VisitDallas failed to clearly report CEO loans in tax filings

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taxes

VisitDallas failed to publicly record $190,000 in loans given to CEO Phillip Jones in 2015 and 2016, and a source close to the agency said this week that the city will be reviewing the agency’s tax filings to ensure they have been accurately reported.

Matt Jones, chief financial officer for the agency (and no relation to the CEO), said a full reporting of the loans will be part of its tax return for fiscal year 2017. The loans were taken from a $400,000 retention bonus, payable at the end of the contract, part of the five-year deal Jones signed in 2013. The agency was formerly known as the Dallas Convention & Visitors Bureau.

In all, Phillip Jones received $225,000 in advance payments on the retention bonus, the CFO said. The payments were for medical care for his son, Phillip Jones has said. He is currently paid a $700,000 compensation package.

A spreadsheet provided by VisitDallas shows an erratic pattern of publicly disclosing the loans.

For tax year 2015, VisitDallas’ tax return showed Phillip Jones as owing $135,000 to the agency. However, only one of three loans that add up to that balance is properly recorded — a pay-advance loan of $35,000.

During the 2016 tax year, according to the spreadsheet provided to The Texas Monitor, VisitDallas made three more pay-advance loans, totaling $90,000, to Phillip Jones. However, the agency’s tax documents for that year show only that his loan balance owed had increased to $225,000; the actual loan transactions were not posted.

“Yes, we could have done this more transparently,” Matt Jones said. But he added that the information provided in tax filings met legal requirements. The form involved, called a Schedule L, “doesn’t show advances, only the balance due,” he said.

Jennifer Becker Harris, a CPA in Bellevue, Wash., coauthored a 2017 presentation on reporting requirements for nonprofits. She said the rules on loans like those made to Phillip Jones can be tricky, but that the payments should have been fully reported.

“We advise that [the main parts] of Schedule L are for sunshine purposes, transactions that might look odd,” she said, including payments to family members of board members and loans to invested parties.

The Texas Monitor reviewed tax returns of about 30 visitors bureaus from around the country with over $10 million in revenue. The returns, going back to 2014, show one advance arrangement with an employee: The Anaheim Orange County Visitor & Convention Bureau advanced CEO Jay Burress $100,000 for moving expenses in 2015. The amount of the loan and the balance owed were reported in the agency’s tax filing that year.

The advance payments to Phillip Jones, which VisitDallas says were approved by the 40-member board that oversees the agency’s finances and conduct, should have been reported as fully as possible, said Dallas City Council member Scott Griggs.

“These payments relate to CEO compensation,” Griggs said.  “I’d sure like an unsecured, interest-free loan with very favorable repayment terms.”

The terms and the advance were not disclosed to the board, said Dallas City Council member Jennifer Gates, one of two council members who sit on the VisitDallas board.

“I had no idea of these draws,” she said.

Phillip Jones’ current contract also includes a retention bonus of $498,000, equal to one year’s base pay. Gates said she opposed the new contract, which was signed in October as the city audit was going on.

contract highlights“I wasn’t comfortable with giving him the current contract,” Gates said. “I wanted him to go a year without a contract but there was a group [on the board] that said he was going to leave and wanted to give him a full contract.”

The consecutive five-year deals have made Jones one of the highest-paid convention bureau CEOs in the country.

If the city council wants to fire him, it might have to pay him a sizeable severance under the terms of his current contract, unless the council finds that Jones committed malfeasance.

The questions about the loans and other compensation to Jones are part of a longer list of woes VisitDallas is dealing with. The agency is drawing fire from the city council after a city audit last month found the agency had no process in place to verify its claims of higher hotel occupancy as a result of its work.

The recent audit came as the city attempts to get control of its agencies after a city audit in 2015 found that the pension board had entered into risky real estate ventures with employee pension funds.

The visitors bureau is funded primarily through the proceeds of the city’s hotel tax. Between 2013 and 2017, VisitDallas received more than $146 million, mostly through the hotel levy. Voters approved the tax in 1998 to help fund the American Airlines Center, a downtown sports and entertainment arena.

City financial experts are reviewing the tax forms, according to a person close to the situation, to make a formal determination as to the accuracy of VisitDallas’ tax filings.

The Dallas City Council is scheduled to discuss the audit and consider the renewal of the city’s contract with VisitDallas on Feb. 19.

Steve Miller can be reached at [email protected].

3 COMMENTS

  1. They should follow the lead of the folks in Houston- they FORGO public money so as to keep their books closed. They did the math and I’m sure they come out better financially at the Greater Houston Partnership in doing so! There is NO TELLING what they do with their finances now.

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