A message to the Parks Board meeting 10-28-2024

As you may know, I and others have been conducting a citizens review of  the contract for the Trail of Lights Foundation with the City.  While the Trail Conservancy Audit is already underway, this is another, different case where the financials may not be in the public’s interest let alone in the city’s best interests. There may even be fraud and serious violations of the existing contract. 

Interim Director Means received a copy of Audit Request case # 3727. City Manager Broadnax met with us last week to discuss details.

Some of the identified concerns include the following:

1. Potential Overcharging the public for admission and parking in 2023;

2. Potential Incorrect billing-or 

-waiving of Tiered Special Event Maintenance Fees and park-use fees prior to 2023;

3. Potential for Incorrectly charging admission on free nights in 2023.

We calculate that the above issues have resulted in:

1. Potential Undeserved revenue from overcharging attendees of up to $650K in 2023;

2. Potential Un-invoiced nonrefundable park-use fees of $30K annually prior to 2023; 

3. Potential Un-invoiced Tiered Special Event Maintenance Fees of about $43K-$88K annually prior to 2023.

By a 2023 Council Resolution, the potential for continued contract violations has been baked into the business model of the Event until 2032. And no one in the City appears to have asked about the profits being earned or the accrued cash reserves year-over-year.

Bottom line is *In the past 4 years, the Event has earned over $1.4M in profits after all salaries and expenses were paid.

By comparison in just one year 2023, over $136K of park-use fees were waived by the previous PARD Director. 25% of those fees were to be "nonrefundable." The PARD Director's choice to ignore contract terms which she signed annually -- resulting in lost potential revenue to the General Fund -- is appalling.

None of that $1.4 M in profit in the past 4 years appears to have come back to the public or the city. An audit will determine if it was kept by the “non profit.” It is difficult to see how this is in the public interest. Furthermore, there may be conflicts of interest concerning Trail of Lights leadership and the previous PARD Director. The city needs to reexamine what it is getting from this  “partnership.” 

Meanwhile, as we speak, the 2024 Event continues to overcharge for General Admission — charging $8 plus fees instead of $5 max per person —  sells VIP and ZIP admissions on nights required to be 100% free; and continues the program of ZIP admissions to allow paying customers to "skip to the head of the line" which damages social equity.

Details about the audit request are posted at TodayinZilkerPark.com. You have received an email from me today with links.

I urge you to review the information and pass a recommendation at a future meeting to require Trail of Lights Foundation to meet their contractual obligations.  This action is part of your charter to improve the operation of our parks.

I am available to answer questions and to go over the details if you would like. 

Thank you in advance for taking this matter seriously. 

Summary of Audit Request: Trail of Lights and the City of Austin Parks and Recreation Department (2024)

I have been researching the Trail of Lights Foundation and PARD's "event oversight" of the Trail of Lights Event.

My audit request — 82 pages — is case #3727 with the City of Austin Auditor. PARD Interim Director Means has a hardcopy. City Manager Broadnax met with me last week to discuss my research and concerns.

The current TOL website shows that the Organizer continues to violate their Legacy Contract Terms.

Let me be clear: The City grants fee waivers for this event based on the premise that the event is operated as a nonprofit and provides affordable admissions for the public. 

By contrast, in the past 4 years alone, the Event earned over $1.4M in profit — after all expenses and salaries were paid. PARD’s former Dir. McNeeley may be personally responsible for over $100K of nonrefundable park-use fees that were not collected in a pre-Event deposit prior to 2023.

In 2024, the Organizer again charges $8 plus a $2.19 handling fee for general admission, rather than the maximum allowed: $5 per person. The Event — by contract — is to admit all visitors free of charge on half of the nights. The contract provides not for “some people admitted free” but “all people admitted free” on half the nights. Instead, VIP and ZIP admissions are sold on all of the FREE nights. ZIP admissions allow people to “skip to the head of the line” damaging social equity. Not all children ages 11 and under are admitted free.

I could go on. These contract violations — with direct support from PARD — are only the tip of the iceberg.

PARD collaborates by producing a Ticket Manifest that fails to report the number of tickets sold at each price-point. I doubt that this Ticket Manifest was produced by the ticketing company on record. In this way, PARD can say that they don’t have a record of the admission prices; it certainly is insufficient data to calculate the Tiered Special Event Maintenance Fee that should have been billed to the Organizer while the Event was not a City Co-sponsored Event, prior to 2023.

In 2023, Council approved a resolution that not only damaged the potential profit of the event, but baked the Legacy contract violations into the event for the next 10 years. I doubt that Council asked to know the annual profit and cash reserves of the Organizer.

What can the Parks Board do? Recommend changes to the operations of the event to protect the promises made to the public in the Legacy Terms. If the Contract with Legacy Terms must be violated, consider recommending that the Event receive a new contract and become a drive-thru only event in future years. I have data to support that. 

Thank you for your interest. More details are below.

--dp

10-28-2024

Audit Request: Trail of Lights Foundation and the Austin Parks and Recreation Department, Case #3727 (2024)

The following are my personal discoveries and assertions. I am not a lawyer, and so I have simply assumed that intentional violation of a contract is an illegal act. I have asked the City Auditor to verify my assumptions and discoveries. -- dp, 10-28-2024

Background:

Resolution 20021003-40 makes it clear what fees can be waived for both City Co-sponsored Events and Non-City Co-sponsored Events. This Resolution is not archaic: It is referenced each and every year in the Annual Budget Ordinance. It should be well known by the Parks Department.

It says that fees not specifically listed required a specific Council acton. Park-use fees were not listed and therefore required 3 sponsors on Council; and all Council Members who approved it would need to allocate their annual total of $6K per Council Member’s authority.

The Trail of Lights was a Non-City Co-sponsored Event prior to 2023. 

Further, every event has a contract that requires a pre-Event deposit of the park-use fees with 25% nonrefundable. Historically, City Co-sponsored Events may have those park-use fees waived by Council action. 

I have asked the City Auditor to determine if Council has adopted a practice that violates the 2002 Resolution for park-use fee waivers and procedure. Between $109K and $160K of park-use fees have been waived for the TOL Organizer alone — annually —  including waiver of the 25% nonrefundable portion.

My discoveries:

Dir. McNeeley -- and the PARD Director before her -- ignored both the 2002 Resolution and ignored the "pre-Event deposit with 25% nonrefundable" paragraph in the TOL Contract prior to its revision in 2023.  During McNeeley’s employment between 2019-2022 while TOL was a Non-City Co-sponsored Event, Dir. McNeeley is responsible for not collecting at minimum the Contract’s requirement of 25% nonrefundable park-use fees from the TOL Organizer James Russell: Over $100K in 4 years.

Specific contract violations:

The Trail of Lights overcharges the public for general admission and sells admission called VIP and ZIP on 100% of the nights: Their contract forbids them from selling any form of admissions on half of the nights.

In other words, they are not only supposed to let SOME people in for free on half the nights; they are required to let ALL people be admitted free. These contract violations are in effect again in the TOL Event 2024.

PARD actions:

PARD participates in the cover-up of these “admission fee” contract violations by producing a poor Ticket Manifest: They refuse to itemize each type of ticket sold and the price. And without this data prior to 2023, PARD failed to charge the TOL the annual Tiered Special Event Maintenance Fee.

These are just some of the ways that PARD has collaborated to violate the Contract and ignore the Annual Budget Ordinance’s maintenance fee rules to enrich the TOL Organizer.

Generating wealth:

Every event that James Russell is involved with now sells VIP or "Shore Access" tickets: TOL, ABC Kite and HEB 4th of July. Social equity is damaged by the ZIP “skip to the head of the line” ticket sales of the TOL Event.

No one in the City is looking at the profits being earned: In the past 4 years, TOL profit was over $1.4 million. That’s after all expenses and salaries were paid: I repeat, $1.4M.

When I asked PARD Special Event Manager Jason Maurer if the fee waivers for TOL were justifiable, his response was to point out the large dollar value of corporate sponsorships: over $1.5M in 2023. With their profits and cash reserves, the Organizer could have easily afforded to pay their park-use fee of $134K.

I question: Is turning the park into a GIANT corporate billboard actually of economic value to the taxpayers of the City?

Council action under PARD direction:

I believe that Council's 2023 Resolution 20230309-043 was a cover-up: Under PARD direction in redrafting the contract, the troublesome paragraph requiring "a pre-Event deposit of park-use fees with 25% nonrefundable" was entirely removed from the 2023 TOL Contract.  Without this paragraph describing the park-use fee deposit, the TOL Foundation now has a Contract different from any other parkland City Co-sponsored Event. 

I believe this was done so that the new PARD Director would not have to be asked to perform an illegal action: By removing the troublesome paragraph of the pre-event deposit from the Contract and making the event an official City Co-sponsored Event, PARD maintained the status quo of waiving 100% of park-use fees without needing to ask the next PARD Director to ignore the Contract Terms.

By removing the troublesome paragraph NOW, later when four years of PARD records had expired in 2027, there would be no more record that a deposit of park-use fees with 25% nonrefundable had ever been in the contract. No one would see Dir. McNeeley's name next to James Russell's on the Contract. I was lucky to do my research now, before this record was lost.

It was also a cover-up because all City Co-sponsored Events produce no public record of the total dollar value of fee waivers.

Seven of the current eleven Council Members and Mayor have received campaign contributions from James Russell of the TOLF. These are: Paige Ellis, Kirk Watson, Chito Vela, Jose Velasquez, Leslie Pool, Natasha Harper-Madison, and Allison Alter. All Council members in 2023 voted unanimously “on consent” in 2023 to a new 10-year contract so that the Organizer could increase his sponsorship fundraising opportunities.

Follow the money:

Park Nonprofits have access to uncapped corporate sponsor fees, private donations, vendor fees, liquor sale percentages, and admission fees. 

No one in the City is looking at their profits.

My request:

I ask Dir. Means to request not only a full audit of my research into the Trail of Lights, but to also audit the ABC Kite Fest and the HEB 4th of July. If unchecked, Austin will become the prey of many more Nonprofits who learn to behave as For-profits on our public land.