The Stillwater City Council, meeting in their role as the trustees of the Stillwater Economic Development Authority, heard a report Monday on Visit Stillwater’s finances. It was a meeting that left both parties looking disappointed and questioning each others’ good faith.
Visit Stillwater, an independent organization that was formerly the Stillwater Convention and Visitors Bureau, has a $720,000 contract to market Stillwater as a destination for business and pleasure travel. The amount of its contract was cut by $180,000 in 2018 and the City Council only agreed in September to extend the contract through the entirety of the fiscal year.
It came as the council was exercising its option to audit Visit Stillwater under a set of agreed upon procedures that Stillwater CFO and Deputy City Manager Melissa Reames said puts a laser focus on certain aspects of an organization's budget. When that didn’t give the councilors the answers they were seeking, it tasked the city’s finance department with compiling its own report.
The city was specifically concerned about categories like employee compensation, travel, entertainment and mileage, she explained.
Reames said when she reviewed the budget, it quickly became apparent to her that Visit Stillwater has a $288,537 reserve fund that city officials did not realize existed. She called it “previously undisclosed,” a term that seemed to trouble some city councilors.
The organization’s decision to pay employee performance bonuses of 20 percent from private funds after asking for $80,000 from the city to bring an ice skating rink back to downtown Stillwater for the holiday season, also prompted questions from the council.
Councilor Alane Zannotti said the council had discussed whether to provide funding for the Winter Wonderland but after learning it generated a net return of less than $5,000, it didn’t seem like a good investment. She said they still considered it because sometimes things are about more than the money they make, but ultimately decided against it. There are no meeting agendas that show the City Council discussing Winter Wonderland in open meeting, nor is it listed under a request for an executive session, prior to discussion of the investigation into Visit Stillwater. SEDA has held several executive sessions to discuss what it characterized as an investigation into Visit Stillwater.
Zannotti asked why Visit Stillwater didn’t use some of its reserve fund to pay for the ice rink.
Mayor Will Joyce said he was also frustrated that Visit Stillwater asked for money for the ice rink and presented a deficit budget when it had a fund balance.
Joyce then remarked under his breath that perhaps the city could have also used part of the reserve it is holding in its hotel tax fund. Reames said city staff is attributing the $454,366 balance built up in the account to savings realized when Visit Stillwater was a department of the city from fiscal years 2012-2014.
Residents have previously questioned whether it was proper for a past city manager to use part of those funds to pay for landscaping accented with western-themed metal figures in city medians.
The tax was approved by Stillwater voters in 1985 for encouraging, promoting and fostering conventions, conferences and tourism development in the City of Stillwater.
City Attorney John Dorman emphasized during his portion of the presentation that the City of Stillwater is the rightful recipient of the tax revenue and its creation by a vote of the people doesn’t mean city leaders can’t ever make changes to the ordinance or repeal it.
Vice-Mayor Pat Darlington expressed disappointment in both parties.
“The city has been remiss in oversight of all our public/private partnerships,” she said. “It’s very unfortunate that these kinds of disingenuous things have been discovered.”
She did allow that expectations for Visit Stillwater may have changed as the make-up of the council changed.
Visit Stillwater Board Chairman Willie Baker was angered by that characterization of the organization and what he says is a lack of communication that has made it difficult to give city leaders what they say they want.
Regarding the reserve fund, he pointed out that the city itself carries a reserve fund.
“Why would they not think it’s prudent for us to have one?” he asked.
Visit Stillwater President/CEO Cristy Morrison said organizations that accredit DMOs recommend having a reserve of 25 percent of their annual budgets. Visit Stillwater has not built up enough to meet that.
Joyce said the city has not always been clear in its expectations for Visit Stillwater but is working to remedy that.
The councilors downplayed that their decision to solicit proposals from marketing firms to potentially replace Visit Stillwater had anything to do with the audit or financial investigation.
Councilor Amy Dzialowski, the most recent councilor to join the body, said evaluating and comparing options is a key aspect of a good procurement program that helps determine you’re getting the best innovation and the best value for your dollars.
“It’s unfortunate that this all kind of coalesced,” she said. “Hopefully it’s not seen as a threatening thing.”
Earlier in the meeting Baker had urged city officials to sit down and discuss what they want with Visit Stillwater. He said meetings formerly held monthly with city staff stopped abruptly about nine months ago and he hasn’t been able to get a meeting since.
“If there’s criticism then let’s get it out in the open and talk about it,” he said. “We can’t do anything if no one is willing to talk with us … With six months in the contract it seems like you’d want to talk about it.”
In wrapping up discussion of the reports, Reames told the trustees they have a contract with Visit Stillwater through the end of the fiscal year, but said they also have a 30-day opt out clause. They would have to put an action item on next week’s SEDA meeting agenda to do anything about it.