San Diego Wraps Up CVB Audit

City auditors are recommending that the San Diego Convention & Visitors Bureau repay thousands of dollars spent on liquor and that policies be clarified to prevent any improper use of city funds.

The audit was kicked off in February after newspaper reports questioned a $50,000 loan to President and CEO Reint Reinders and a $16,000 golf weekend in Florida. The loan turned out to be allowable under Reinders' employment contract. And the weekend in question was the CVB's sponsorship of an American Society of Assn. Executives' event.

Although the probe uncovered no wrongdoing, it did reveal some expenditures that "do not appear to be the most appropriate uses of public funds." Overall, the audit recommended that the CVB reimburse the city $88,826, mostly for duplicate payments and expenses. All but $23,023 has already been paid back.

"I'm glad it's over. We're very focused on moving forward," said Reinders, adding that under his watch San Diego hotel occupancy and revenue have both risen.

Reinders said the bureau would reimburse the city for the $10,645 spent on liquor during the 18-month audit period, even though a 15-year-old waiver gave it permission to use city funds on meals and entertainment expenses. Other waivers allowed the bureau to use city funds on travel, lodging, gifts and awards. The waivers have since been revoked.

Furthermore, the audit recommended that future contracts expressly prohibit city money being spent on alcohol, donations, scholarships and employee recognition. Several expenditures that auditors took issue with were in those categories.

Among the questionable expenditures were tickets for San Diego Chargers games, the Holiday Bowl and the Super Bowl. The CVB spent more than $53,000 to wine and dine 10 top clients at the Super Bowl. According to the audit, those top clients together were responsible for more than $83 million in convention bookings.

Auditors also questioned employee bonuses, including $81,000 paid to Reinders, $9,500 each paid to eight vice presidents, $5,500 each paid to 27 managers and bonuses of less than $500 paid to 50 staff members to improve morale after the CVB incurred layoffs and a budget cut.

CVB officials' January attendance at the Assn. for Convention Operations Management conference was also called into question, as was a $10,000 scholarship donation to a local state university, staff gifts and meals, and a $10,000 donation to a local museum.

To prevent future problems, auditors recommend that a city official be appointed to the CVB board. In addition, the CVB should account separately for city-paid expenditures and file a monthly expenditure report with the city, the audit suggested.

Reinders said the CVB still plans to spend money to entertain clients. However, private, rather than public, funds will be used. "We have a stellar reputation in San Diego," he said. "This kind of stuff taints your reputation. It keeps you occupied when you have people poring over your records."

As part of the audit, city officials compared the San Diego CVB with counterparts and determined that its staff count of 86 was higher than normal for a CVB of its size. The staff has since shrunk to 66.

In addition, the CVB is set to receive less than $10 million in city transient occupancy tax funds this coming fiscal year, compared with $12.5 million in 2004 and nearly $14 million in 2003.

However, the biggest change comes from the CVB losing its responsibility for convention center bookings and hotel room blocks. The San Diego Convention Center took on that role in July, after hiring seven members of the CVB's sales staff.