“Joey Zapata is a fool if he thinks this is good enough,” said Kingston, who is a member of the committee that will discuss the fate of VisitDallas next week. “[Council colleague] Jennifer Gates and … people like that think VisitDallas is a wonderful thing and don’t think the audit findings are all that bad. They believe this hokum of advertising that is supposed to be reaping millions of dollars for the city is more important that filling potholes.”

Gates was one of two city council members on the 40-plus-member board of VisitDallas, which is intended to give the city a voice in how the agency operates.

She said the proposed plan for increased monitoring of VisitDallas will work for now, as the agency’s contract is up in September 2020 and some city officials are already questioning whether it will be renewed.

“We need a convention bureau in place,” Gates said. “We need it to make the convention center successful, and hoteliers would go crazy if there were no convention and visitors bureau in place.”

Adam Medrano, the other council member on the VisitDallas board, did not respond to an email seeking comment.

While Kingston and some other city leaders advocate dumping VisitDallas, Gates said it can be salvaged.

“I believe we can fix [VisitDallas] rather than starting over,” she said.

Zapata defended the proposed changes in oversight arrangements and said the leadership of the two city departments involved has changed in the past year.

“We’ve got new people, a new city manager, and we will take direction from the city council on whatever we do,” Zapata said.

The audit released in early January found that VisitDallas has provided murky, debatable data on hotel occupancy and other key measures of its performance. The audit also found that VisitDallas handled tax revenue improperly in violation of state law and failed to make a required annual payment for maintenance of the city’s convention center.

The report also blamed the two city departments for procedural failures that allowed VisitDallas to operate with weak accountability.

Auditors found that VisitDallas operated in almost total independence, with no monitoring of its financial reports or even annual reviews of its tax filings.  

The audit noted that Jones used his expense account to buy personal items, including a $543 Tumi backpack. He purchased $7,000 in what he declared as gifts, although Jones failed to list who the items went to in accordance with VisitDallas policy, the audit noted.

The audit also found Jones used a car service while traveling, even though Uber service or cabs were available and that he routinely exceeded per diem limits on hotel rates and meals.

If the remedy plan is approved, VisitDallas, which failed to clearly document advance payments on a $400,000 retention bonus given to VisitDallas CEO Phillip Jones, will now use a certified public accountant, approved by both the city and VisitDallas, to “periodically review expenses in order to ensure compliance with VisitDallas’ policies and procedures … .”

The council committee on Tuesday will also consider Jones’ future as CEO. A full vote of council is required to fire Jones, but Kingston predicted it will happen.

“What’s going to happen is that Phillip Jones will be terminated,” he said. Kingston called the proposed changes at VisitDallas a “dog and pony show where VisitDallas makes a big show of firing Phillip Jones and begs for its life and promises not to do it again.”

City council member Scott Griggs said the audit’s findings regarding Jones’ spending are enough to warrant his exit.

“I think [Jones] should resign, and I want to take this [expenditure] in a different direction,” Griggs told The Texas Monitor earlier this month. He suggested that Spectra, a private management company that on Wednesday was awarded a five-year contract to operate the Kay Bailey Hutchison Convention Center, could assume some of the duties of VisitDallas.

Gates said the council would have to be able to present solid reasons for any decision to fire Jones or terminate the contract with VisitDallas. Without that, the city could be required to pay those entities the remaining value of their contracts.

The document to be discussed next week notes that city staff disagreed with seven of the audit’s 18 proposed solutions. Among those points is a recommendation that the city review expenses to ensure they are in compliance with state and city guidelines and that the city obtain independent verification of claims regarding the economic impact of VisitDallas’ work.  

Zapata said that the contract between the city and VisitDallas limits the city’s access to some information regarding the agency.

For example, it lacks language that would allow the city to police expenses.

“Those are things that are outside our control,” Zapata said. “The contract needs a lot of improvement, and those checks were not specified in there.”

Steve Miller can be reached at [email protected].

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