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Audit finds overtime waste at Los Angeles Convention Center

City Controller Wendy Greuel says hundreds of thousands of dollars a year are being wasted through lax control of overtime.

September 18, 2009|Alexandra Zavis

The Los Angeles Convention Center is wasting hundreds of thousands of dollars a year by failing to control overtime, a city audit has found.

In a report released Thursday, City Controller Wendy Greuel took issue with the center's practice of using electricians from other city departments to help staff major events when they must be paid overtime rates. The audit, the first one completed under Greuel's watch, estimated that the center could save about $700,000 annually by hiring outside help at non-overtime rates.

Greuel also argued that the center had been constrained by city bureaucracy from taking steps to be more competitive in a difficult economy and to operate like a business.

In particular, she said management should be allowed to reduce rental rates on a trial basis to help fill the convention center during slow seasons. Prices are currently set in the city's administrative code. She also said the city should consider a public-private partnership.

"Part of what makes the convention center so unique is that it is in direct competition with other privately operated convention centers around the country," Greuel said in a letter to Mayor Antonio Villaraigosa and other officials. "Our goal must be to make the convention center more marketable and more efficient, so it becomes a more consistent source of revenue generation."

The convention center, which has an operating budget of about $30 million, is one of the city's most important assets, contributing more than $1 billion annually to the regional economy, Greuel said. But like other businesses, it is struggling with the economic downturn. Revenue is expected to drop nearly $6 million to $24.5 million this fiscal year.

Proceeds from hotel bed taxes, which are used to service a debt of more than half a billion dollars from the center's construction and expansion, have also taken a hit. The city expects to spend $13 million this year from its general fund to cover those costs.

The convention center's general manager, Pouria Abbassi, said he had already started implementing the report's recommendations, which he called a "road map . . . to be a better organization."

He underscored that the center had managed to cover its operating costs for the last four years without dipping into the general fund and expected to do so again this year.

"Just imagine what great things we would be able to accomplish, especially with the sports and entertainment district behind us, if we were more flexible and nimble and responsive," he said.

The audit, which covers the period from July 1, 2007, to Feb. 28, 2009, criticizes the city for inconsistent funding for the center's upkeep. As a result, it says repair costs have been increasing.

Other deficiencies highlighted in the report include a lack of oversight and controls.

The convention center is supposed to pay overtime only to full-time employees. But auditors found that three workers were paid a total of nearly $34,474 in overtime after they failed to notify the center that they were no longer working full time for another department.

When auditors reviewed five sample events, they could not find documentation to explain why $22,131 in fees had been reversed or waived.

They also found that people were allowed to park for free because their parking cards weren't canceled after the event for which they were issued had ended. This occurred 43 times in one month.


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