(August 19, 2008) -- LBReport.com has learned that LB's Dept. of Parks, Recreation and Marine paid $10,000 from LB's Marine Bureau using Tidelands Funds for a "Economic Impact Report" which concluded that LB's Sea Festival Association, a privately run non-profit group then under the direction of Chris Pook, generated positive economic impacts for City Hall.
The "Economic Impact Report" was produced by CSULB Economics Professors Joseph Magaddino and Lisa Grobar and received considerable media attention at the time. It claimed (among other things) that the Sea Festival Association operation generates over $5 million annually for LB's "economy."
The Sea Festival Association released the report, without disclosing that it was funded at least in part using public money, prior to the anticipated release of a Contract Performance Audit on the Sea Festival Association then being completed by City Auditor Laura Doud. When released a few months later, the City Auditor's report questioned City Hall expenditures, sponsorships, contractual compliance and unreimbursed city services.
LBReport.com has also learned that LB's Dir. of Parks, Recreation and Marine is recommending that the City Council not recover $37,000 that City Auditor Doud's audit concluded SeaFest owes the City. The sum stems from city staff's failure to enter into a written contract with the SeaFest Association for nearly a year after the Council authorized the contract that would calculate money owed the City based on a scale increasing each year.
SeaFest contends no money is owed, computed by excluding the first year of its operation with City Hall when no written contract was in place. In recommending that the Council not seek to recoup the $37,000 sum, Parks & Rec management says the issue is resulted from "confusion" on the issue.
The story of the Sea Festival Association contract, researched in large part by then-freelance writer Ryan Smolar [who now heads SmolarCorp which created the cutting-edge "University by the Sea" among other now advancing projects] was first reported by Dave Wielenga in TheDistrictWeekly.com.
The non-profit Sea Festival Association's Executive Director since its creation has been former Grand Prix mastermind Chris Pook, who drew a salary for his services, and is now in the process of exiting SeaFest to move on to other ventures.
The Sea Festival Association's governing board includes Drew Satariano, who is also a member of LB's Parks & Recreation Commission (Mayor nominated, Council approved).
As separately reported by LBReport.com, on August 13 the Parks & Recreation Commission approved a lengthy list of fee increases that City Management said are intended to eliminate what it called City Hall "subsidies" for items including day care and childrens' sports teams use of nighttime field lights.
In a memo dated August 8, 2008, responding to the City Auditor's April Contract Performance Audit on the Sea Festival Association, Parks & Recreation Director Hester wrote to City Manager Pat West for the Mayor and City Council:
Since its inception in 2005, the policy approved by the City Council allows the
City to waive any permit fees for groups falling under the Sea Festival umbrella. All other City costs, like those for Police and Fire, are still to be paid by the event
operators. Since the operators who have had their event costs waived are
located in the Tidelands area, there has been no negative impact to the General
Fund. Also, it should be recognized that most of the neighborhood events are
provided by, or co-sponsored by the Parks, Recreation and Marine Department,
in addition, the small amount of lost permit revenue should be evaluated in terms
of the original mission and goals of the Sea Festival program and benefits to
Long gealn residents. The recommendation is to continue to waive permit fees
for event operators, and to require them to pay for all other City costs, consistent
with the current policy.
Regarding the $37,000 that the City Auditor says is due from Sea Fest, Parks & Rec. Director Hester writes:
I was included in many of the meetings with the Association and the former City Manager concerning this new Sea Festival and agreement. I feel the intent of the agreement was to consider FY 2006 as year one, with no fee, and FY 2007 as year two, with a fee of a minimum of $20,000 or 20 percent of gross revenues, whichever is greater. The Association did, in fact, pay the City $S2,177 for FY 2007.
Since there is confusion over the intent of the agreement and the intent of the
former City Manager, we recommend that FY 2005 be designated as the "organizational" y"ir, FY 2006 as year one, with no fee due, and FY 2007 as ye; two, for which the Association has paid the appropriate fees. Again, since the Sea Festival takes place in the Tidelands area, there are no negative effects on the General Fund.
The City Auditor's Contract Performance Audit didn't cite the use of public money in generating the Sea Festival Association's "Economic Impact Study"...and Parks & Rec Director Hester's memo (which was a response to the City Auditor's report) likewise didn't mention it in his memo to the Mayor and Councilmembers.
Parks & Rec Director Phil Hester and Deputy City Manager Reggie Harrison are both ex officio (non-voting) members of the Sea Festival governing board.
LBReport.com believes we are the first LB media outlet to report this story. Among the Sea Festival Association's "sponsors" currently listed on its website are the Press-Telegram and the Grunion Gazette. Gazettes Associate Publisher/Executive Editor (and frequent City Hall news story writer) Harry Saltzgaver is also a member of City Hall's Parks & Recreation Commission.
Other Sea Fest "sponsors" listed on its website include the Port of Long Beach and Long Beach Airport [non-General Fund entities] and the office of L.A. County Supevisor Don Knabe.
City Hall's relationship with the Sea Festival Association was approved in a 2005 City Council vote (9-0).
In February 2008, at roughly the time the Sea Festival Association released its "Economic Impact Report," it was announced that this summer's events would be managed by International City Racing (ICR).
Developing.
