Glenwood questions chamber billing
September 23, 2005
The Glenwood Springs Chamber Resort Association appears to have overbilled the city by $86,000 for services provided under a tourism promotion contract, city officials say.A city review has found that some overbilling may have been intentional, with the chamber obtaining reimbursements from the city in cases in which people hadn’t asked for or received tourism information.However, a chamber board member vehemently disputed the review’s findings, saying they lack specifics, are based on misinformation and previously have been investigated and determined to be unfounded.”I’m sorry it got to this point,” board member Martha Cochran said. “I hope that we get it resolved quickly for everybody’s sake. I’m sorry we had to go through it again and I hope everybody can get satisfied and we can get on with business.”She said a recent audit actually suggests the chamber underbilled the city by $30,000.The city voiced its concerns about the chamber’s handling of the $500,000 contract in a letter sent by Mayor Larry Emery to chamber board Chairman Fred Wall on Tuesday. In addition to the overbilling concern, Emery also questions travel expense claims by the chamber for alcohol, in-room movies and expensive meals; its billing the city fund for all advertising related to Strawberry Days; and its keeping of all income related to the annual visitor guide despite charging some expenses to the fund.”From our investigation, obviously we need some answers,” Emery said in an interview Friday.The city has asked the chamber board to respond to its concerns by Oct. 7. City officials say they plan to seek reimbursements if overbilling occurred. Emery said the situation potentially could become a criminal matter if any chamber actions resulted from wrongful intent rather than a mistake or mere oversight.City attorney Karl Hanlon said it’s premature to speculate whether there was any criminal wrongdoing.Former tourism marketing director Lori Hogan said Friday that police have helped to investigate the matter, interviewing her in the process. Hogan said she initially raised some of the concerns being looked into by the city.The city imposes a 2.5 percent lodging tax for tourism promotion. It long has contracted with the chamber to handle the work and has not put tourism promotion out for bid. This summer City Council decided to put out a request for proposals for the 2007 contract, in part out of concerns over the chamber’s handling of the contract. Council awarded the chamber the contract for next year because it concluded it was too late to bid it out.Also this year, the chamber set up a new tourism marketing board to provide oversight over its handling of the fund, in response to pressure from representatives of the tourism industry.Number of mailings, contacts questionedIn his letter this week, Emery wrote that the city looked at the chamber’s postage meter and found that the chamber billed the city for 30,192 visitor guide mailings “for which no backup can be provided.”The postage meter record confirmed 17,288 guides were mailed from 2001-04, the review found. The city concludes that the chamber overbilled the city for $86,042 during those years.The chamber also bills the city based on tourism-related contacts made with the public. The city contacted a sample of names in a chamber database in 2003 and 2004, and all of them “neither requested nor received information regarding Glenwood Springs,” Emery wrote.”All of them did say that they subscribed to a variety of magazines in which the chamber advertises such as AAA Home Away and Modern Bride Colorado. It appears that the bulk of the names contained in the electronic databases were provided from these publications as part of the publications’ mailing list.”City Manager Jeff Hecksel said if the chamber never had contact with people but used their names to bill the city, then it billed the city for work it never did.”In fact they never called, they never got anything from the chamber and yet we paid you [the chamber] to do that. I mean, that’s kind of what it looks like. If we’re wrong, please tell us that we’re wrong.”The city is wrong, said Cochran, who noted that she was speaking as only one board member and that the board would be meeting Tuesday to discuss the city’s allegations.She questioned how many people the city surveyed. Emery said the number was “substantial,” at least more than a few dozen. Cochran also said the names in the database represent legitimate contacts with the public. She said contacts can occur in all kinds of ways – returning promotional postcards about the city from magazines, walking into the chamber for information, responding to a contest, and other ways. It’s possible that someone asked by the city whether they were contacted by the chamber about something such as the opening of the Glenwood Caverns tramway years ago wouldn’t remember it, Cochran said. She said at least one person surveyed by the city didn’t realize that when contacted about an event, it was the chamber that made the contact because it was a chamber event.The contact “didn’t in their mind come from the Glenwood Springs chamber, it came from the event,” she said.Hogan said Friday that the chamber pressured her to come up with enough names of contacts “basically to beef up their budget.””I thought it was wrong …. because they were getting money that wasn’t rightfully theirs.”Emery’s letter raised concerns over a monthly bill from the chamber in which it said it sent out 5,013.33 guides. Emery wonders if the number was manufactured to arrive at the $15,039 the chamber billed the city for distributing the guides – the same dollar amount it had billed for in a prior month.”You can’t mail a fraction of a visitor guide,” he said of the extra one-third of a guide that was billed.Hogan said President Marianne Virgili directed her to buy mailing lists “just to use the names” for purposes of billing the city and when Hogan refused to do that Virgili went behind her back to obtain the lists.Virgili, while referring questions regarding most of the city’s concerns to Cochran, said she did discuss buying mailing lists with Hogan but with the intent of using them for conducting direct mailings. However, she said she ended up not obtaining the lists because Hogan had concerns about using them.”She didn’t want to go that route and I deferred to her judgment,” Virgili said.Virgili said she did try to take action in 2004 when she noticed that the chamber wasn’t getting many requests for tourism information.”I was concerned with meeting the terms of the marketing plan” with the city, she said.But she said she responded in a legitimate fashion and the chamber was able to boost requests by putting a notice on its website that its visitor guide was available.In his letter, Emery also questioned why the tourism fund has been subsidizing two revenue generators, Strawberry Days and the visitor guide, “without an appropriate allocation of profits” to the city.Same issues raised two years agoCochran expressed disappointment in how the city has handled its investigation into the chamber’s administration of the tourism fund. She said many of the same concerns were raised two years ago and the city’s auditor gave the chamber a clean audit.”I hope what we do is call in the auditors again and do it again,” said Cochran, who said it is hard for the chamber to respond to “blanket, unspecific allegations.”She believes the issues arose again because Hecksel and many council members are new to their positions and not aware that the concerns already have been addressed. While she understands their concerns, she questions their methods. She said the chamber immediately turned over all requested records to the city, then never heard anything from the city until this week’s letter. She wonders whether those who looked into the matter fully understood the issues and why they didn’t ask questions of the chamber during the investigation.”I think it was handled poorly, and it was handled from kind of an adversarial position rather than these are two entities that work together,” she said.Emery’s letter contends that the chamber apparently hasn’t acted on recommendations contained in previous audit management letters for addressing issues now being raised by the city.Emery said the city review was a response to “specific allegations by multiple sources.””Should the chamber not be able to explain [its handling of the fund] sufficiently we’re going to have to go back and re-examine that contract as a whole and how it’s awarded and how it’s monitored,” he said.”The city has both legal and civil remedies at our disposal should we choose to go that route,” he said.