Regional Tourism District Seeks to Resolve Breach of Contract, “Loss of Trust” with State Tourism Office

NORWICH — Members of an ad hoc committee of the Eastern Regional Tourism District board are convening in Norwich multiple times over the weeks of Christmas and New Year’s Day to meet a January 6 deadline set by the State Office of Tourism, which claims the district breached a contract for a state grant of about $400,000, dispersed in June 2019 for the fiscal year 2018-19.

One member of the district board and ad hoc committee, Tony Sheridan of Waterford, said at multiple points during meetings on Monday, December 23, and Thursday, December 26, that there has been a significant “loss of trust” between the regional district and the Office of Tourism.

“How do we regain the trust of the [state] tourism office?” Sheridan said at Thursday’s meeting of the ad hoc. “That’s the bottom line. No more, no less.”

The district, a regional organization with seats for members appointed from about 40 member municipalities, is one of the state’s three regional tourism districts tasked with promoting tourism in its region.

To be eligible for a similar state contract for $400,000 for the fiscal year 2019-20, the district will need to resolve — to the state’s satisfaction — several infractions that were identified to the board in a December 6 letter by State Office of Tourism Director Randy Fiveash.

“It has become clear the Eastern Regional Tourism District Board of Directors is in a state of disorganization … It is our opinion that the membership of the District Board must address and remedy this disorganization, immediately,” Fiveash wrote.

Fiveash’s letter identified six infractions as making up the breach of contract. 

  • That the district’s marketing activities had not been coordinated with and approved by the Connecticut Office of Tourism.

  • That the district had not returned unexpended funds from the grant back to the state agency.

  • That the district did not follow the budget that the state sent with the contract.

  • That the district did not submit to the state agency a monthly marketing report.

  • That the district did not submit to the state a plan to raise private donations.

  • “The carrying out of the functions of the contract by the leadership of the District has not been successful in its role as administrator of the contract.”

Fiveash also wrote the district that they would have to cease and desist all use of the funds in question until the district provided several records for the state tourism office to scrutinize: 

  • A full itemized accounting of all their expenses since receiving the state funds.

  • A defined timeline for the completion of an audit of the district for that time period.

  • Copies of contracts for any and all vendors or contractors paid with or promised pay from these funds.

  • A plan for the tourism board to identify a partner organization (such as a chamber of commerce) to aid in administering the funds.

At a meeting of the ad hoc committee on December 23, Fiveash said that the Western Regional Tourism District had been placed under a similar breach of contract earlier this year but that that district had made “substantial progress,” in part by changing their leadership and culture.

“They changed the whole culture of how they are doing business,” Fiveash said. “So they’re moving forward.”

On December 19, at a meeting of the full Eastern Regional Tourism District board, the board tasked an ad hoc committee to deliver a recommendation to resolve the breach of contract. The ad hoc is chaired by Pete Connair, a resident of East Lyme and former state senator.

The district board has called a special meeting for Friday, January 3 to vote on those recommendations. January 6 is the current deadline for an action plan after the board twice extended the December 18 deadline.

At the December 18 meeting, Southeastern Connecticut Council of Government Executive Director James Butler agreed to let the tourism board use the council’s offices in Norwich for the ad hoc meetings. The two organizations are separate but share many of the same member towns.

The matter is complicated by the fact that the Eastern Regional Tourism District was effectively shuttered for most of the last three years, according to Board Chair Rita Schmidt, after Gov. Dannel Malloy zeroed out funding for fiscal years 2016-17 and 2017-18. 

The Connecticut General Assembly approved funding in the two-year state budget passed earlier this year. It’s that money that has become the center of the controversy between the district and the Connecticut Office of Tourism.

Official says state impeded the regional district

Schmidt said that rules recently applied to the district by the state, after effectively shuttering the district for nearly three years, has made it “almost impossible” for the district to function and meet its obligations.

Schmidt pointed to a provision in the 2018-19 contract that districts cannot use state funds to hire their staff or lease office space.

“We cannot have an office,” she said in a Thursday interview after the ad hoc meeting. “We cannot have staff. You have to wonder who really is supposed to do the work?”

Schmidt said that the board is made up of volunteers representing member towns, and would struggle to provide enough time for the day-to-day work of administering district funding.

Edward Dombroksas, former executive director of the easterm tourism district who worked for the district as a consultant over the last year, said further that the district had only three weeks to spend or obligate the $400,000 from receiving the money until the end of the fiscal year.

“The real problem last year came with the delay in making that funding available to the regions,” he said in a phone interview on December 19. “In our case, [the state] didn’t make the funding available until June 8 but it was mandated that that money had to be spent or obligated by June 30, a three-week period of time.”

The check from the state to the district was so large by the district’s recent fiscal standards that it was even held up at the bank for about a week, Dombroskas said at the December 23 meeting of the ad hoc.

Fiveash, speaking at the meeting of the ad hoc committee, responded that the Central Region Tourism District had been offered the money at the same time and had been able to spend it all before the end of the fiscal year.

Fiveash said, “Let’s please not continue to say ‘We couldn’t do this because we got the check too late because the state held it back.’ The thing I’m going to say to you is call the guys at Central District. They spent every single dime of it and they spent it judiciously and they did great work with it. And I’ll tell you why: because they prepared. They had a marketing committee, they had all these bylaws and committees set up in anticipation of everything.”

Schmidt, in the Thursday interview, said that the terms of the contract also tightened requirements of what makes up a quorum — the minimum board attendence at a meeting to make official voted decisions.

Now a vote will only count if there are enough members present as a fraction of the total possible members. Previously the board counted only seats filled by member towns.

Some of the approximately 40 towns in the district, such as Old Lyme, don’t currently have an appointed member, or they have members that have been inactive.

“Not all towns have appointed a member to the board because some of them are smaller and are not really involved in tourism or they may just not have the manpower to send people out to different communities like this,” Schmidt said. ‘That is one of the difficulties that we’ve had in getting people out to communities like this.”

Schmidt further said that the state contracts have required the tourism district to follow a budget largely prescribed by state officials, with more restriction on how the districts would be able to spend the money in their area. 

A minimum of fifty-percent of the funding was designated for “proven, dedicated tourism marketing and advertising.” A minimum of five percent was allocated for a nonprofit partner, and a maximum of 20 percent could cover administrative costs, according to the fiscal year 2018-19 contract.

“It took away the individuality of the tourism districts,” she said.

Fiveash, speaking by phone on Thursday, said that his office has acted to make the most of the limited money that the state has to promote tourism by ensuring that organizations are working together.

“What we as a state are doing is not trying to tell them how to do business from a regional standpoint. What we’re trying to do is to make sure all the money in all three of the regions is spent in coordination with the State Office of Tourism,” he said.

“The other two regions have agreed to that, and I think the eastern region’s tourism industry there has also said, ‘Yes, that’s what we want to do.’ We have over 4600 partners that we have on our website at CTvisit.com, and those partners, a significant number are down in the eastern Connecticut area. We want to make sure that all of the money that’s spent is in great coordinating effort. We’re not trying to dictate anything, we’re trying to make sure it’s all coordinated.”

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