Okaloosa County BOCC — November 4, 2012 — Stewart TDD Recommendations 6-19 — reading text

agency which has been serving the TDC in this regard is the Zimmerman Agency (“Zimmerman”), located in Tallahassee, Florida. It has been providing these services since the early 1990s and has been reselected on several occasions through a competitive process. During the spring of 2011, a Request for Proposal was issued for advertising services by the Board. The two top firms selected were Lewis Communications (“Lewis”) located in Mobile, Alabama, and Zimmerman. These contracts were approved by the TDC and, ultimately, the Board. Each contract was for three years, with the ability of up to two one-year extensions. The Zimmerman contract provides for certain fixed monthly charges for services with reimbursement of costs and a potential add-on commission if the amount of media purchases exceeded $3,000,000 during a budget year. Lewis did not charge any fixed monthly amount, but rather was compensated by a commission on its purchasing on behalf of the TDC. As a result of the differing compensation, Lewis was primarily involved on a project-by-project basis (normally involving the Conference Center). Zimmerman was used primarily for the promotion and advertising of leisure-type or general tourism activities. Based upon a review of documents, this allocation of functions was not rigid Promotion Approval Process As set forth in the statute and ordinances, the primary purpose of the TDC is to act as an advisory board to the Board of County Commissioners relating to matters of tourism and promotion in the county, and it is also intended to provide oversight to assure that the expenditures are used for authorized purposes. Though contemplated as an advisory board only, our review has determined that the TDC has, over the years, become the primary decision maker as to the approval of promotional activities. This evolution of authority has developed over numerous years and began well before Bellinger was hired. As a result, the Board was rarely consulted about specific promotions and was normally only provided summaries of 6 promotional activities as an informational item only. This delegation of approval authority to the TDC represents a structural inconsistency with both the statutory and ordinance provisions. The TDC has in the past created various sub-committees. In the past these consisted of the Promotion Review Committee, Product Improvement Committee and the Executive Committee. Prior to the hiring of Bellinger, the approvals of promotional expenditures along with an analysis of the financial costs, were presented both to the Promotional Review Committee and then the TDC for review and formal approval by each. Additionally, the advertising agencies under contract with the County, generally participated in the preparation and presentation of promotional concepts to both the subcommittees and the TDC as a body. Following the hiring of Bellinger, there was a significant change in how promotional events were considered or approved. Initially, the advertising agencies’ participation in arriving at promotional concepts was significantly reduced and assumed primarily by Bellinger. Eventually, the advertising agencies were no longer asked to be present at the meetings of the Promotional Review Committee and its successor committee and the promotional and marketing activities were for all practical purposes totally controlled by Bellinger. In January 2011, the TDC eliminated the previous committees and created a single committee entitled the “Marketing Committee.” The Marketing Committee consisted of the Vice Chairman of the TDC, representatives of the five top industries in the area (hotel, condominium, restaurant, retail, and attractions), three members from the lodging industry and two members for qualified individuals or any business or industry. Persons who desired to serve on the Marketing Committee applied and their applications were screened by Bellinger, and under his direction, the Marketing Committee became the primary entity for the discussion of promotional concepts. As with the TDC itself, the authority of the Executive Director to direct the promotion and advertising expenditures has also evolved over the years. Under the previous policies of the TDC, the express approval of all promotions and advertising was required by both the various subcommittees and the TDC itself, and it appears that this joint approval was strictly followed by the prior Executive Director. However, after Bellinger’s employment, similar to the reduction of authority by the advertising agencies, the role of the subcommittees and the TDC 7 was substantially diminished and promotions and advertising were almost exclusively under his control. This restructuring of authority was eventually memorialized by the amendment of the TDC Operations and Procedures Manual approved by the TDC in February 2012. This amendment was never submitted to the Board or approved by them. The amendment approved by the TDC reduced its authority to approve promotions at all. That amendment, as approved by the TDC, provided as follows: As described generally in Sections E.200-600, the Executive Director is responsible for all aspects of the negotiations and administration of this contract with the exception that the members of the standing Advertising end—Prometion Marketing Committee and the Council members shali may have the opportunity to have artistic review over print, radio and television advertising product produced under this contract. The Committee’s approval shall be provided at noticed public meetings and a majority vote of those members present will be required for approval. To the extent that extraordinary circumstances preclude the possibility of a noticed meeting for this purpose, the Executive Director shall be solely responsible for the authorization of final release of any artistic product for publication. (language reflects changes made in policy). In reviewing the minutes of the Marketing Committee, the Promotion Review Committee, the Product Improvement Committee, the TDC and the Board, it is apparent that under Bellinger there was no formalized approval process for promotional activities. It appears that the primary entity for the discussion and review of potential promotional activities was the Promotion Review Committee, now reconfigured as the Marketing Committee.. The minutes of those meetings reflect that various promotional activities would be discussed and considered by the Marketing Committee in “brainstorming” sessions. In some of these meetings, the Marketing Committee would actually vote on whether to proceed with a proposed promotion. At that point, it appears that Bellinger would take this approval as authority to proceed without the necessity of a vote by the TDC. However it appears that Bellinger, on some occasions, did not 8 actually seek the affirmative approval of the Marketing Committee, but would proceed with the promotion based solely upon the discussions of the concept. Finally, it also appears that there some occasions where marketing expenditures were made by Bellinger that were neither discussed nor approved by either the Marketing Committee or the TDC. In reviewing the entire process for the approval of promotions, it is apparent that the Marketing Committee was considered primarily as a tool to assist the Executive Director in the development of promotional concepts. Though the Marketing Committee may be beneficial in terms of assisting in the development of concepts and ideas, it is not an authorized entity for the approval of expenditure of public funds. In reviewing the minutes of the TDC, there were discussions of potential promotional activities and others that were ongoing, however, we were unable to find any meeting where there were voting approvals of particular promotional events. Rather, Bellinger appears to have assumed exclusive authority for the creation and authorization of promotional events and the TDC was merely provided informational updates as to these events. In discussing past operations of the TDC prior to Bellinger’s employment, it appears that there was a more formalized process at the TDC level and that formal approval of promotional activities by the various subcommittees and the TDC was routinely obtained. However, even prior to Bellinger being hired, promotional concepts were not brought to the Board for approval. Though there were meetings where various promotional activities were discussed, these were generally informational-type sessions without any accompanying dollar cost figures attributed to these promotions. Upon Bellinger’s employment, there was a complete absence of structure. The entire promotional process appeared to rest solely upon Bellinger. The Marketing Committee and the TDC substantially delegated their responsibility to Bellinger. The Board was omitted entirely from the promotional approval process. In reviewing the practices and procedures around the State, (we surveyed only non-panhandle TDCs), most if not all of them had ultimate approval for promotional activities by their respective County Commissions and the TDC acted solely as an advisory body. Special Events Funding Generally, the TDC would receive requests from local entities for the funding of events within the community. As the process evolved, the Marketing Committee took on a greater role in evaluating these proposals. As its role increased, so did the potential for conflicts since the Marketing Committee is comprised of local business interests. In discussions with TDC members, it appeared standards and criteria were utilized in evaluating requests for funding of particular local events. However, those standards and criteria were not memorialized in the TDC Operations and Procedures Manual until the recent amendment which was approved by the TDC in February 2012, but never adopted by the Board. In several jurisdictions we evaluated, stricter standards have been established to consider the merits of these types of requests. The use of stricter standards would assist in providing clear guidance as to the funding process and avoid the appearance of conflicts. Furthermore, while most jurisdictions have made contributions directly to the requesting organization often in the form of a grant, it appears that under Bellinger, these payments were frequently made through the advertising agencies as pass- throughs. Budget Approval Process The budget for the TDC is approved by the Board. However, in the preparation of the budget, staff analyses are prepared almost exclusively in the context of the revenues that will be available and which may be used for a given purpose. For example, certain portions of the Tourist Development Tax pennies were dedicated for advertising and promotional activities and the entire amount included in the budget was based solely upon the projected receipts of these pennies that were anticipated during the upcoming fiscal year. No expenditure detail is provided; rather, there is an availability of several million dollars and absolutely no designation of uses except a broad category of “promotions.” In numerous counties around the State of Florida, the TDC adopts as part of the budgetary process a strategic or marketing plan on an annual basis, which is also approved by the Board. This plan attempts to identify in advance what is anticipated to be utilized for these promotions and the amount of funds allocated 10 for that purpose. The benefit from the adoption of strategic or marketing plans is so there is a clear delineation in terms of what the TDC, and ultimately the Board, intend to utilize the money for. It also presents a working document under which various reviewing entities can determine the extent of promotional activities which have been approved. No similar strategic or marketing plan has been formally adopted by the TDC or Board in Okaloosa County. Invoice Process In reviewing the approval process used. for