AUSTIN (KXAN) — City Council unanimously approved the Austin Convention and Visitors Bureau’s budget Thursday, following a two-week postponement to address concerns about the organization’s spending on high-price entertainment, dining and gifts.
KXAN first revealed the questionable spending at ACVB, officially called Visit Austin, in late September. A line-item review of two years of American Express credit card statements and receipts found Visit Austin charged nearly a half million dollars on booze, dining, parties, gift cards and jewelry in that time period.
All of the credit card receipts were paid with public hotel occupancy taxes, Visit Austin told KXAN. Visit Austin said locals, unless they stay in an Austin hotel, do not pay the hotel occupancy taxes that are levied on customer hotel bills.
Visit Austin paid $6,317 in one night for more than 500 alcoholic beverages at Antone’s night club. In addition, the non-profit’s employees bought $5,000 in prepaid American Express and Visa gift cards for clients and more than $10,000 in Kendra Scott jewelry gift cards. The group also purchased 75 Lady Gaga tickets at venues outside of Texas at a cost of over $18,000, among other concerts.
“None of those people were from Austin,” Council Member Leslie Pool said, after reading KXAN’s report that highlighted Paul McCartney, Adele and Beyonce out-of-state concerts. She told KXAN, “You opened the door for us and we are carefully walking through it and taking stock of what we’re finding.”
“There were some expenditures, in my opinion, that weren’t necessarily as in support of Austin musicians as they should have been,” Mayor Pro Tem Kathie Tovo added.
Visit Austin plans to change that.
“In the past, we’ve taken musicians on the road,” Visit Austin CEO Tom Noonan explained to KXAN on Thursday. “We do that quite often actually, and we’re going to do that exclusively going forward now. Then obviously, when we’re in town in Austin, we’ll use local musicians or use local music venues.”
Austin musician Gina Chavez can speak to the benefit, as an artist that’s gone on the road with Visit Austin.
“To have an entity that says, we’re the live music capital and we’re going to take live musicians on the road with us, and we’re going to pay you fairly and we’re going to treat you like you should be treated… it’s really been a game changer for me,” Chavez told KXAN.
Visit Austin also agreed that moving forward all money spent on alcohol will come from private funds, not public dollars. Facing financial scrutiny over this spending, the group sent a letter to the mayor and council, saying it welcomes an in-depth financial and performance audit by the city, something Pool called for following KXAN’s original investigation last month.
“When I saw the bar tabs, they were extraordinary. And I think it was a little bit, well — it was off-putting,” Pool said, who explained she worked for the state for years and anytime a state employee wanted to order an alcoholic beverage, they had to do so on their own dime. A policy she agrees with.
Since private funds are smaller portion of Visit Austin’s budget compared to hotel tax dollars, KXAN asked if private funds will realistically be enough to cover the cost of alcohol, to wine and dine clients.
“We’re going to work on it the best way we can,” Noonan said. “We’re going to try to make the council happy, and — if that’s their mandate — that’s what we’re going to do. So it won’t be easy, but we’re going to work our hardest to make sure that happens.”
Julie Hart, Visit Austin’s chief financial officer, said the amount of businesses and money the non-profit brings to town far exceeds the organization’s spending. Visit Austin has also had “10 straight years of flawless audits” and it has put itself through a “very rigorous accreditation process,” she added.
Pool said the changes Visit Austin agreed to “are significant and we’re not done.”
Three big things are still to come for Visit Austin. In addition to the city audit into Visit Austin’s financial and program performance, expected to take about six months, council still still needs to approve the organization’s marketing plan. That will likely happen next month. Council also plans to take a closer look at the city’s contract with Visit Austin, to potentially re-establish city council oversight.
During Thursday’s meeting, Tovo was vocal about her desire to further explore different ways to use the city’s hotel occupancy tax, warning Visit Austin the funding it currently receives from the tax may not always be there to the extent it is now.
“It is my perspective that we should deliberate on those tax allocations and potentially make changes,” Tovo said. “In terms of Visit Austin, it may mean that they want to increase their private fundraising and shift their reliance on hotel/motel tax dollars.”
At a Sept. 29 Austin City Council meeting, some council members said they were skeptical of the need to spend that much on parties, and they were concerned about the organization’s transparency. At that time, council was set to approve the nonprofit’s budget and marketing plan at that meeting, but it voted to postpone the vote to take a closer look at the expenditures.
“I understand the argument that that is what the industry does,” said Council Member Ann Kitchen, regarding Visit Austin’s spending. “But that is not really the question, from my perspective. My perspective is from the city of Austin. What do we think is appropriate for the use of those public dollars?”
Others on the City Council, including Jimmy Flannigan, expressed concern over the abrupt pause of Visit Austin’s budget and how it could affect staff.
“This is not property taxes. This is not sales taxes,” Flannigan said. “Everyone in every other major city does it this way. It even says it in the article. This is not public tax dollars. These are taxes on hotel rooms. It is a substantively different animal. I do not support postponement.”
Several local hotel executives, including general managers of the W Hotel and Hilton downtown, spoke in favor of approving the budget and said Visit Austin is a critical generator of business in the city.
“They do an absolutely incredible job of marketing the city, better than any I have worked with at previous locations during my career,” said Drew McQuade, general manager of the W Hotel.
Visit Austin’s expenditures fall in line with other visitor bureaus in the state, according to correspondence with bureaus in Dallas, Houston and San Antonio.
Visit Austin CEO’s Contract
A copy of Noonan’s contract obtained by KXAN shows interacting with members of the Austin City Council was, at one time, part of a bonus incentive for him.
According to an addendum to his contract dated May 2016 to October 2016, Noonan would receive up to a 30 percent salary bonus, on top of his $300,000 salary, if he met a series of benchmarks. Visit Austin said the bonus was prorated to $34,616 because the term of the contract was less than a year.
Among the benchmarks, Noonan was asked to meet with and “sell” council members and city leaders on the convention center expansion. He would also develop a “strategy paper” to address each district’s “what’s-in-it-for-me” motivations, and the strategy paper should “remain highly confidential among ACVB leadership,” according to the contract.
To achieve the bonus, Noonan was also tasked with developing a comprehensive five-year plan for the organization, being a leader on the host committee of the Professional Convention Management Association, and achieving annual room booking and financial goals, according to the contract.
Visit Austin Board of Director Chairman Gene McMenamin said Noonan’s interactions with council members went “no further than introductions and requested meetings by Council Members” because of the establishment of the Visitor Impact Task Force and its work on the convention center expansion.