Citing cost overruns and apparent disregard for procedures, Costa Mesa officials said Thursday that the city’s 60th anniversary party last summer ended up about $84,000 in the hole.
The three-day “60 & Fabulous” celebration cost some $518,000 — significantly more than the initial $315,000 estimate — and generated far less income than organizers had projected.
Of that final figure, the city’s cost was $209,000, which includes paying the $84,000 overage and is more than the $125,000 the City Council originally allotted for the party.
The Costa Mesa Conference and Visitor Bureau, a marketing agency independent of City Hall but funded by hotel tax revenue, chipped in the largest chunk of cash: $232,000.
The event generated $78,000 in revenue, including sponsorships, ticket sales and merchandise sales.
The new total is about $100,000 higher than the estimate reported in an earlier Daily Pilot investigation, which in December reviewed more than a year’s worth of expenditures approved by the council toward the 60th anniversary festivities.
Officials on Thursday said the anniversary party had been virtually paid off, and all the money is accounted for.
“The multiple investigations have found no evidence to date that public funds were used for personal gain or were unaccounted [for],” the executive summary reported. “However, purchasing policies and procedures were not adhered to in many cases.”
Many of the findings, however, were forwarded to the Orange County district attorney for review.
On Thursday afternoon, after several months of withholding documents and denying public records requests from the Pilot and concerned citizens, officials released more than 1,000 pages — a tiny fraction of which had been redacted — related to the planning, finances, contracts and other matters concerning the party.
In an interview with the Pilot, city officials said almost 20 people, both inside City Hall and outside, were involved in the roughly $45,000 independent investigation into the festival. That figure, they noted, did not include staff time and police costs.
City CEO Tom Hatch called the city’s six-month anniversary review the most comprehensive and thorough of any in recent memory.
It involved a financial audit, an independent analysis of revenues and expenditures, an independent personnel investigation, a criminal investigation and some reviewing of Costa Mesa’s purchasing policies and procedures, according to the report’s executive summary.
The investigation did not rise to the level of a more serious forensic audit, however, because no money was found to be missing, Hatch said.
The party’s primary organizer, Public Affairs Manager Dan Joyce, has been on paid leave since Aug. 6.
City officials have declined to comment on Joyce, noting that personnel matters are confidential.
Christine Cordon, special events coordinator and assistant recreation supervisor, was also put on paid leave when Joyce was. She returned to work Dec. 30.
Findings forwarded to D.A.
The report’s executive summary says the criminal investigation was forwarded to the Orange County district attorney’s office for review because of possible municipal code violations.
“As a matter of practice related to the criminal investigation that would indicate possible municipal code violations, or other violations of law, we would submit the case to the D.A.'s office for review, and as a layer of accountability and analysis,” said Police Chief Tom Gazsi.
The June 28-30 party and street festival utilized Fair Drive, which was closed off for a few days, the front of City Hall and the adjacent Orange County Fairgrounds. Admission was free, though food and concert tickets were sold. An estimated 16,000 people attended over the three days.
A 60th anniversary citizens committee began meeting in December 2012. From the beginning, organizers seemed intent on making the 2013 party bigger and better than the “CostAmazing” 50th anniversary celebration in 2003, which attracted 800 people to the Pacific Amphitheatre.
Initial reactions to the summertime event were largely positive, though soon after the event wrapped up, the 60th committee began airing concerns about what went wrong behind the scenes.
Some members cited minor things — like running out of ice cream and having too few plates for serving the 1,700-pound chocolate cake — but there were also more significant grievances, like alleged “mistreatment” of the volunteer workforce.
Still, the committee noted, it was “a miracle” to accomplish an event of this scope with only about six months of planning, and most everybody seemed to have a good time.
Event was ‘overly ambitious’
In addition to a “breakdown” of internal communication channels, there was pressure to limit planning for the 60th event to about six months instead of a year — the latter being the amount of time, officials surmised, that probably would have been needed to do things in full accordance with city procedures.
The event planning’s “shortcomings” that failed to meet the city’s “high standards” were narrowed to four topics in the report: unbudgeted growth of the “overly ambitious” event, escalating costs, violation of city purchasing policies and poor cash control.
One particular overrun, officials said, was the $143,200 in rental costs that were originally budgeted as $62,500. Another was the $117,000 toward entertainment, an amount originally earmarked as $35,000. Notables on the music lineup were Eric Burdon and the Animals, Berlin and Chevy Metal, which featured some members of the Foo Fighters.
The acquisition of those three bands — and more than 25 other aspects of the party — was not made with the required purchase orders, according to the city’s report.
“These lapses were apparently related to time constraints and lack of familiarity with the policies,” the report said. “However, to date, the investigations have found no evidence of funds being spent on improper purposes.”
Several components of the party — including public relations, ice, banner printing, fireworks, electrical work and security services — did not go out for competitive bidding, the report stated.
City code stipulates competitive bidding for purchases over $1,000, and municipal code requires it for over $5,000.
Review of two outside contractors
Before Thursday’s release of the documents, some event contracts faced public scrutiny.
In December, Roland Barrera, owner of SUN Grp and the Casa bar in Costa Mesa, was identified as a suspect by the U.S. Securities and Exchange Commission in a Ponzi scheme that targeted a Newport Beach man for millions of dollars.
Unrelated to the SEC matter, Costa Mesa paid Barrera about $125,000 as an entertainment consultant for the 60th, according to the released documents.
Officials said the bands, and associated aspects they required, were the single greatest factor that drove up the cost of the 60th party, but the review found no evidence of impropriety.
Newport Beach-based KB Event Management helped handle the event’s food and drink portion with another affiliated entity known as O.C. Tastefest. According to documents provided to the Pilot by KB in October, Tastefest made a slim profit from its participation.
KB’s co-owner is Scott Baugh, chairman of the Republican Party of Orange County and friend of Mayor Jim Righeimer’s. He has a private office near the one occupied by Righeimer’s private business in Newport Beach. The mayor’s critics questioned that proximity in relation to the 60th.
On Thursday, Hatch said Righeimer was not involved in the selection of KB.
Though KB was not chosen through a competitive bidding process, Hatch said the firm was picked by city staff because it had already worked in Costa Mesa before by helping stage the annual O.C. Marathon.
Reforms to follow
The silver lining in all this is a series of reforms aimed at ensuring the improprieties don’t happen again, city officials said.
The reforms include a “refresher training course” for all employees “to ensure the standard purchasing process is followed from start to finish.”
Hatch and the city’s finance director will also work to create strong checks and balances mechanisms. A city “buyer” position was also recently approved by the council. That person will add an “additional layer of review” and assist in training of the city’s procedures.
Lastly, Costa Mesa will establish the Purchasing Quality Control Committee, made up of city staffers tasked with meeting monthly to review purchasing policies and recommend improvements. Those improvements will also go the citizens Finance Advisory Committee and the council for consideration.