I know the proponent's arguments for this facility and while they indeed have merit, it's a matter of priorities in my mind.
Review slams MDHA on Nashville convention center
Agency officials 'astonished' it could lose job
A review of pre-development work on the proposed Nashville convention center found contract problems that could cost the Metro Development and Housing Agency its role in the project, top city officials said.
The review by Kraft CPAs "indicates serious flaws in contracting practices by MDHA. The errors made were in violation of MDHA's policies," Metro Law Director Sue Cain and Finance Director Rich Riebeling wrote Wednesday to Phil Ryan, MDHA's executive director.
"Your response to these questions will allow us to determine whether it is of the Metropolitan Government's best interests to continue working with MDHA on this project."
Ryan and MDHA's board chairman and vice chairman replied in a letter to Cain and Riebeling that they were "frankly astonished" by the prospect that the agency would be taken off the $585 million project.
"We don't believe your characterization of the report accurately portrays the manner in which MDHA handled the pre-development activities," they wrote.
Cain hired Kraft CPAs after MDHA's work came under intense scrutiny last summer, causing political and public relations problems for Mayor Karl Dean and the convention center, his signature initiative.
The agency's records showed it had been billed for more than $458,000 by public relations firm McNeely Pigott & Fox, which had an initial contract capped at $75,000.
Kraft said it reviewed six procurement processes, 12 contracts and 63 invoices and found several problems, including changes in payment amounts that weren't approved by MDHA's board, a "commitment" for more than $104,000 that the board didn't get a chance to review, and a vendor being paid under terms different from those in its contract.
The review also found no contract for $350,000 spent by the Nashville Convention & Visitors Bureau for the "Blitz Campaign" for the proposed Music City Center. Nor was that expense approved by MDHA's board.
Kraft also discovered 12 billing errors in McNeely Pigott & Fox's invoices and said MDHA had "significantly understated" the need for PR work on the project, resulting in an agreement for $75,000, which the firm billed for in just 11 weeks.
MDHA ultimately settled on a $900,000 PR budget over the life of the project, but the low initial figure may have kept other firms from trying harder to get the job, the auditing firm said.
The letter from Ryan and MDHA board officers Chase Cole and Leigh Walton admitted to "a few non-material examples of improper procedure" but said "errors are inevitable" in such a large project.
In a telephone interview late Wednesday afternoon, Ryan said the auditors interpreted MDHA's policies differently than the agency's staff and board do, and he noted that the review said expenditures were consistent with legal requirements and government agreements.
"We feel we did what we were asked to do and did a good job of it, quickly and efficiently," he said. "The city has gotten a world-class convention center design."
Ryan said the $104,000 "commitment" criticized by Kraft included only $93,500 in contracted work, putting it below the $100,000 threshold for MDHA board approval. Kraft said MDHA should have included more than $11,000 in reimbursable expenses in the total.
"I would simply urge everyone to read the report before jumping to any conclusions," Ryan said.
Asked if the report and the strongly worded letter from Cain and Riebeling might have served a political purpose, Ryan replied, "I don't guess at motives."
MDHA has a long history of working on big Metro projects, including LP Field, the downtown arena and the downtown library. Dean and Riebeling reduced the agency's role on the convention center project after the McNeely Pigott & Fox situation blew up in August.
The administration moved more quickly than it had planned to create a convention center authority, and it hired a senior project manager to oversee the work of MDHA and other parties and report to the authority.
The Metro Council approved the pre-development work but has yet to receive a financing plan for the convention center's construction from Dean. The mayor is expected to submit that plan next week.
