published Saturday, January 21st, 2012

Chattanooga: Champions Club faces city investigation


by Cliff Hightower
Champion's club, a city-owned tennis club off Lupton Drive, is suspected of conducting private business after a city audit uncovered the violations.
Champion's club, a city-owned tennis club off Lupton Drive, is suspected of conducting private business after a city audit uncovered the violations.
Photo by Ashlee Culverhouse.

AUDIT FINDINGS


• The manager operated a pro shop, gave individual lessons, held summer camps and tournaments and pocketed the revenue without city approval

• The assistant director hosted a summer camp and also received revenue without approval

• City employees were used to man private events while on city time.

Source: City audit

The city attorney will investigate a city-owned tennis club after an audit found its managers were operating it as a for-profit business and using city employees to help run it.

“It’s basically on my desk,” said City Attorney Mike McMahan. “I haven’t worked on it yet. But I will.”

But Parks and Recreation Director Larry Zehnder challenged the audit of the Champions Club at Rivermont Park on Lupton Drive. He said the problems resulted from lost records in previous administrations and a contract that parks and recreation officials assumed was still operative.

“This is a very unfortunate situation because it puts a bad light on an important city function,” Zehnder said.

Orlando Lourenco is head manager and tennis pro at the Champions Club. Eddie Baker is the assistant manager, and the club employs three full-time and eight part-time staff people.

The facility features 26 hard courts, a 6,000-square-foot clubhouse, restrooms, showers and a pro shop.

The city audit, covering July 1, 2010, to June 30, 2011, uncovered a litany of problems. It said the manager operated a pro shop and gave individual lessons, put on summer camps and tournaments and pocketed the revenue without city approval. It also said the assistant manager hosted a summer camp and received revenue without approval, and that city employees were used to man the private events while on city time.

The managers collected tens of thousands of dollars from events held at the publicly owned tennis courts, the audit states, while in many cases, the city never received a dime.

But Zehnder and Lourenco stressed Friday that a contract from 2000 spelled out specifically the tennis pro could conduct side business at the courts as part of his compensation package. The audit states there was an unsigned contract but it expired in 2002. Lourenco said he didn’t know that the contract had expired and needed to be renegotiated and passed by the City Council.

He also questioned the audit statement that the contract was unsigned.

“I know that it was signed,” he said. “I just don’t have a copy of it.”

Reactions

Zehnder said he was talking with the city attorney’s office about creating a new contract and getting council approval. He said he was not aware of a city attorney investigation.

“We’re doing what we can to get a new contract that’s very detailed,” he said.

McMahan could not be reached Friday to comment on those efforts.

Councilwoman Deborah Scott, chairwoman of the city’s Personnel and Audit Review Committee, said she did not think a contract would be good enough and several problems existed that violate state law.

“There’s some confusion from the employee on what his role is,” she said.

She doesn’t consider the expired contract valid, and said trying to renegotiate nine years afterward is a “little late coming.”

“I don’t think it’s appropriate for a city employee running a business on the side,” she said. “He needs to decide which he wants to have.”

Audit Findings

Auditor Meghan Petty stated in the audit that she couldn’t find where the City Council approved the 2000 contract or any evidence it had been signed or renewed.

The audit noted that in April 2011, the City Council approved an ordinance setting fees for parks and recreation facilities. Part of that ordinance stated that no private lessons were allowed at the tennis courts. The Parks and Recreation Department said that part was wrong and that the department would ask for a revision when the ordinance comes up for approval in the future.

The audit had a host of specific findings on the financial dealings at the Champions Club. They include:

• During the audit period, Lourenco held four summer camps, a junior clinic and an undetermined number of private lessons, using the city’s website to promote the private events. Lourenco admitted he pocketed all revenues.

• The pro shop on premises is stocked with inventory purchased from Lourenco’s personal funds. City employees sell the merchandise as part of their duties and while being paid by the city. But the city gets no revenue from the items sold or services rendered.

• Lourenco hosted three tournaments at the facility during the audit period that netted more than $19,000, but no contract existed between him and the city for use of the complex. “We found city employees were paid by the city to work during the tournaments, though the courts were closed to the public,” the report states. The city received no revenue from the events.

• Lourenco hosted five events for city “partners” and no revenue was collected. Fees also were waived for two events hosted by the United States Tennis Association, and USTA officials told the city auditor they normally would pay for those events. No formal agreements existed to waive fees.

• In July 2010, Baker organized a USTA National Open tournament. Part-time city employees worked the event while on city time.

Petty estimated revenues from the event at $8,000. The audit stated it violated state codes for Baker to work the event when he stood to profit from it. The audit also stated he did not have pre-approval for outside employment in his city personnel record.

• The club routinely waived fees for individuals and accepted late tournament entry fees. The audit found two instances where players never paid, but still participated in tournaments.

Parks and Rec Answers

Zehnder said the contract began under Mayor Jon Kinsey’s administration, lasted through Mayor Bob Corker’s term and was picked up by Mayor Ron Littlefield’s administration and former Parks and Recreation Director Rob Healy.

He said Lourenco’s activities at the club were never hidden and that every administration before knew about the additional income.

“They knew what was going on there,” he said.

Zehnder said it is standard practice for tennis pros and golf pros at city facilities across the U.S. to get additional income in sales and instruction. He said he does not know why, but the signed contract had been lost prior to his arrival.

He also questioned the city employees working on city time for events. He said there would need to be better records and documentation, but he also said there would be times when city employees would work around such events.

“It’s like our softball tournaments,” he said. “Do they have to pay for maintenance afterward? No, we do it.”

Lourenco said he had no intentions of stepping down from his position at the Champions Club. He said he enjoyed working with children and people who enjoy the facility.

“I believe in the club,” he said. “I believe in public tennis.”

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