CITY BUREAU TOO LAVISH, AUDIT SAYS REPORT CITES FREE-SPENDING PRACTICES TO PROMOTE L.A.

Byline: Mariel Garza Staff Writer

Los Angeles officials need to renegotiate the contract and impose tighter controls on the Visitors and Convention Bureau, which spent lavishly on luxury travel and high executive salaries despite a big drop-off in bookings, according to a report released Thursday by City Controller Laura Chick.

``While the LACVB is in full compliance with its current contract, this contract contains broad and undefined objectives that literally make any expenditure related to Los Angeles tourism allowable,'' Chick said in a letter to Mayor James Hahn about the audit's findings.

``Instead, the city's contract should be tied to specific, measurable performance goals,'' Chick said, adding that ``lavish and extravagant spending of taxpayer money must be a thing of the past.''

The audit, conducted by former state auditor Kurt Sjoberg and his Sacramento-based firm, cited the $350,000 salary and incentive package of bureau President George Kirkland, which it said is significantly higher than the average $240,000 for other chief executives in similar jobs.

The audit also cited Kirkland's split-dollar life-insurance policy with a $230,000 annual premium. Split-dollar insurance arrangements, which involve two parties agreeing to split the premiums or benefits, are often used as a type of employee compensation. In August, the federal government issued new rules to clarify taxation on such arrangements between employers and employees.

The audit also noted that the bureau's administration is reimbursed for luxury travel and meals, and gets paid membership to multiple civic organizations, and that the 2000-2001 staff retreat cost nearly $200,000.

Those expenditures are allowable but ``appear extravagant,'' the auditors noted.

The Los Angeles Convention and Visitors Bureau is a private nonprofit corporation that acts as a marketing agent for the city of Los Angeles, promoting it to conventions, trade shows and group tours.

The audit also made a number of recommendations to city officials, suggesting that they take more charge over the bureau by setting specific expectations in the contract with the bureau and participating in the board of directors.

Alan Rothenberg, chairman of the bureau's board of directors, agreed that the bureau needs some city oversight and that the board will take Chick's audit findings to heart.

``The bureau has already implemented a series of reforms, including expansion of the size of the 15-member board, implementing new guidelines for trade missions and changes in our sales incentive programs,'' Rothenberg said. ``This audit will provide us with further guidance for reforms that are already under way. Given the opportunity, these reforms will help make our operations as efficient as possible and attract more conventions and tourists to Los Angeles.''

The drop in convention bookings, which the audit mentioned, is in part due to the tourism slowdown felt nationwide in the past year, which is starting to turn around. Rothenberg said Los Angeles is poised to take advantage of that upturn.

``A new convention center hotel, which the city is planning for, will measurably boost Los Angeles' capacity to compete for business,'' Rothenberg said.