A City Council committee got a briefing from the San Antonio Convention and Visitors Bureau in its mission to seek nonprofit status, one of many lengthy steps towards making the CVB independent of the City.
The Economic and Human Development Committee met on Tuesday to review City staff’s recommendation of starting the process of incorporating the new organization.
CVB Executive Director Casandra Matej addressed committee members’ concerns about accountability and transparency within the new organization's proposed leadership structure.
The process, expected to take six to 12 months, would include filing proposed articles of incorporation and bylaws paperwork with the Texas Secretary of State, applying for an Employer Identification Number, and applying for 501(c)(6) status with the Internal Revenue Service.
Filing of the paperwork may begin early as Friday, said Matej, who briefed the committee on the progress of transitioning the CVB from a City department to a full-fledged entity. According to the task force's recommendation, however, the new CVB would still be a public/private organization.
It's been more than one year since Mayor Ivy Taylor appointed a task force, made up of representatives from the City, local hospitality industry and business community to formulate those recommendations.
The task force recommended that the CVB become an independent, nonprofit corporation, to help make San Antonio more competitive with similar cities, and to better leverage and diversify the organization’s revenue sources.
City Council formally launched the transition process in February. Many local business leaders endorsed the plan, saying San Antonio should follow the example of other large U.S. cities that have public/private or completely independent convention and visitors agencies.
Leaders in the local hospitality industry say the change is needed as growth in local technology, culinary arts and other sectors requires a more flexible CVB.
But Council members Rey Saldaña (D4), Ron Nirenberg (D8) and Shirley Gonzales (D5) – none of whom are are on the Economic and Human Development Committee – expressed early on their concerns about the new CVB’s accountability, transparency and governance.
As a result, Mayor Taylor, City Manager Sheryl Sculley, Councilwoman Rebecca Viagran (D3) and Councilman Roberto Treviño (D1) met to address and form the proposed articles and bylaws for the new organization. City staff focused on transparency, accountability and composition of the board of directors.
City staff also talked with other Council members and private stakeholders. Matej told the committee on Tuesday that the CVB’s governance and board will be as open as legally applicable.
Councilman Joe Krier (D9), who chairs the committee, said that because plans call for transition to unfold gradually, concerns about the new organization are decreasing.
"I think the reason the committee felt comfortable about formalizing all this is the realization that the Council controls the purse and continues to control how the (Hotel Occupancy Tax) is spent," Krier said after the meeting.
Due to rules related to the state’s Hotel Occupancy Tax (HOT), the new organization will be liable for following all local and state laws pertaining to the Texas Open Meetings Act, Matej said.
The new 501(c)(6) entity will hold an annual open board of directors meeting that will coincide with CVB budget presentation and adoption.
The proposed board of directors will include two appointments from the mayor and City Council and one appointment from the city manager, as well as up to three ex-officio City positions.
The new CVB would brief the mayor and Council yearly on any proposed changes to bylaws or articles of incorporation.
A management agreement between the City and the new organization would outline requirements to include annual review of the use of HOT revenue, quarterly reporting requirements, annual audits, budget presentation, performance metrics, and a yearly business plan and briefings with the City.
Mayor Taylor and the Council will see the proposed management agreement sometime this summer. The process of filing articles of incorporation would lead to the development of a code of ethics "similarly based on the applicable provisions of the City's ethics code," Matej said.
"As long as City Council controls the money, then the mechanics of how this new arrangement works will be subject to Council's review on an ongoing basis," said Krier. "I think that raised everybody's comfort level."
A board nominating committee will be comprised of five individuals who will nominate and approve the first full 21-member board of directors.
These individuals would include Convention and Visitors Commission Chairman Frank Miceli, two hotel industry representatives, someone from the general public, and either Mayor Taylor or a Council member.
Matej will help the initial board through the nominating process and serve as staff liaison.
Top Image: San Japan, a Japanese pop culture convention, attracted nearly 20,000 attendees the Henry B. Gonzalez Convention Center in 2015. Photo by Kay Richter.