The Dunedin Chamber of Commerce: its cozy relationship with government and its odd finances

During a four-year period ending September 30, 2015, the Dunedin Chamber of Commerce received $74,500 in government grants from the city and the county. The chamber’s cash balance rose by about the same amount ($70,000) during that same time period. The chamber is a private corporation, not a government agency, yet it receives money from the city without a contract specifying what the money is to be used for.

In this investigative article, we will focus on four topics:

  1. Public funds provided by the City of Dunedin to the chamber
  2. Public funds provided by Pinellas County to the chamber
  3. The chamber’s high cash balance and apparent accounting irregularities
  4. The close relationship between chambers of commerce and government

As explained below, neither chamber president Lynn Lynn Wargo nor chamber board chair Jane Sweeney have responded to questions from DR (DunedinReporter.Com) about these matters.

1. Public funds provided by the City of Dunedin to the chamber

The chamber receives $10,000 per year from the City of Dunedin on a no-bid, no-contract basis. In addition to grant money, the city pays a $1,825 annual membership fee to the chamber.

Chamber president Lynn Wargo spoke to DR on September 14th and said she had “no concerns” about how it looks that the chamber receives $10,000 per year from the city without a written contract specifying what the money is to be used for. Wargo said that city funds are used to keep chamber offices open on weekends.

bujalksi_wargo_cropped
Lynn Wargo (right) with mayor Julie Bujalski (left) during an official visit to Toronto in 2015.

Every year, the city grants the Dunedin Chamber of Commerce $5,000 out of the General Fund, and another $5,000 out of its  Community Redevelopment Agency (CRA) fund.  But if the money goes to a single purpose, as Wargo claims, why does the city split the cost between two different funds?

Under Florida Statute 163.356, “community redevelopment” is a governmental function to deal with “slum and blighted areas”. However, the chamber does not have a program to deal with “slum and blight”, nor does the chamber appear to operate in such depressed areas.

Additionally, the chamber’s stated tax exempt purpose of “promotion of the business commerce with the business community of the City of Dunedin” does not include “community redevelopment.”

After DR started asking questions about mayor Bujalski’s preferred status in the city marina, city attorney Tom Trask ordered city staff to not answer questions, not return phone messages, and to not respond to e-mails from from the DR reporter. Therefore, finding out why the city distributes CRA funds to the chamber may be difficult. The city is only obligated to respond to public records requests.

According to the latest available CRA annual report, the CRA expended $517,898 in one year. The CRA’s governing body, which exercises oversight, has met for a total of only 8 hours in the last 5 years, thus averaging 1.6 hours per year. Wargo is a member of the CRA’s Citizen Advisory Committee, which the CRA’s governing body relies on for advice on how to expend CRA funds.

2. Public funds provided by Pinellas County to the chamber

The chamber also used to receive public funds from the Visit St. Petersburg/Clearwater, the Pinellas County tourism agency. Pinellas County’s public records “Spending in the Sunshine” portal shows that the chamber submitted three invoices to the county on September 22, 2015. All three invoices were dated the same day, numbered sequentially and each was for $2,500. The invoices were issued 9 days before the of the end of the fiscal year for both organizations.

Wargo did not explain why the transaction totaling $7,500 was structured this way, rather than submitting one invoice with three line items.

The chamber no longer receives grant money from Pinellas County as of 2016, but county records show that all other nearby chambers continued to receive grants from the county in FY2016. That fiscal year which ends on September 30. The Upper Tampa Bay Chamber received $6,210, the Tarpon Springs Chamber received $15,000, even the much smaller Palm Harbor Chamber with an annual revenue of $136,151 received $3,910 in grants from Pinellas County during FY 2016.

Even the Central Pinellas (Largo) Chamber receives county funds. DR is in the process of determining why the Dunedin chamber no longer receives grant money from the county. The county continues to pay a $425 annual membership fee to the chamber.

accounting_american_style

3. The chamber’s high cash balance and apparent accounting irregularities

The balance sheet on page 11 of the chamber’s most recent federal tax return shows a cash balance of $169,766, an unusually large amount in relation to the chamber’s annual revenue of $242,461. With reported liabilities of less than $430 in each of the last three years, the chamber’s finances look more like that of a charity than those of a chamber of commerce {see footnote 1}.

The Dunedin Chamber’s cash balance is also much higher than the cash balances reported by the Tarpon Springs Chamber ($4,102) and the Upper Tampa Bay Chamber in Oldsmar ($48,181). These two chambers have slightly higher income than the Dunedin Chamber, with both reporting annual revenue near $274,000 in their latest tax returns.

As mentioned in the first paragraph of this article, the rise in the chamber’s cash balance over a four-year period is just slightly below the amount the chamber received in public funds during that same period. While the high cash balance is odd to say the least, the tax return of a separate legal entity also housed at the chamber offices reveals a noteworthy accounting irregularity.

In its 2011 federal tax return, the The Dunedin Chamber Cultural and Educational Foundation (DCCEF) reported receiving public funds from the city (excerpt of their tax return immediately below). Yet when DR made a public records request to the city, city staff could not find records of any payments to the DCCEF.

 

dccef_door

We inquired further, citing the tax return. Allison Broihier, Budget Manager for the City of Dunedin, looked into the matter and told DR:

“After a thorough review of our Accounting records, there are four (4) contributions made to the Dunedin Chamber Cultural and Educational Foundation THROUGH the Dunedin Chamber of Commerce. Our Finance Department cuts checks based on forms completed by internal city departments, therefore payment was directed by staff to be made to the Dunedin Chamber of Commerce, not the Foundation.”

The memos accompanying the two payments totaling $6,000 make no mention of DCCEF, only the chamber itself. Also, the two checks were made out to the chamber, not DCCEF.

We made a public records request to the city for the original application for funds – it shows that the chamber (not DCCEF) was the applicant asking for funds from the City’s “Commercial Building Facade Program”. We wanted to know why this $6,000 was reported on DCCEF’s  tax return, and not on the chamber’s tax return where it properly belongs.

We would have liked to ask chamber president Wargo this very question. However, Wargo has already not responded to one set of questions from us. Our policy, which was mentioned first in our e-mail to Wargo, is that if a public figure does not respond to our questions (even if it’s just to say “no comment”), then we will never ask that person questions again ahead of an article. We don’t want to waste their time, or ours.

sweeney_jane_in_shop_croppe
Jane Sweeney at her business

Instead, we turned to Jane Sweeney for answers. Sweeney is the chairwoman of board for the Dunedin Chamber. Sweeney is also the owner of  MJ Fashions & Gifts at 314 Main Street, located across the street from the chamber office. As a board member, Sweeney has fiduciary duties towards the members and other parties.

“I don’t get involved with the finances, I really have nothing to do with it” was Sweeney’s immediate response when we reached her via phone. Sweeney was attending an event, so we agreed to send her our urgent questions via e-mail. We also asked her to call us back when she had a moment.

The next morning, Sweeney e-mailed us and said “I will be in contact with you. Please do not contact me on my personal cell phone or business phone.” Sweeney was made aware of our publication deadline, but DR received no further communications by the deadline. We will publish Sweeney’s response when we receive it.

The application Wargo filled out with the city provides the most likely explanation for why the grant funds were laundered through the chamber before showing up on DCCEF’s tax return. As a condition of receiving grant funds from the city, Wargo had to provide notarized attestation that the applicant owned the building that the grant money was going to be spent on. But the chamber owns the iconic building at 301 Main Street, not DCCEF. Therefore, DCCEF was not eligible to receive those funds. Public records show that DCCEF has never owned the building.

compliments2accountingAt some point in time, city staff decided that the city was providing funds “to DCCEF through the Chamber” (see above statement from the city). Again: the checks issued by the city were made out to the chamber, yet the income was reported on DCCEF’s tax return.

Incorrectly reporting the $6,000 city grant on DCCEF’s tax return allowed the chamber to report fewer government grant dollars received than it actually received. These transactions took place at a time when the Great Recession was biting hard and large contributions from the city to the chamber might have raised question from citizens. Instead of raising questions then, these events from five years ago now raise questions about the chamber, and about transparency in the city’s finances.

Other questions around the chamber’s accounting also remain unanswered. For example, the chamber’s 2013 tax return shows it operating under a “Modified Cash” accounting basis. On the 2014 and 2015 returns, after a change in accounting firm, no accounting basis is given. Furthermore, it appears that the chamber is not reporting all government grants on its federal tax returns. If true, it not only reduces transparency, it would also violate IRS reporting requirements.

People familiar with the chamber have told DR that Wargo takes 5 or more weeks of vacation per year and an unusually high number of sick days, particularly right after a vacation. That would only be the business of dues-paying chamber members if it wasn’t for the fact that the chamber receives so much government money. For its 2016 fiscal year, all of that government money came to the chamber from the city on a no-bid, no-contract basis.

4. The close relationship between chambers of commerce and government

The close relationship between chambers of commerce and government has been a topic of frequent and long-standing criticism, In 2007, the Wall Street Journal’s editorial board member Stephen Moore argued that “many chambers of commerce on the state and local level have become, in effect, lobbyists for big government.”

big-govt_modIn the “government” category, the chamber lists the following as members on its website: the City of Dunedin, the city’s CRA (Community Redevelopment Agency), the Pinellas County Economic Development department, and elected officials Jack Latvala and Chris Sprowls. However, the Pinellas Suncoast Transit Authority (PSTA) and other government agencies are not listed in the “government” category. Whether all member government agencies pay annual membership fees, and how much those fees are, is not clear. Most importantly: what benefits do these agencies receive as a result of their membership?

Government agencies using tax dollars to be members of chambers of commerce is questionable, given that the agencies do not engage in a chamber’s core mission: commerce. Such memberships are also a conflict of interest minefield. As an example, the Dunedin Chamber receives membership dues from the city, the county and PSTA, agencies that all saw its governing bodies endorse the Greenlight Pinellas tax hike in 2014.

ntft_signwaving
No Tax for Tracks sign-waving event in 2014

Unsurprisingly, the Dunedin Chamber also endorsed the Greenlight tax hike. They did so without polling or asking its members. Wargo told DR that she felt “no pressure” to endorse Greenlight from its government agency members who also endorsed it.

The referendum measure failed at the polls with 62% NO, and failed by an even larger margin in Dunedin. A grassroots movement called “No Tax For Tracks” is widely credited as having defeated the measure.

As was the case with its support of Greenlight Pinellas, the chamber is supportive of spending $81 million of public funds to keep the Toronto Blue Jays in Dunedin for another 25 years. The chamber board is likely to once again make that decision without polling their members, and without asking: should government subsidize any form of entertainment?

In May, the Tampa Bay Times reported that a prominent professor of economics said that “officials are engaged in something fundamentally fraudulent” when pushing for public funding of pro sports teams, and that the Blue Jays “are shoving their cost to the public … hustling the taxpayer for monies that will rebound to (the team’s) bottom line.”

No matter what the situation, it appears that the chamber’s position is always aligned with the government agencies who fund the chamber.

As always: DR reports, and the readers decide. Please like our Facebook page to learn when we publish new articles.

We wish to thank Allison Broihier, Budget Manager for the City of Dunedin, for her exceedingly prompt response in providing the public records we requested.

————————–

Footnotes

1/ Specifically, the key ratio

(Short Term Assets – Short Term Liabilities) / 12 Months Expenses

is 0.77 and rising.

2/ The federal tax returns of non-profit organizations are open to public inspection as a condition of their tax exempt status. The tax returns for most non-profits can be found on the free service Guidestar.org.

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4 thoughts on “The Dunedin Chamber of Commerce: its cozy relationship with government and its odd finances

  1. Dunedin has become a boutique town managed for the benefits of its merchants and developers. The average citizen gets little direct benefit. Dunedin is the only Pinellas County town where homeowners are not permitted to keep small boats in their driveways, but a ride through Dunedin will show many homes where parking violation have been uncited for years. Please visit my fb page Dunedin Boat Parking for more details. The same Code prohibits contractors from keeping utility trailers in their driveways. Our Mayor had a utility trailer parked in her driveway for years until I pointed out that it was hypocritical of her to object to my boat while she kept a trailer. The Commissioners have generally ignored my question “why is Dunedin’s Code different” from the Codes of other waterfront Pinellas Cities.

    Liked by 1 person

  2. It appears that the case for calling in a complete IRS audit of city and chamber of commerce finances and perhaps a states attorney general investigation into the matter is called for if the reporters information and facts are correct.

    Like

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