Business class air fares, $45 bottles of wine and dinners that cost up to $117 per person are part of an emerging financial picture of how a publicly funded nonprofit charged with promoting tourism in Niagara County has spent money.
Details of a financial report released Wednesday by the City of Niagara Falls show that the Niagara Tourism and Convention Corp. has spent liberally on travel and entertainment in recent years, and overpaid a bonus to its top employee.
Certified public accountants hired by the city to examine expense reports from the agency highlighted a number of items in their financial review, including:
The NTCC paid a $25,000 annual bonus in 2008 to John Percy, the president and CEO -- more than double what should have been paid under a formula in Percy's contract. Accountants found that the bonus was miscalculated and should have been $11,812.
A consultant who organized the Niagara International Kite Festival was overpaid $9,728. The festival last year was canceled because of its cost to the organization, Percy said.
Percy and the agency's director of sales charged tens of thousands of dollars of expenses in 2008 and 2009 and then sought reimbursement from the organization. The NTCC reimbursed $85,424 to Percy for expenses in 2008 and $59,396 in 2009. Those amounts include travel and entertainment expenses, but as well as large banquets held for tour operators and other groups.
The report, prepared by Pittsford-based Bonadio Group CPAs, provides a picture of expense receipts that the nonprofit organization has previously refused to make public.
"It's excessive, and it's extravagant," said Niagara Falls Councilman Sam Fruscione, who called for the city-funded financial review earlier this year.
Percy and Frank Strangio, the tourism agency's board chairman, defended the expenses, arguing that money spent on travel, entertainment and promotional efforts is the cost of doing business in a competitive industry.
"I think we have proven results in the past couple of years since I accepted the position of president and CEO," said Percy, who is being paid a salary of $128,115 this year.
"Nothing's improper, illegal or fraudulent," he said. "There may be some things in question, and they may question them, and that's fine, but I feel that everything is legitimate and is justifiable as far as expenses, especially when a budget is approved by my board of directors."
Strangio said the agency's directors had developed new policies during the last year that covered issues raised in the financial review, They also have hired a chief financial officer.
"We're marketing a product that is, in a way, inferior to our competition, and we're still getting results," Strangio said. "So in terms of the expenses, the board agrees that we stand behind the expenses because they're necessary to promote the region."
The agency, formed in 2002, operates on a $3 million annual budget funded largely through a hotel occupancy tax and local casino revenue. About a third of the budget comes from private grants and revenue the organization generates through advertising sales and other services.
Travel and entertainment accounts make up a small portion of the budget, but have been the subject of scrutiny by Fruscione and other critics who have questioned why the organization refused to release receipts.
The report provides the most detailed picture yet of how top agency staff members have spent money on travel, meal and entertainment expenses, but it does not list many of the names of restaurants or hotels where money was spent.
*Percy has traveled to India on business class flights twice. The air fares cost $3,847 and $4,996. He said the flights were purchased only on international travel and often were used in cases where he had to go directly from flights to events..
*The NTCC has spent thousands of dollars to take travel writers, consultants and others out to dinner or drinks.
In one case, Percy and the board's former chairwoman spent $110.72 on a dinner in Niagara County in July 2008. The dinner, Percy said, followed a presentation the two had made to the County Legislature and was a working meal to discuss several items from the meeting.
A February 2008 dinner for five that included representatives from New York State and the United Kingdom cost $347 and included two $45 bottles of wine.
Percy spent $311 at an "honesty bar" at the Knightsbridge Hotel in London in 2007. The bill was for six people and was a small gathering to thank tourism marketers from New York City who had referred clients to the agency, Percy said.
The cost of sending Percy on the seven-day trip to the World Travel Market Trade Show in London that year was $5,305, excluding air fare or the event registration fee.
The organization spent $18,736 to pay massage therapists to work on the convention floor at the American Bus Association in 2008, last year and this year. They were part of a "creative" marketing attempt to entice tour operators to visit the Niagara Falls booth at the convention, Percy said.
Strangio said the board intends to "rectify" the overpaid bonus to Percy. As a hotel owner, he said, what's important to him is marketing the region.
"I think that we should always be cost-conscious when we can; I think that's very important," Strangio said. "But if it's a means to the end, and we're seeing a return on it, than I think it's worth the investment."