Arts group faces cuts in its taxpayer funding

The OneColumbia arts advocacy group has been spending public money inappropriately and could lose its taxpayer funding, according to city officials and two external audits.

In its first five years of operation, OneColumbia – a nonprofit group born with the backing of Mayor Steve Benjamin – has received almost $670,000 from the city to operate, records show. That money comes from meal taxes. The organization has asked for nearly $177,000 more for the upcoming fiscal year.

However, an auditor has questioned thousands of those expenses, including money spent on food and alcohol, saying they are ineligible to be reimbursed under state law and city policy. OneColumbia for Arts and History acknowledges it has spent nearly $9,000 on food and beverages, including for its board meetings and board retreats.

OneColumbia has been using meal taxes, paid by patrons of the city’s restaurants and bars, to pay for almost all of its bills, including its utilities, water bills, insurance bills and the entire salary of its executive director, according to expense claims examined by The State newspaper and the city staffer who oversees claims for those public funds.

Other recipients of meal-tax money do not get or even ask for reimbursement of all the expenses that OneColumbia has been receiving, said Libby Gober, an assistant to City Council. Gober oversees reimbursement requests submitted by about 85 cultural and entertainment organizations that get a share of the $10.5 million that the meal tax is expected to generate this fiscal year.

OneColumbia is not a city government organization. It was created to centralize advocacy and coordination of Columbia’s cultural events and to market them to tourists. Critics say OneColumbia duplicates other arts promotion efforts, delivers few cultural activities and creates programming that competes with other organizations for patrons’ time.

Asked if any other group gets as much of its funding from the meal tax, Gober said, “I do not think there is anyone else that we fund their entire budget, and that is what triggered the auditor’s attention.”

As of this week, the city was questioning $28,882 in OneColumbia expense claims for the six-month period that ended Dec. 31, 2015, she said. Gober has not received expense claims for expenditures since Jan. 1, 2016, and has not re-examined claims for previous years.

“We’re trying to establish that those dollars were eligible expenditures,” Gober said of the nearly $29,000. “I want our auditor to be satisfied that we have the back up for every dollar that we’ve given them.”

Red-flag expenditures

Among the reimbursement claims that raised questions are:

▪  The entirety of the group’s executive director salary, now $50,000 a year

▪  $8,865 for food and beverages, about a fourth of that total going to wine and dine OneColumbia’s board

▪  $1,052 for beverages from Morganelli’s Party Shop, a Forest Drive liquor, wine and beer store that supplies alcohol for OneColumbia activities

▪  $1,300-a-month in rent for the group’s 1,400-square-foot Taylor Street office. The building is owned by businessman Tom Prioreschi, according to Richland County tax records. Previously, the organization rented from Barbara Rackes, who was among the founders of OneColumbia and remains vice president of its board.

▪  Thousands of dollars to cover South Carolina Electric & Gas Co. utility bills for OneColumbia’s office. Monthly bills vary with the larger ones in the neighborhood of $300.

▪  $4,500 for a study of the city’s arts workforce and its economic impact on Columbia

▪  $4,336 for a Nikon camera, a 27-inch TV, a mini iPad and other materials for a conference room that is available to arts groups at OneColumbia’s office

▪  $2,000 for a facilitator at two board retreats to help craft a strategic plan

OneColumbia: Legal opinion supports reimbursements

OneColumbia director Lee Snelgrove said his organization submits all of its expenses because of a March 2012 legal opinion from then-city attorney Ken Gaines and a September 2013 letter from city manager Teresa Wilson.

Gaines wrote he was asked whether it was legal to use meal taxes for office rental, to pay the director and to provide other services “to increase arts and history tourism” in the city.

Gaines wrote the only appropriate use of meal-tax money, as listed in state law, was for “advertisements and promotions related to tourism development.” Because the law did not spell out the meaning of that phrase, Gaines wrote, “I believe it is in Columbia City Council’s discretion to legislatively determine that OneColumbia’s proposed mission and budget are activities which constitute ‘advertisement and promotions’ ... ”

But Gaines qualified his position. “I cannot state with certainty how the Attorney General would opine or a court would rule if asked to address this issue.”

Auditor cites deficiency in city’s bookkeeping

OneColumbia’s spending habits came to a head last month when the city’s external auditing firm, WebsterRogers, questioned some of its expenses in its financial report for the city’s fiscal year that ended June 30, 2015. WebsterRogers had raised a red flag previously about whether meal-tax money was being spent the way state law allows.

The auditor’s most-recent report prompted Councilman Moe Baddourah to ask council to consider hiring an auditor who would review all reimbursement claims for meal-tax money.

When City Council meets Tuesday, citywide Councilman Howard Duvall said OneColumbia faces the prospect of losing its funding for the rest of this fiscal year – or it might get a one-time bailout.

Snelgrove said he is hopeful a solution will be found. “I would think that we could work with the city to find some solutions.”

Duvall agrees. “There is a possibility that council won’t support its continued existence,” the councilman said. Short of that, council might agree to use general fund money to help OneColumbia through June 30, the end of the fiscal year, he said.

During those three months, the organization would have time to find other sources of money. “If not, I think OneColumbia might not survive,” Duvall said.

Efforts to reach Benjamin Monday for comment were unsuccessful. His aide said he was out of town.

Taxpayers fund 99.9 percent of group’s budget

During a March 15 council work session, WebsterRogers auditor Bud Addison publicly found fault with allowing any organization to get its entire budget from meal-tax revenue.

Addison never publicly mentioned OneColumbia by name. But he noted spending tax revenue on food and drinks is not legal under state law or city policy.

OneColumbia gets 99.9 percent of its overall income from meal taxes, commonly called “hospitality” taxes, according to city records. And city staffers and council members said the organization is the target of Addison’s reviews.

Addison did not respond to a reporter’s request for an interview.

The external auditor reminded council he had pointed out similar problems during his audit for the fiscal year that ended June 30, 2014. “(W)e noted several expenditures for food and beverage items that were reimbursed,” he wrote in that year’s management letter that accompanied the audit. “We believe food and beverage expenditures do not fall within ... eligible categories.”

OneColumbia has received its meal-tax income by going directing to council. It has never sought funding through the citizen advisory committee that vets such requests.

City Council – which unlike the advisory committee does not scrutinize financial data and other records – doles out the lion’s share of the millions in revenue collected largely from patrons of the city’s restaurants and bars.

Duvall and Gober said they did not know that OneColumbia’s rent was being paid by the city.

Asked if any other meal-tax recipient gets its rent paid, Gober said, “Definitely not. We don’t allow it for anybody else.”

Snelgrove said, “We submit all our expenses as transparency to the city.”

This story was originally published April 4, 2016 at 7:37 PM.