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CVB leader speaks about city audit calling for more oversight

Posted at 10:45 PM, Feb 05, 2019
and last updated 2019-02-05 23:45:21-05

A recent audit by the city shows the glaring difference between how Corpus Christi does business, compared to the Convention and Visitors Bureau. That’s according to Paulette Kluge, the bureau’s CEO.

As KRIS 6 News previously reported, the audit came as the city and the CVB are negotiating a new contract. The auditor believes that the agency needs more oversight in several areas, including how it uses money from the city to promote tourism. The majority of that revenue is generated through the Hotel Occupancy Tax (HOT).

“The city over the years has adopted different formats for how they do their business, but in our industry, we have had a different format,” Kluge told KRIS 6 News.

The audit, dated January 7, concludes the CVB is not in compliance with seven of eleven key areas in the contract, including the presentation of an annual report to the city, as well as periodic performance reports to city council. Another key area out of compliance, according to the auditor, was the provision of a business plan by July 31 of every year to include a line item budget.

“We’ve always had an approved budget and in that approved budget has all of our expenditures and how we’re going to use the money,” Kluge explained. “So there’s never been a question on how we’ve used HOT dollars ever in the five years that I’ve been there.”

Yet, the city audit also questions how that hotel occupancy tax revenue is spent, saying there are no policies to manage that spending. It specifically points to business credit card purchases that don’t align with city policy, like out-of-town travel expenses for someone who wasn’t an employee of the CVB. But Kluge says those types of expenses are common in the tourism industry.

“We compete against San Antonio and Austin and Houston and Dallas to get conventions to come here, so we entertain clients,” she said.

The audit also calls for more accountability of the tax revenue usage, especially with the CVB also operating charities, like the Heritage Society, which operates as a 501(c)(3). According to Kluge, “We set that up in order to accept funds from people that want to help us to do our business.”

However, the city auditor says those funds from the charity and the CVB often comingle, although the Heritage Society is allowed to accept foundation grants and tax-deductible donations that the CCCVB cannot. For that reason, Kluge says the agency is working on an agreement to properly account for all of those funds.

The city says it agrees with the audit’s findings and is working on an action plan.

“The city manager’s assigned city staff — directors, managers — to take a look at some of these processes and create those improvements, to create some new policies and procedures,” said Tracey Cantu, assistant director of the city’s communication department.

Kluge says the CVB is also on board.

“We celebrate the fact that we need to continue to improve and that’s what we want to do. We want to improve and continue doing great work for the city of Corpus Christi.”

Kluge says the first draft of the new contract with the city is done. It’s still unclear when the deal will be finalized, but Kluge hopes it will be soon.

You can read the city audit on the Convention and Visitors Bureau in full by clicking here.