Browder Tourism Fund Reversal

From: Browder, Leslie
To: larryakers@austin.rr.com
Cc: Garza, Rudy ; Tester, Mark ; Gizelbach, Michele ; Mory, Kenneth ; Kennard, Karen
Sent: Tuesday, September 13, 2011 12:46 PM
Subject: FW: illegal transfer of funds to Tourism and Promotion Fund

Larry, Please see the information provided below. The correction was incorporated in the budget passed by the City Council yesterday. You will be able to see the results in the fund summaries when the approved budget document is published later in the fall. Leslie
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From: Browder, Leslie
Sent: Friday, September 09, 2011 10:29 AM
To: Hadavi, Jason
Cc: Mory, Kenneth; Garza, Rudy; Kennard, Karen; Fireside, Leela; Tester, Mark; Gizelbach, Michele; Van Eenoo, Ed; Ott, Marc
Subject: FW: illegal transfer of funds to Tourism and Promotion Fund

Jason,

Law department staff sent me the emails attached below and I understand that the auditor’s office, as well as the convention center director, has been contacted with these concerns as well. As we discussed on the phone, here is a brief synopsis regarding this funding.

As part of the budget development process for fiscal year for 2009, we examined all of the transfers to other City funds that were being made from the General Fund. This was one of them. The goal of that review was to make sure that the funding source (i.e., general municipal revenues) was appropriate as a means for paying the cost of service being provided. In this case, the funding was for staff efforts related to music in the Austin community. It was our opinion that this could be more appropriately funded by the Austin Convention Center. For example, the Convention Center provides funding for Austin City Limits and, in general, local music is part of what makes Austin a desirable convention and visitor destination. I asked Rudy Garza to have the staff at the Convention Center take a look at this and he indicated they would assume this funding beginning in fiscal year 2009 since it was consistent with their mission, provided no funding restrictions might exist. He sent the issue over to them for review and consideration.

To make a long story short, this expense was placed in the Palmer Events Center set of funds rather than in the Convention Center funds. I am still of the opinion that it aligns more closely with the Convention Center’s mission and have asked the Budget Office to get this corrected as part of the fiscal year 2012 budget adoption process. We will make the correction retroactive back to 2009 and will publish the results in the approved budget document later in the fall.

Hope this information is helpful and provides what you need to close this inquiry. I will inform Council and Mr. Akers as well.

Leslie

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From: Hadavi, Jason
Sent: Monday, June 27, 2011 12:38 PM
To: Kennard, Karen
Subject: FW: illegal transfer of funds to Tourism and Promotion Fund

Karen,

I’m not sure if this has been brought to your attention or not but the email below from Larry Akers references reporting your department to the State Bar, so I thought you should know.

In addition, Akers alleges some illegal transfers of City funds. Have you issued an opinion on this? And if so, may we have a copy of it?

Thanks in advance!

Jason Hadavi

Assistant City Auditor

City Auditor’s Integrity Unit

512.974.2469

jason.hadavi@ci.austin.tx.us
——————————————————————————–
From: Marmell, Naomi
Sent: Thursday, June 23, 2011 11:24 AM
To: Hadavi, Jason
Subject: FW: illegal transfer of funds to Tourism and Promotion Fund

More from Larry Akers.
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From: Larry Akers [mailto:larryakers@austin.rr.com]
Sent: Thursday, June 23, 2011 11:22 AM
To: Leffingwell, Lee; Martinez, Mike [Council Member]; Cole, Sheryl; Morrison, Laura; Riley, Chris; Spelman, William; Shade, Randi; Ott, Marc; Hensley, Sara; Tester, Mark; Kathie Tovo
Cc: Maryland, Calvin (Rafael); Marmell, Naomi
Subject: illegal transfer of funds to Tourism and Promotion Fund

For the past three fiscal years, the City of Austin has engaged in an illegal
transfer of funds from the Town Lake Park Community Events Center Venue Project
Revenue Fund to the City’s Tourism and Promotion Fund.

For the current 2010-2011 fiscal year, this transfer is $130,000. (See
http://www.ci.austin.tx.us/budget/10-11/downloads/fy11approved_budget_vol2.pdf
page 225 (p. 236 in the PDF file).

For fiscal year 2009-2010, the transfer was $125,382. (See
http://www.ci.austin.tx.us/budget/08-09/downloads/Executive_FINAL_reduced.pdf
page 434 (p. 552 in the PDF).

For fiscal year 2008-2009, the transfer was also $125,382. (See
http://www.ci.austin.tx.us/budget/08-09/downloads/Executive_FINAL_reduced.pdf
page 488 (p. 610 in the PDF).
2008-2009 $125,382

The prior three fiscal years also saw a $125,382 transfer into the fund, but
the source was the General Fund, not the venue project Revenue Fund. The
General Fund is a legitimate source of funds.

The first year of the illegal transfer (2008-2009) was also the first year
the budget was under Marc Ott’s tenure. In the previous three years, the
budget was developed by Toby Futrell.

Section 334 of the Local Government Code governs venue projects, including the
Town Lake Park Community Events Center Venue Project. Section 334.042 clearly
delineates all the eligible sources of revenue and all the eligible uses for
that revenue permitted under law. In particular, Section 334.042(d) speaks
to the uses:

Sec. 334.042. VENUE PROJECT FUND.
..
(d) The municipality or county may use money in the venue project fund to:
(1) reimburse or pay the costs of planning, acquiring, establishing,
developing, constructing, or renovating one or more approved
venue projects in the municipality or county;
(2) pay the principal of, interest on, and other costs relating to
bonds or other obligations issued by the municipality or county
or to refund bonds, notes, or other obligations; or
(3) pay the costs of operating or maintaining one or more approved
venue projects.

(Chapter 334 of the Local Government Code may be found on-line at
http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.334.htm.)

Skimming a portion of venue revenues into the City’s Tourism and Promotion
Fund is not among these uses allowed under state law and is therefore
illegal and would not withstand legal challenge.

Council must immediately direct the City Manager to halt or reverse the
$130,000 transfer of funds from the venue Revenue Fund for the current
fiscal year. It must also reverse the previous two years’ transfers,
restoring the $250,764 to the venue fund, plus accrued interest if such
is the policy for interdepartmental loans.

If such a transfer is contemplated for the 2011-2012 budget, it must be
withdrawn immediately.

Both the City Manager and the Law Department should be sanctioned for
initiating and authorizing this illegal fiscal activity. Regarding the Law

Department, the matter has already been referred to the State Bar of Texas.

On June 5, I notified Council and the City Manager of this violation
in the 2010-2011 budget. Having heard no response, I infer no action
has been taken. If this is the case, it is unacceptable and constitutes
another chapter in the financial abuse of the venue project, the
pattern of which exposes the project and the City to uncertain risk.

Larry Akers

Friends of the Parks of Austin Stakeholder Representative

Town Lake Park Venue Project

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