Terror Twins

Council Activists Fight to Reform the ACVB

Sadly for our mayor, last Thursday's council meeting dealt another rude awakening to his privatization dreams. On the bill was the emancipation of the Austin Convention & Visitors' Bureau (ACVB) from a city agency to a non-profit corporation of some 20-odd tourism representatives. But the drama was thick behind the scenes, what with some councilmembers accusing staff of subterfuge in readying the entity for its coming-out-private party, and staff in turn blaming the deceit and "misrepresentation" on fiscal watchdogs and council meeting habitués Jim Hudson and Leonard Lyons. Hudson, who formerly served on the volunteer citizens' committee for the ACVB, and Lyons, who serves on the airport advisory commission, weren't going to allow the ACVB to go private quietly.

Privatization of the ACVB has been a goal of many members of the tourism industry since its de-privatization in the late 1980s. The agency's charge is attracting conventions and tourism to the convention center and Austin hotels, and it gets funding from tax revenues imposed on hotel rooms -- the so-called hotel bed tax. Tourism representatives and city staff say that corporate status for the ACVB would translate into less restrictions on how money could be spent, permitting the ACVB to greatly enhance its bang-for-the-buck. For example, as a corporation, ACVB representatives would be able to barter with airlines, trading advertising space in promotional media for airline tickets. The tickets could then be used to fly conventioneers to Austin.

But, as often is the case when public money gets into the hands of the private sector, the ACVB's last quasi-public phase was a debacle of immense proportions. Excess monetary freedom wrought mostly spending improprieties and lavish giveaways to conventioneers. As a result, the then-council jerked the reins. City staff assure that the past is indeed the past, and that a 1989 state law limiting the types of expenditures bed taxes could be used for should prevent any hint of fraud.

Nonetheless, some members of today's council -- Beverly Griffith, Daryl Slusher, Eric Mitchell and Jackie Goodman -- are attempting guarded precautions before cutting the ACVB free once again. Goodman has been especially vigilant. When the council approved the by-laws six weeks ago, creating the corporation, she angled tooth-and-nail for a few safeguards in the corporation's operating documents to ensure public accountability this go-round. What she didn't get, city staff promised to later include in the contract, which was up for approval last week. But it turned out that Goodman didn't get what she wanted. At stake were millions of dollars in public funding over a five-year period, and damned if she'll be implicated if another round of fiscal and ethical atrocity comes to pass.

Goodman, often the timid sibling of the dysfunctional family called city council, was uncharacteristically aggressive in a rare public tongue-lashing of city staff. Of great concern to her was staff's alleged unscrupulous support of the privatization effort. Goodman claimed staff has consistently subverted her wishes that the ACVB corporation be accountable to the council and public. "I very rarely get confrontational with staff, especially not in council chambers," she complained to the city manager, who had just finished exonerating his staff of wrongdoing, "but in this case it appears you may have not been told everything."

Her reasoning was not hard to understand. Earlier in the week, she had submitted 11 questions about the contract and by-laws to city staff. The response was a study in highly accomplished artifice, and Goodman felt that at least six of her questions were simply ignored or answered misleadingly.

Moreover, as the process of council approval has unfolded over the past two months, staff assurances -- once granted with frequency and an air of nonchalance -- were nowhere to be found in the proposed contract. "My understanding was that the whole [ACVB] board would have to ratify decisions of the [ACVB] executive committee," says Goodman. But when it came time for the council to vote on the contract, the proposed by-laws contained no checks on the executive committee's power.

A draft contract dated August 30 limited the incentive that ACVB could offer to conventioneers to $5 cash back (in the form of trade) for each overnight hotel stay. So for example, if the Texas Society of Association Executives (TSAE) -- which offers convention symposiums to members -- rented 1000 hotel rooms, it could get an incentive package of $5,000 via the hotel bed tax.

But by the time of the vote last week, that clause had been nullified, and there were no incentive limits, so the lavishness of the past -- during which, according to Hudson, the TSAE enjoyed a $270,000 come-to-Austin party complete with parachutists, bands, and free booze financed primarily with bed-tax revenues -- could reoccur all over again.

And there are other examples of staff behavior over the past two months that have raised eyebrows, most notably: In August, the proposed ACVB board contained more than 20 representatives. All but one, a private travel agency, represented industry or service organizations. The lone representative was Juan Portillo, owner of Tramex Travel, and interestingly enough, an ACVB boardmember during its shadowy past and a frequent city contract beneficiary. Asked by Councilmember Slusher why a private company should be on the board, former ACVB director Karen Jordan -- who recently left for a similar post in D.C. -- noted that there was no public travel agency organization in Austin. Members of the Travel Agents Council of Austin (TACA), created in 1981, begged to differ, and contacted Slusher. Portillo was scratched and a TACA member added.

With the afore-listed shenanigans in mind, then, it's not hard to see why the white-haired, portly twins of terror -- Leonard Lyons and Jim Hudson, ever in search of government wrongdoing -- zeroed in on the issue. Lyons has made Councilmember Ronney Reynolds the target of his campaign, pointing out his links to convention center issues. One of Reynolds' accounting clients is the aforementioned convention education group, the TSAE, which has a member on the ACVB board and has been a major beneficiary of the ACVB's past largesse. Reynolds says neither he nor the TSAE will benefit: "The TSAE is a non-profit association. Its members are non-profit as well. They don't make money."

But there's more. At the meeting, when asked point-blank, Reynolds seemed unsure whether his wife, Mary Reynolds, was a board member of Meeting Professionals International. "I think she is going to be on the board," he hedged. Like TSAE, MPI is another non-profit group that educates organizations on convention issues, and could receive the same kinds of financial incentives. "Nobody on MPI is on the convention and visitors board," added Reynolds. But the mayoral wannabe must not have done his homework: not only is his wife on the MPI board currently, but she has been for some time. Also, Reynolds needs to know that MPI does have an ACVB board rep, Janet Blomquist. If that's not enough, Mrs. Reynolds makes her living off tourism; she owns Around Austin, Inc., a company that shuttles visitors to different sites in the Austin area.

Despite Lyons' requests and a public scolding from the conscience of the council, Gus Garcia, Reynolds has refused to recuse himself on this issue. As Garcia pointed out, Reynolds and his wife may not benefit directly, but even the appearance of a conflict of interest is reason enough for recusal. Moreover, Reynolds' links no doubt heap even more doubt on the already dubious path that this process has taken. As one councilmember says, Reynolds' fervent advocacy of the ACVB privatization certainly lends skepticism.

All of which helps explain why Goodman, Slusher, Mitchell, and Griffith seemed to favor an alternative contract that was drafted and circulated by the terror twins. The contract, which Lyons hammered out on his home computer, contained important clauses for public accountability that could not be found in staff's copy. For example, Lyons' version requires that the ACVB executive committee meetings be recorded electronically, and that the committee be accountable to the board. Further, the alternative contract would give the city council, not city staff, power to approve changes to the board's operating procedures. But the mayor and Reynolds complained that the contract didn't get to their desks until that day, and requested more time to study it, so the vote on the ACVB contract was tabled until the following work session.

Sensing the council tide against them, ACVB interim chair Carl McKee, general manager of the Doubletree Hotel, invited Lyons and Hudson to his hotel to mesh Lyons' contract with staff's proposal. Over cold cuts and heated debate, Lyons and Hudson were able to get most of their provisions into a new compromise contract. The ACVB board would still have no limits on their incentive package, but the executive committee will be accountable to the entire ACVB board.


In council this week: Another, perhaps final, vote on the ACVB. Also a resolution from Eric Mitchell, requesting a five-year business plan from staff on how the electric utility will prepare for deregulation.

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