Denver Parks & Recreation under scrutiny in recent audit

50-year contract, "unique" terms raise red flags
Posted at 4:47 PM, Nov 15, 2016
and last updated 2016-11-16 00:53:50-05

DENVER --  Is Denver Parks and Recreation making sweetheart deals with your taxpayer money?

That is the question raised by deals like these:

  • A golf course concession contract that extends up to 50 years.
  • A house that comes with a golf course concession.
  • A contract that goes to the license owner's estate without needing city approval.

Parks & Recreation is one of the largest city departments with a $93 million annual budget and about 240 contracts.

Now, taxpayer money is under the microscope. The Denver City Auditor is presently re-auditing the department after Fred Weiss, the Director of Finance, disagreed with key recommendations from an audit this summer.

"The inherent risk level goes up when they disagree over these kinds of recommendations for documentation, for proper segregation of duties," said Timothy O'Brien, Denver's City Auditor. "Yes, it concerns me. We will do more auditing."

This summer, O'Brien released an audit raising questions about so called "unique contract terms" in Denver Parks & Recreation agreements, especially at city-owned golf courses. 

For example, at Wellshire golf course the contract for the concessionaire, Wellshire Event center, has a highly unusual length -- extending up to fifty years.

Under Executive Order 8, the City of Denver limits contracts to three to five years absent special circumstances.

"Fifty years is way too long in my opinion. If this is a nuclear power plant, I could understand 50 years, but not to operate a concession at a golf course," said O'Brien.

While the Department of Parks and Recreation declined Denver7's request for an interview, according to the audit: "The Director of Finance and Administration explained that, in this instance, the lengthy term was justified because the concessionaire is responsible for significant investment related to maintenance and repair costs of the facility, which is aging."

However, O'Brien said Parks & Recreation offered no documentation to justify that decision

It wasn't the only perk in Wellshire Event Center's contract that came under scrutiny in the audit.  

The contract also states the license owner can transfer it to his estate without the city ever approving.

"That is unique," said O'Brien.

In the audit, Parks and Rec states: "The Director of Finance and Administration explained that this term was negotiated because the concession license owners are aging and wanted to be able to transfer ownership of the license to their estates."

But again, no documentation of the negotiation process and contracting decisions could be found, the audit states.

On the Evergreen Golf Course, the city has another unusual agreement with the concessionaire: a house.

"We identified a unique term that allows employees of the concessionaire to occupy an on-site residence," the audit states, and while it states there is no documentation as to why a residence is included for a concessionaire, "Denver Auditor and Administration explained that the contract term was included because a residence existed on the golf course and the City did not want to be responsible for maintaining it. By allowing an employee to inhabit the residence, he or she would be responsible for upkeep rather than the City."

Is including the house some sort of handshake deal negotiated under the table?

"I think if they had the kind of documentation I’d like to see in the files, we’d be able to answer a question like that," said O'Brien.

The audit also details significant differences in compensation terms for golf course food and beverage contracts.

For example, Wellshire pays the City a flat rate, which was $50,000 for 2015.

At Evergreen, the concessionaire must pay the City $25,000 or 8 percent of gross revenues, whichever is higher.

So for 2015, Evergreen's concessionaire paid the City more than $115,000, even though Wellshire's concessionaire actually had larger gross revenues.

"Despite this fact, due to the differences in compensation terms, the first concessionaire was required to pay less than half the amount that the other concessionaire was required to pay," the audit states. 

In the audit committee meeting this summer, Weiss went on the defense.

"The picture that was painted is that we don't care and that's it's a mess. If that was frankly the case, we would have had many, many issues, which we have not had," said Weiss.

But not everyone is happy with the way Weiss handles contracts.

Larry Ambrose, a Denver neighborhood activist, said he experienced problems first-hand after his concession proposal for Stapleton Central park was denied in 2009 with no explanation. Instead, the city decided to run the concession itself.

"I just thought it was underhanded," said Ambrose, who has been calling for more public oversight of the department. "This is an entrenched bureaucracy. As parks managers come and go, Mr. Weiss has been there constantly and has a great deal of power."

In fact, when it came to this summer's audit, Weiss disagreed with certain findings (such as separation of duties) and declined to make some of the suggested changes.

"I believe that we do a very good job at monitoring our contracts," said Weiss in the audit committee meeting, although he did state that the department is not  perfect. "There are processes in place, they’re just not documented, and we agree that they need to be documented."

That response, though, did not sit well with O'Brien, who has since launched a new investigation into Parks & Recreation permits.

"I was surprised that they didn’t agree with all of the recommendations (from the audit)," said O'Brien. "What that does is increases the risk level in the organization, which means we will do more auditing in Parks and Recreation."

To see the entire audit: Click here.


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