Report Praises Management of Cruise Project

Strongly defending the San Diego Cruise Industry Consortium amid questions over the group’s budget, San Diego City Manager Sylvester Murray on Tuesday said that city funds used in the program “were spent legitimately and correctly” and that expenditures were properly documented.

In a report also signed by a top local tourism industry official and a cruise consortium leader, Murray praised The Harrison Enterprises, the firm that runs the cruise program, saying the company “has worked in a very honest and professional manner.”

“I hope this puts the whole thing behind us--the past few weeks haven’t been much fun,” said Donald Harrison, whose handling of the cruise program has been closely scrutinized in several recent news reports. “My stomach muscles are just beginning to get back to normal.”

Tuesday’s report comes in the wake of recent inquiries from the press and pollster Ralph Todd over how Harrison’s firm has spent nearly $200,000 in city funds in the past 2 1/2 years on the consortium, established to promote San Diego as a home port and destination for cruise ships.

In particular, questions have been raised over the fact that Harrison, whose firm receives a monthly fee of $4,670 in public funds, plus expenses, for running the cruise program, also is a top $3,000-a-month aide in the mayoral campaign of City Councilman Bill Cleator, who trumpets the cruise program’s success as one of his major accomplishments.

The city’s lack of detailed documentation of the cruise program’s expenses also generated other queries over whether the public funds were being properly spent.

However, Tuesday’s report reinforced Harrison’s prediction last month that “everything has been handled in an absolutely proper way” and that receipts would prove that he had “not even a dollar to hide.” The two-page statement, accompanied by 36 pages of cost figures detailing the consortium’s expenses, was signed by Murray; Allan Frostrom, chairman of the San Diego Convention and Visitors Bureau (ConVis), the group that acts as the cruise ship program’s fiscal overseer; and Ray Lubach, the consortium’s vice chairman.

“Based on the review of the records, the three men are satisfied that the public monies were spent legitimately and correctly based on the purpose for which they were given, and adequate documentation of such expenditures exists and is in order,” the statement said.

Cleator, whose campaign aides had expressed concern that the controversy could damage his candidacy, said Tuesday night that he was “absolutely tickled” by the report.

“It’s pretty hard for me to do a flip at age 59, but that’s what I felt like doing,” he said.

Tuesday’s statement was issued following a meeting earlier Tuesday at which Murray, Frostrom, Lubach and top financial officials for both the city and ConVis reviewed the cruise consortium’s 1985 expenditures. Harrison and Cleator also were among the dozen people who attended that meeting at ConVis’ downtown office.

Harrison requested the meeting, because, he explained, “our family and our business have been getting pilloried, and we knew this was the only way to defend our reputation.”

At the meeting, Harrison provided the officials with financial records and copies of receipts for all of the cruise program’s expenditures last year in three accounting categories--publicity, conferences, and travel and local contact expenses. Pollster Todd, who conducts surveys for the San Diego Union and other clients, had requested documentation of those expenses as well as the consortium’s staffing bills, which remain constant via the monthly retainer paid to Harrison’s firm.

Included among the receipts are bills totaling more than $3,000 for trips and other expenses incurred by Cleator, chairman of the consortium’s board of directors. Those expenditures include about $780 in air fare, hotel costs and miscellaneous bills stemming from a promotional trip to Miami last fall; nearly $460 for a trip to San Francisco and Los Angeles; about $580 for a Seattle trip, and more than $1,300 for a cruise conference in New York City and a related sales trip to Miami.

Those totals do not reflect some of Cleator’s meal expenses during those trips; rather, some bills are listed under headings such as “San Diego delegation,” making it impossible to determine the cost of an individual’s meal.

In addition to expressing satisfaction with Harrison’s financial record-keeping, the report also emphasized that the consortium’s board of directors reviews and approves all major expenditures made by Harrison’s firm.

“The cruise industry consortium advises us . . . that The Harrison Enterprises has worked in a very honest and professional manner,” the statement concluded. The financial records enclosed with the report note, for example, that Harrison has donated more than $43,000 to the consortium through advertising placement fees that his firm is entitled to but has not taken, using the money instead to purchase additional ads.

The statement also described the cruise program as an overall success, a claim based on the fact that the number of cruise ship passengers who visited San Diego grew from about 29,000 in 1983 to more than 104,000 last year.

“The cruise ship program . . . has enhanced the general image of San Diego as a destination and its economic viability, and we encourage the program to continue,” the report said.

Since the beginning of the controversy, Harrison has insisted that his work on Cleator’s campaign has not caused him to neglect the cruise program. And, while clearly pleased that Tuesday’s report exonerated him, Harrison conceded that the episode has “left a pretty bitter taste in my mouth.”

“Even though they say a lot of nice things in the statement, I just feel completely wrung out by this whole process,” Harrison said.

“We feel that we’ve really been victimized as a business by people who demanded something of us that even our own clients had never asked for. And when we said yes, that we could document all these expenses but it would take some time, we were made to look like we’d done something wrong because we couldn’t produce it overnight.”

The twice-monthly financial statements that Harrison submits to ConVis do not include copies of receipts or other documentation of expenses. However, before the recent controversy, neither ConVis nor the city had requested such backup documents from Harrison.

In addition, both ConVis and city financial officials have emphasized that the consortium’s record-keeping practices satisfied all parties involved and are similar to those used in other city programs, which also do not provide specific details on how funds are spent.

“What bothers me is that, all along, we were giving ConVis exactly what it wanted, and ConVis was giving the city what it wanted, and we were still made to look like we were doing something wrong,” Harrison complained. “It was kind of a ridiculous position to be in.”

The cruise consortium is financed with both public and private sector funds. This year, the city has allocated $240,000 in hotel tax revenue for the program, while most of the private contributions are in the form of so-called “in-kind” services such as free hotel rooms, air fare, meals and tickets to sporting events or plays for visiting cruise company executives.

Under a contract with the city, ConVis acts as the cruise program’s fiscal agent, and in turn contracts with Harrison to provide day-to-day management of the program. In essence, ConVis serves as a financial middleman between the city and Harrison’s firm, with the hotel tax funds being funneled from the city to Harrison via ConVis.

While neither the city nor ConVis have asked Harrison to begin to routinely provide receipts along with his bills, Harrison said after Tuesday’s meeting that he intends to “start sending them every receipt we get” over $25.

“We might end up giving ConVis and the city a lot more paper work than they want, but we feel that’s something that’s in our best interest,” Harrison said. “I don’t want to have to go through this again.”