NEWS 8 INVESTIGATES
IRVING — Irving taxpayers were told last month they were owed a $133,000 refund for overpayments on the yet-to-be-built Las Colinas Entertainment Center.
The refund was discovered through an audit ordered by city council members following a News 8 investigation.
But what if Irving citizens are really owed $4.2 million?
The questionable costs were incurred by developer Billy Bob Barnett and the Las Colinas Group.
At issue: Irving's contract with the Las Colinas Group that states reimbursable expenses "do not include costs ... relating to start-up business costs ... or any overhead costs ... not directly related to the construction of the Entertainment Center."
Following News 8's investigation, Irving City Council members paid an audit firm $70,000 to analyze the Las Colinas Group's invoices paid by the city. The result was an audit report delivered to Council members one month ago, on January 12.
"X" marks next to dozens of consultants' names indicated particular expenditures that did not meet generally accepted accounting principals (G.A.A.P), and therefore may not be capitalized or considered a necessary part of construction.
Of the $21 million spent by the city so far, the auditors found $4.2 million was not capitalized.
Remember, the contract said the city should not pay costs "not directly related to the construction costs of the Entertainment Center."
News 8 also uncovered an internal memo dated November 12, 2010 from Irving's senior assistant city attorney to Irving's chief financial officer. In it, the senior assistant pointed out the Entertainment Center project costs must be limited to "generally accepted accounting principals of capitalization of costs."
The letter goes on to say Brimer Bill Bond Funds "may not be used for operating or maintenance costs as those are not permanent improvements." The auditors even broke down the expenses, distinguishing between construction costs and operating costs.
Yet, when the audit was presented to the Irving City Council last month, those findings may have been overlooked. In the final report, only $132,000 of the $21 million were ultimately disallowed for reimbursement and needed to be refunded to the city.
So, what happened to the auditor's findings and the assistant city attorney's directive that the city may have prevented the possible overpayment to developers by $4.2 million?
Irving City Manager Tommy Gonzales and Ramiro Lopez, his deputy assigned to oversee the audit, made the final determination.
In the three weeks since the findings were released, Gonzales and Lopez repeatedly declined WFAA's requests for answers and an interview.
Also unresponsive to requests for answers was the chairman of the Council's audit committee, Joe Phillip, who along with the mayor appeared pleased with the final audit report.
"We will continue to do the audit process follow up to ensure expenditures are appropriately made," Phillip said.
But, Joe Putnam, an opponent of the Entertainment Center project, said the senior assistant city attorney's findings make it clear the citizens of Irving are owed that $4.2 million.
"I think if the city would have followed her instructions -- or followed the instructions that she sets out in that letter -- these inappropriate expenditures would not have occurred," he said.
While Council member Phillip made mention of a continuing audit process, he declined to elaborate.
No one from the City of Irving is willing to explain who made the determination to apparently disregard the findings of the $70,000 audit, and there has been no explanation as to why a $4.2 million rebate is not due to the citizens of Irving.