The control of millions of dollars of public money used to market and promote Niagara Falls and Niagara County is in the hands of 17 people.

They choose how casino revenue and hotel taxes should be used to promote tourism in the county. They determine the salaries of staff hired with those dollars. They oversee when and where those staff members travel on the public dime.

But out of 17 directors who oversee the Niagara Tourism and Convention Corp., only three represent people elected by the public.

That has shielded the publicly funded agency from state laws intended to give citizens open access to records and meetings. It also has placed the agency at the center of controversy that has lingered for months over how much detail the organization should release about how it spends public money.

The agency has been selective in what it has chosen to disclose to the City of Niagara Falls so that some records don’t end up in the hands of the public. That information it has withheld includes:

Salaries of its employees, aside from its president.

Receipts or detailed expense reports for travel that has included overseas trips.

How much private consultants are paid.

Roughly 80 percent of the Niagara Tourism and Convention Corp.’s $2.5 million annual budget comes from public sources — hotel taxes and casino revenue collected by Niagara Falls, Lockport and Niagara County.

But the not-for-profit organization — started with the help of two state lawmakers in 2002 — has determined that releasing some information about how that money is spent would either give away “trade secrets” and “competitive advantages” or violate the privacy of its employees.

NTCC President and CEO John H. Percy Jr. recently explained the organization’s position in a letter to Niagara Falls Corporation Counsel Craig H. Johnson, answering questions the city posed about the agency’s budget.

“While we have strived to document as much detail as possible, we recognize that information provided to the City of Niagara Falls becomes subject to the New York State Freedom of Information Law,” Percy wrote

Some examples of how NTCC discloses spending and how it doesn’t:

Salaries and year-end bonuses: $707,450 and $28,000 The agency will not provide the salaries of individual employees, aside from its executive director.

Advertising and marketing: $750,000 The NTCC provides a description of its media campaign, as wells advertising it has purchased, but not detailed expenses.

Tourism trade shows and sales: $157,000 Two-thirds of this money was spent on registration, participation and travel for 25 trade shows within the United States, two trips to Europe and one to India. The agency will reveal the overall costs, but does not provide receipts or detailed expense reports for travel.

July 30. “Tourism is a highly competitive industry and it is the position of the Board of Directors to protect the business position of the NTCC.”

The agency recently received an advisory opinion from the State Committee on Open Government that it is not subject to the Freedom of Information Law. The law requires government agencies and many publicly funded organizations to disclose most records to the public.

Board makeup cited

The NTCC’s exemption from the law, according to the advisory opinion, stems from the fact that only three of its 17 board members are appointed by government. The cities of Niagara Falls and Lockport, as well as the Niagara County Legislature, each has one permanent seat on the board of directors.

The remaining 14 members are chosen and appointed by the board from various sectors of business and tourism. The board also has two nonvoting members from Niagara Falls State Park and USA Niagara Development Corp., the state’s economic development agency in the Falls.

Robert J. Freeman, executive director of the Committee on Open Government, concluded that the board’s makeup exempts its from the Freedom of Information Law.

“A not-for-profit corporation that is not within the essential control of government would not, in my opinion, constitute an agency subject to that statute,” Freeman wrote in a letter to Niagara Falls Councilman Sam Fruscione.

Fruscione, who is running for re-election, has made the NTCC’s lack of disclosure a campaign issue. He has threatened to get the City Council to withhold funding to the NTCC if it does not provide more information about its spending. He later withdrew that proposal after determining that the city could not, by law, hold back casino revenue without facing its own financial penalties.

“The only reason we’re on you,” Fruscione told NTCC representatives at a meeting this month, “is we have to be the watchdog for the taxpayers.”

The Niagara Tourism and Convention Corp., since its creation in 2002, was designed to streamline and reform the way Niagara Falls and Niagara County promote tourism and market the area as a destination.

It replaced two tourism promotion agencies — Niagara County’s Tourism Department and the not-for-profit Niagara Falls Convention and Visitors Bureau. Both spent about $1 million a year, and they often duplicated services.

Representatives from both agencies would sometimes show up to the same trade shows. Tourists looking for information were shuffled between the two organizations.

State Sen. George Maziarz, R-Newfane, and Assemblywoman Francine DelMonte, D-Lewiston, reached across their partisan aisle in 2002 and sought a new approach to tourism marketing.

They found a nationally regarded tourism consultant, Joseph Lathrop of OCG Consulting, and commissioned a report to determine just what the Niagara region was doing wrong when it came to tourism marketing.

“The whole idea behind the formation was that government was not doing a very good job,” Maziarz said. “The county was spending a million dollars a year. The bed tax money, which is really the taxpayer’s, was going in to fund the old Convention and Visitors Bureau. They were constantly at odds.”

Lathrop’s report recommended that a new, independent nonprofit organization, funded by state, county and marketing partners, should replace the two existing agencies, which he said were “inherently redundant, at times inconsistent with one another, subject to lapses in coverage and severely hampered by run-down facilities, high costs and limited amenities.”

Efficiency sought

Maziarz and DelMonte pushed through state legislation that guaranteed that most of the hotel occupancy taxes generated in Niagara Falls, the City of Lockport and Niagara County would be “used only for the promotion of convention activities and tourism” and would be paid to a “not-for-profit corporation under contract” with each of the three entities.

The three municipalities then struck 10-year agreements with the newly formed Niagara Tourism and Convention Corp. to handle tourism marketing and promotion.

Later legislation passed in 2006 dedicated a stream of casino slots revenue specifically to the NTCC.

“Part of the idea behind doing the not-for-profit is that it would help to insulate it from political pressures, so that neither the City Council [nor] the mayor’s office [nor] the County Legislature could control policy there or who got hired,” said Falls Mayor Paul A. Dyster, who was on the City Council at the time the contract was approved.

That model — a convention and visitors bureau set up as an independent, nonprofit organization — is used by about 65 percent of tourism marketing agencies, according to Destination Marketing Association International.

About 20 percent are arms of government agencies.

But that structure now puts the NTCC at odds with some in government who question whether the agency is operating as effectively as it could.

Fruscione and the City Council have spent five months pursuing detailed information about the NTCC’s budget, including “detail on all travel, operations and salaries of all employees.”

The Council is still waiting for some of that information and has been told explicitely that the NTCC does not intend to release a detailed list of individual salaries aside from Percy’s pay.

Percy, according to information recently provided to the city, earned $154,392 last year and is budgeted to earn $124,384 in 2009.

“We report the CEO’s compensation in compliance with federal [form] 990 reporting requirements,“ the NTCC stated in its letter to the city. “The Board of Directors respects the privacy of our employees and will not disclose individual information that exceeds the requirements of state and federal law.”

Information lacking

NTCC Chairwoman Tricia Mezhir pointed out that each of the three entities — Niagara Falls, Lockport and Niagara County — has a representative on the board of directors and can gain knowledge about its operations through that board member.

“They should let professional people run the tourism agency,” said Chris Glynn, president of the Maid of the Mist and a former NTCC board member. “Certainly, whatever they’re required to produce by contract, they should be made to produce it. But it seems to me with the mayor on the board, the city is very well represented.”

NTCC’s finance committee, Mezhir said, meets monthly to review and sign off on all spending.

There are clauses in the contract between the NTCC and the City of Niagara Falls that require more reporting than either the NTCC has done or the city has requested.

The contract requires that five reports be submitted to the city. Those include quarterly expenditure and quarterly program performance reports, a two-year marketing and operational plan, yearly audit reports and annual reports. Only annual reports and audit reports have been issued on a regular basis.

The contract also allows the municipalities to “audit, examine and make excerpts or transcripts” of NTCC records that pertain to its contract with 10- days’ notice. That clause has not been invoked.

What the NTCC has invoked — from Lockport to Niagara Falls — is complaints that the organization is not doing enough to market certain destinations. Fruscione and others in Niagara Falls complain that Niagara Falls contributes the bulk of the NTCC’s funding but has to share its resources with other communities that pay less. Maziarz, whose district includes all of Niagara County except for Niagara Falls, believes the NTCC should do more to market and promote the eastern areas of the county.

“I guess if you’re getting complaints from both sides, you must be doing something right,” DelMonte said. “I think John [Percy] is open to being as transparent in his operation as possible, and I would certainly advocate that. I would certainly advocate that he be transparent and open with his operation so that people understand how the money is being spent and the return on investment.”