JOHNSON CITY, Tenn. (WJHL) – When they met June 7, leaders of the Johnson City Convention and Visitors Bureau (CVB) council had been seeking answers about their own budget for the entirety of 2020.
So had city commissioners, since city hotel-motel taxes of $687,955 (this year) comprise most of the CVB’s budget. The CVB promotes Johnson City’s resources, events and attractions to visitors and citizens — essentially bringing people here to put “heads in beds” and customers in restaurants and stores.
The lack of clarity had come in the wake of a changing of the guard at the Johnson City Chamber of Commerce, which has nominally overseen the publicly funded CVB for more than 30 years.
Longtime Chamber CEO Gary Mabrey retired in mid-2019. His successor, Bob Cantler, has changed the Chamber’s accounting software and merged the organizations’ checking accounts — both moves he told News Channel 11 are meant to improve operations — and CVB council members have unsuccessfully sought budget specifics ever since.
“The CVB council has expressed concerns about it and we’re just waiting for the Chamber to figure out how they’re going to provide those finances at this point,” CVB Council Chair Andy Marquart told News Channel 11 several days before the council’s June 7 meeting.
Concerned about the lack of details, Johnson City Commissioners had asked staff early this year to draft a “Memorandum of Agreement” (MOA) laying out specific guidelines surrounding the CVB-Chamber relationship and finances.
That MOA remains in draft form, but it specifically prohibits the CVB from loaning any funds — something it has traditionally done for the Chamber, while always being paid back in the same calendar year until the end of 2019.
“Five or six months ago it was brought to our attention that there was a suggestion to look at changing the way the accounting and banking of the CVB and the Chamber could possibly be handled,” City Commissioner John Hunter said. “That kind of made us revisit what the process of the past was and whether that still fit within the realm of what the city intends and desires.”
Cantler presented a long-awaited balance sheet June 7, but council members remained frustrated at its lack of specificity.
“There’s no breakdown between how much the CVB is paying its own staff versus the salaries of the Chamber staff, so that is a concern of mine,” Marquart said during the meeting. He had received the balance sheet just a few hours earlier.
“We’re five months into the year and the budget could have been, I would assume should have been seen sooner,” Hunter said after attending the same meeting.
“Tourism is a key component of Johnson City and the CVB’s an integral part of our success as a city,” Hunter said. “Moving people here, encouraging people to visit, that generates sales tax dollars, which helps us fund our top-tier public education system, helps us keep our property taxes low for our local citizens.
“Every dollar that they spend on bringing people here is a dollar well spent.”
That’s why Hunter was concerned when that meeting ended and members weren’t much more informed than they had been going in.
“We are expected to be transparent and deal with the funds that are given to us with clarity and the expectation to do the best we can for our citizens, so we should expect that from those we provide funds to as well,” Hunter said.
After the meeting, council members still didn’t have an exact accounting of how much of the CVB’s funding had gone to support “shared services” with the Chamber, with whom CVB shares a building, phones, and even some personnel costs.
Nor did they know whether Cantler planned to ask the CVB to begin shouldering part of his own salary. That’s something that had never occurred under Mabrey either, but something Cantler suggested was possible during a June 5 interview with News Channel 11.
“If a receptionist is shared, this portion of the receptionist’s time is to the CVB,” Cantler said in explaining the shared services and fixed costs such as rent. “Accounting is shared. My time is shared.”
Council members had learned a few things during the meeting they’d been wanting to confirm since January, though. Cantler finally confirmed to them he had merged the organizations’ checking accounts around the first of the year.
That prospect was something about which Council members had expressed concerns much earlier, one of them said during the meeting.
“I remember a budget was presented to us in January where Bob had said we’re going to combine CVB and Chamber into one checking account,” Council member Shannon Castillo said.
“Remind me, guys — didn’t we vote as a board not to vote on this budget because we weren’t even sure that was a legal thing to do to combine those public funds and private funds?”
Marquart and fellow board member Alicia Phelps concurred.
Board members also learned the Chamber had ended 2019 about $20,000 in debt to the CVB and that the balance had increased to $60,000.
What members still didn’t know after that meeting was exactly how much the CVB has been charged for shared salaries. And they didn’t know how Cantler proposed to pay back the CVB funds as the Chamber continues a capital campaign with the expectation of moving to newly renovated space inside the Model Mill near the corner of West Walnut and Sevier streets.
Cantler had discussed a repayment plan with Marquart before the meeting, but after the CVB Council refrained from passing its 2020 budget citing the continued lack of information, Cantler said he’d wait, too.
“I’d like to defer that as part of the conversation with the (MOA), because we may come out with a different strategy of how to make sure we do that,” Cantler said after Marquart asked him to update members on the loan payback plan.
“I think we can do the (MOA), the budget layout and the payback all in the same conversation.”
The changing of the guard and the MOA
With CVB Director Brenda Whitson having served in her role nearly as long as Mabrey served in his (several decades), the two parties were comfortable and familiar with each other.
“The CVB and the relationship with the Chamber and then ultimately the relationship with the city is based on a handshake that happened in 1982,” Marquart told News Channel 11. “So I believe that an MOA is the first step to really formalizing how the CVB receives and spends its money.”
For his part, Cantler told News Channel 11 he suggested something in writing after coming on board.
“When I came in and I said, ‘ok, we need to formalize this process a little bit better, because we want to formalize — is there a chance that the CVB could receive additional funding than they’re currently receiving,” Cantler said.
“So we wanted to have the steps in place to be able to have those conversations and that’s what the MOA would do.”
Cantler said the change from Peachtree accounting software to QuickBooks and the merging of the accounts was a positive step.
“We started looking at how other organizations handle their quasi-government funding,” Cantler said of the weeks after he came on board. “We spoke to different chambers and … some of those were able to combine (funds), and there’s better controls if I have them in an account to where I can reconcile them appropriately, I can true up expenses.
“If I have a phone bill, instead of writing two checks I can write one check to do that.”
He said the specifics for the balance sheet after the accounting software changeover had been delayed by COVID-19, but that “we’ll have a balance sheet that will be for the total organization and it’ll have on there if the CVB has reserve funds, what our cash balances are and so forth. And it would have any intercompany loans on there.”
As to the loan, Cantler said he understood the city’s position of wanting to restrict CVB funds from being loaned out. “We’re putting some controls and systems in place so the Chamber would maybe, if they’re in a cash crunch, would have to get a line of credit.”
Questions about Cantler’s salary, the merging of accounts and the Chamber borrowing from the CVB are among reasons for an MOA, Hunter said after Tuesday’s meeting.
“If there was a change in payment of people there needs to be tangible, direct explanations not just to, it could be this or it could be that, but ‘I will provide this service to the CVB,” Hunter said.
The commission stewards taxpayer funds, he said, so preventing loans to the privately funded Chamber is an important part of the MOA, Hunter said. Still, he added, with the city currently unaware of the Chamber’s financial position, he wants to combine accountability with grace as far as the current loan.
“The sooner the better, but I also think it’s important to be reasonable in trying to structure something that would not cripple the Chamber, but also get that trued up.”
Hunter called the draft MOA a good start.
“I think we’re going to talk about that next week in the commission chambers, of maybe some caps or some more firm guidelines that can help make sure that the funds provided by the taxpayers to the CVB go to the exact intended purposes,” Hunter said.