Bonnie Arbittier / Rivard Report
When it comes to public policy, it is easy to get caught up in the “scandal of the day” and miss the larger picture. What’s worse, sometimes policies are based on said scandal, and we later find that those policies didn’t solve the problem, because the scandal wasn’t the real problem.
San Antonio has recently seen its share of such scandals – namely those surrounding the bid for a Major League Soccer expansion team, Centro San Antonio, the Tricentennial, and most recently, the San Antonio Symphony. On the surface, these issues seem to have little in common, and when examined, yield little more than a finger-pointing marathon. But beneath the surface there appears to be one issue in common – a lack of due diligence by local government officials.
In terms of raw public money, the City of San Antonio and Bexar County likely spent around $40 million on Toyota Field and the STAR Soccer Complex. Even before the City and County jointly acquired Toyota Field for $18 million in late 2015, the City had allocated around $5 million from the 2007 bond for the initial land cost, and the County invested about the same amount as part of its 2008 youth sports bond projects. Once the soccer complex was approved, the City contributed millions more in water, streets, and sewer infrastructure.
The resulting soccer facilities have been transformative for youth and collegiate soccer in San Antonio. Considerable due diligence went into the development of each of the County’s youth sports facilities, and the success of the facilities finally recommended by its Sports Facilities Committee is reflective thereof.
The MLS bid, however, seems to have lacked that same level of due diligence. It became fairly apparent that MLS was far more enamored with Austin than with San Antonio, and that the leader of the expansion committee owned a team that he wanted to relocate to Austin.
Through the international soccer body FIFA, MLS “owns” the right to establish teams in U.S. cities, so even though it rejected our application, it retained those rights. We failed to ask MLS for an “escape clause,” one that would have allowed us to negotiate with Mexican professional leagues if not selected. It seems that we left all the chips on MLS’ side of the table.
Centro San Antonio’s embezzlement scandal shows the same pattern, but on a much smaller scale. A simple background check, perhaps the most basic form of due diligence, could have prevented that disaster. Perhaps a certified public accountant in the chief financial officer position would have been the next level of due diligence. Even simple things like tasking the same person with both operations and finance should have been a potential red flag for board members.
The Tricentennial is a mystery. How could former Mayor Julián Castro, who was so passionate about “the decade of downtown,” delay starting a Tricentennial Commission? San Antonio is hosting its fourth Men’s Final Four this year and has previously organized two Women’s Final Fours. Despite San Antonio’s experience hosting these events and the NCAA’s experience producing them, we had to bid on the 2018 Men’s Final Four five years in advance and begin work on it three-and-a-half years in advance.
Once the Tricentennial Commission finally got started, its leaders violated nearly every rule of nonprofit governance in its structure and didn’t learn lessons from similar efforts in our community. Instead of starting an independent nonprofit, the City started the Tricentennial Commission as a nonprofit government corporation that acts as an arm of the City.
Formerly a City department known as the Convention and Visitors’ Bureau, Visit San Antonio spun off into an independent nonprofit, so it could function more effectively. The Fiesta Commission is an independent nonprofit that coordinates the production of a multi-week festival every year.
Historically, nonprofit government corporations have a much harder time raising money – specifically because of the word “government” – than independent nonprofits. Another misstep: Starting with five co-chairs immediately set the stage for no accountability or chain of command.
Most recently, San Antonio saw the death and resurrection of its Symphony – the pattern is starting to get scary. The City and County spent more than one-quarter of a billion in public dollars to develop the Tobin Center for the Performing Arts as a home for the Symphony – including the surrounding site, improvements to nearby portions of the San Antonio River, and a new parking garage. More recently, the nonprofit that ran the Symphony was replaced with one deemed more capable of raising funds, but six months post-coup, the new management discovered that it couldn’t make it work.
Could a pension obligation have been a surprise? Weren’t there payments into that fund on the books? Pension obligations are certainly one of the trickier components of corporate mergers and acquisitions, but the “new and innovative management” was loaded with corporate experience. How did we end up back in the exact same place we have been with the Symphony for the past 30-plus years?
Every one of these efforts – top-level professional soccer, Centro San Antonio, the Tricentennial, and the Symphony – is worthwhile and of great benefit to our community. I supported, and still support, all of them. That is what makes the pattern of a lack of due diligence so frustrating. It appears that every time our local governments get involved in private-sector activity, its officials lack the skill sets to complete due diligence on those projects.
Often, consultants are hired to arrive at predetermined answers. At other times, leaders’ great instincts about what to do next were not tempered by an equal dose of rigor. Sometimes it is pure politics – strong business or political leaders promoted the answers before the questions were even developed.
Whatever the cause and whatever the project, due diligence has been in short supply. We should all heed these examples as warnings, because big and ambitious projects are always on the horizon in San Antonio. They should be, but they should be preceded by legitimate due diligence.