Auditor Challenger Wilson-Doud Lambastes Incumbent Burroughs' Record on Queen Mary; Burroughs Says QM Lease Didn't Let Him Audit Detailed Books & Records; We Post Lease Portion So You Can Decide...Along With Views Of Retired Deputy City Attorney McCabe
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(April 5, 2005) -- Dogged by charges from City Auditor candidate Laura Wilson-Doud that he failed to ensure City Hall received Queen Mary rent for an extended period because he hadn't audited rent credits claimed by the QM's operator, City Auditor Gary Burroughs said at a candidate forum that he did have the right to audit QM credits and rents due the city...but said he "did not have the right to audit the detailed books and records" of the Queen Mary.
But the actual contract (1998 lease) verbiage (posted verbatim below) and the position of retired Deputy City Attorney Jim McCabe (who handled Queen Mary related matters at the time) challenge Burroughs' claimed inabilities under the lease.
The Queen Mary rent issue first came to public attention after a LB housewife/taxpayer, Traci Wilson-Kleekamp, examined documents already in City Hall's files (using the state freedom of information law, the CA Public Records Act) and began publicly questioning the status quo via the internet.
The Queen Mary's operator (QSDI under a 1998 amended lease with City Hall) is now seeking bankruptcy protection after city management retained an outside firm, the Staubach Co., which concluded rent was owed, and Burroughs' office subsequently prepared a report acknowledging rent is due. The QM operator denies this conclusion...and the sum at stake is now estimated to have grown to roughly $5 million. City management continues to cite this sum in its budget as revenue balancing the city's Tidelands budget. [If the money isn't ultimately received and nothing else changes, the City budget/Tidelands fund will be out of balance by that amount and taxpayers could be left holding the bag.]
Ms. Wilson-Doud, a CPA and law school graduate, told an April 3 Wrigley area candidate forum, "[T]he reason why the Queen Mary is a bankruptcy is because he [incumbent Burroughs] failed to do his job."
Polished and unflappable on stage, incumbent Burroughs replied calmly, "My office is the only office -- not the City Manager's office, nor any other office in the City of Long Beach -- ever responded to the issue of the Queen Mary. It was only the City Auditor's office that did so."
But when Wilson-Doud continued to press the point, Auditor Burroughs took a more didactic tone:The problem Laura has is she doesn't understand the contract, which has constantly been her problem. Number one, I don't have the authority, nor does anybody else have the authority, under our existing contract with the Queen Mary, to audit the detailed books and records of the Queen Mary. We do have the right to audit the credits or the rents due the city, but we do not have the right, over my objection actually, we do not have the right in the contract to audit the books and the records of the Queen Mary. And again, it was my office -- not the City Manager's office, not the lawyers, not the contract administrators, not anybody else at City Hall except the City Auditor's office -- who issued the
report about the rent credits.
Still Wilson-Doud persisted. "He does have the authority. Every time a question is raised about his job performance, he blames somebody else. It's either the City Attorney, the City Council or the City Management. Our City Auditor never takes responsibility for the job. He is always blaming someone else for not doing the job."
So what does City Hall's 1998 amended lease with Queen Mary operator QSDI actually say? In the public interest, LBReport.com posts the pertinent portion of the lease below [bracketed material by us]
6. BOOKS AND RECORDS.
Tenant shall maintain full and complete books of account and other records reflecting the results of all such business transactions conducted in, on or from the premises. Tenant shall make its books and records and, whenever relevant and significant to the issues covered by this lease, including without limitation the issues raised by section 5.4 herein [pertains to calculation of rent], those of its permitted sublessees, licenses, concessionaires, subsidiaries and others that Tenant permits to conduct business on the Premises which are available to Tenant upon reasonable notice to Landlord to inspect and/or audit said figures. Tenant agrees, wherever relevant and significant to the issue of Percentage Rent to provide in all subleases and other agreements of any kind which makes revenue generating activities on the Premises with any other person or entity, a requirement that the other person or entity shall maintain complete books and records if its revenue generating operations on, or from the Premises or as may be relevant to Section 5.4, and make them available in said lease or agreement for inspection and/or audit and shall provide in said leases or agreements that failure to comply shall be cause for termination thereof...If the amount of any [rent] deficiency for any lease year or partial lease year exceeds five percent (5%) of the rent paid, Tenant shall pay the cost of the audit not to exceed $25,000;...
Asked about the specific lease verbiage the day after the candidate forum by LBReport.com, Auditor Burroughs provided us with a copy of the pertinent lease text (we already had one) and continued to assert that in referring to section 5.4 [which deals with rent calculation] it limits the City to auditing matters regarding rent calculation. Mr. Burroughs also indicated that this view was shared by the City Attorney's office by then-Deputy City Attorney Jim McCabe.
So we contacted now retired Deputy City Attorney McCabe.
Mr. McCabe, who indicated he handled QM-related matters from roughly 1992 to 2004, told us without hesitation, "The contract [lease] gives the Auditor the right to audit the books regarding any issue of the lease, rent or otherwise."
And noting that the rent credits are effectively the central issue, Mr. McCabe added, "I didn't receive any input from his [Burroughs] office as to his wanting more extensive rights."
And Mr. McCabe tagged his statement to us with the following opinion: "I found Mr. Burroughs to be an impediment to doing an audit on the rent credits."
Further as newsworthy.
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