Tourism leaders speak out against slashing Chattanooga's Visitors Bureau dollars

Hamilton County Commissioner Tim Boyd speaks about his plan to reallocate $4 million from the county budget during a meeting with the Times Free Press editorial board on Wednesday, March 29, 2017, in Chattanooga, Tenn.
photo Bob Doak, president and CEO of the Chattanooga Cenvention and Visitors Bureau, talks to guests as a high-definition live video stream from the Tennessee Aquarium is unveiled in the Chattanooga Metropolitan Airport lobby on Tuesday, Mar. 29, 2016, in Chattanooga, Tenn.

Alstom Settlement

The Hamilton County Commisison approved a $6 million settlement from GE Power in connection to a broken tax break agreement with the former Alstom manufacturing plant on Riverfront Parkway. The county will receive $2.7 million of the settlement, with Chattanooga recieving the rest. Both Hamilton County and Chattanooga offered tax breaks to Alstom in return for meeting expansion and hiring benchmarks.

The Chattanooga Convention & Visitors Bureau says it's willing to do anything to show Hamilton County commissioners how transparent it is, except for making its internal financial figures available to the public.

Commissioner Tim Boyd has reviewed those financial documents - labeled "working papers" - and questioned the agency's spending habits for more than a month. Working papers, by state law, are not public record, county officials have said.

When Boyd cited some of those internal figures in a report he released on March 29, CVB attorney Philip B. Whitaker fired off a letter the next day to County Attorney Rheubin Taylor about "Mr. Boyd's blatant violation" of statutory confidentiality rules. The letter threatened legal action against the Hamilton County Commission if future breaches of confidence occurred.

Boyd has recommended cutting $2 million out of the CVB's county hotel-motel tax revenue stream, which is projected to be $7.8 million this year. The commissioner wants to use that money to pay the debt on a proposed $10 million athletic complex at Howard High School.

The CVB has projected it will bring in $1.1 billion in tourist dollars this year.

On Wednesday, CVB President Bob Doak and a host of tourism industry leaders appeared before the commission, answering questions about the agency's spending and asserting its impact on growing tourism dollars and tax revenues.

"We would welcome a county commissioner to come and look [at our financial records], but if that information is disseminated out in the public, it is a competitive disadvantage to us," Doak said, explaining another city could overbid the CVB to bring signature Chattanooga events such as Ironman to their city. "I'm not sure it's wise to publish your marketing plan, your business plan."

Boyd challenged Doak on the possibility that the CVB would let slip any business secrets based on financial records the agency has given him.

"These documents that I was provided do not include a business plan or a marketing plan and do not compromise the work of the CVB," Boyd said. "What it does show is the drill-down facts of where all the dollars are spent."

While Doak refused when Boyd asked him point-blank if he would release the working papers to the media, he did address a number of fiscal 2014 findings cited in Boyd's report.

The CVB president explained that a $6,000 payment to the Atlanta Braves was for in-game scoreboard advertising and announcements, while a $3,000 payment to the Redwood Grill in Santa Monica, Calif., was made on behalf of the Tennessee Department of Tourist Development. The tourist development agency was hosting a tour operator convention, but was unable to reserve the restaurant with a credit card. The CVB received reimbursement for the expense, Doak said.

The bureau also spent $992 at the Hilton Hotel in Miami as part of a trip to make a bid presentation to a police department association convention in an attempt to lure them to Chattanooga, he said.

"[Commissioners] are certainly entitled to ask questions," Doak said. "These are all very justifiable."

Although most of Chattanooga's visitors come from within a 150-mile range, the agency sometimes has to go far afield to bring in conferences and events, Doak said.

In a couple of instances, Doak did not have extensive records available when he refuted claims published in Boyd's report.

Boyd claimed the CVB spent $314,645 in conference and travel expenses in fiscal 2014, citing the agency's 1990 income tax return. Doak countered it only spent $120,000 in travel expenses that year.

The pair also disagreed on how much money the CVB spent to furnish its top-floor office in the SunTrust building downtown. Doak said the agency spent $63,000 on chairs, desks and tables. Boyd said a depreciation expense report showed the CVB had spent $970,340 for computers and furnishings.

After the meeting, Doak said he would need to research the discrepancy with the CVB's accounting firm, noting the agency had capital expenses associated with its old office as well as its new office.

Hamilton County Mayor Jim Coppinger said media reports on Boyd's concerns had alarmed him, stating perception was worse than reality.

"What's disturbing is how quickly things can get legs and continue to go," Coppinger said. "We do this at the expense of people who choose to serve the public, and we call into question their integrity and their credibility without facts."

Boyd has repeatedly said he has reported only what he found in CVB documents.

"We're talking about accountability and transparency," he said. "We're not talking about the good work the CVB does."

Commissioner Joe Graham praised the CVB and said he would not support cutting its cash flow. However, when the hotel-motel revenue stream hits the $12 million mark, a brick-and-mortar tourist site expansion should be considered, he said.

Mitch Patel, CEO and president of Vision Hospitality Group, said he believed even a 10 percent cut to the CVB revenue stream would be "detrimental."

Developer Ken DeFoor, who is investing $60 million to turn the "Gold Building" downtown into a Westin Hotel, voiced concerns of his own.

"I can tell you that had we known that there would be the possibility of CVB being cut, pulled back, we would have probably given second thoughts as to our investments," DeFoor said. "It would have given us a real pause to know we are not moving forward and upward."

Coming back around to the CVB attorney letter, Coppinger asked Doak if the CVB had or still intended to file a lawsuit.

"No, sir," Doak said. "It wasn't then, and it's not now and never will be."

Commission Vice Chairman Greg Beck criticized the threatening nature of the CVB letter.

Boyd said the county attorney had told him it was legal to discuss information found in the CVB's working papers, but he couldn't reveal the source documents, describing the matter as "a gray area."

Contact staff writer Paul Leach at 423-757-6481 or Follow him on Twitter @pleach_tfp.