Special Report: 60th party cost nearly $400,000, documents show

Costa Mesa’s 60th anniversary celebration has so far cost close to $400,000, significantly more than the initial $315,000 estimate to produce the event, according to a year’s worth of public records reviewed by the Daily Pilot.

The total cost — before revenue — appears to be nearly triple the $125,000 the City Council authorized in public funds for the three-day, summertime party. But the event also produced income in the form of ticket and concession sales, sponsorships and outside grants, so the true cost to taxpayers will probably remain unclear until an expected city audit is released early next year.

Between March and December, the city paid out nearly $400,000 for insurance, rentals, musical acts and numerous other expenses for the June 28 to 30 celebration, according to council documents known as “warrant resolutions.”

To get a picture of the event’s price tag, the Pilot reviewed 12 months of those expenditures listed in council agendas. The documents list the city’s purchases and are approved by a single vote at each council meeting as part of the consent calendar, which usually comprises routine items.

By compiling expenses with line items explicitly related to the 60th anniversary, the Pilot determined the city has paid out slightly more than $391,000 since March. Among the payments were $3,000 for a cake and $18,000 for fireworks.

Councilwoman Wendy Leece, who attended most of the 60th planning committee meetings, expressed shock when she heard the $400,000 estimate.

“I think it just got out of control,” she said, specifically citing the music festival aspect, which featured about two dozen acts. “It grew too big.”

The councilwoman said she has requested certain contracts and documents related to the celebration but was rebuffed.

Leece said she’ll withhold a final opinion until she sees all the facts, including a total cost.

“It would be premature for me to judge the thing now,” she said.

More bills could be on the way. As recently as Dec. 3, the council approved a $1,840 payment for security at the celebration. In addition, because the city has so far denied a Daily Pilot public records request for more information about the event, a complete picture of the total expenses cannot yet be drawn.

However, Costa Mesa spokesman Bill Lobdell said in a statement emailed on behalf of the city Friday that the independent audit into the 60th anniversary celebration will soon be released.

“The results of the city’s audit of the 60th anniversary celebration finances should be available by Jan. 15,” according to the statement. “Preliminary numbers show a $79,000 shortfall between expenses and income (including sponsorships), which the city has paid out of existing general funds without use of reserves. Also, it’s expected that by Jan. 15, the city’s investigations into the 60th anniversary celebration finances will be complete, and all public documents related to the event will be released.”

In September, city CEO Tom Hatch announced that on July 31 he ordered the independent forensic audit.

“Since the conclusion of the street festival, some concerns have arisen over whether some policies and procedures may not have been followed in regard to the event’s finances,” Hatch read from a statement at the Sept. 3 council meeting.

In August, officials placed Public Affairs Manager Dan Joyce and Special Events Coordinator Christine Cordon on leave for unstated reasons. The two employees were considered “principally responsible” for organizing the event and had been working with a large citizens planning committee since December.

Joyce did not return a voice mail left Friday seeking comment. Cordon has previously declined to comment.

*

Explanation of the budget

The $125,000 approved by the council was not the event’s entire budget. The plan was to spend more than that with the hope that revenue would offset expenses.

In February, Joyce presented a preliminary budget to the council suggesting that the event would cost $315,000 to produce.

He asked council members to allocate $125,000 from the city’s general fund, and they approved the expenditure.

The rest of the budget relied heavily on donations and sponsorships. It assumed supporters would kick in another $125,000, including $50,000 from Costa Mesa Conference and Visitor Bureau, a marketing organization for the city funded by local hotel taxes.

The remaining $65,000 would come from other revenue like souvenir sales or a proposed loyalty program, it was thought.

Those goals were missed, according to a City Hall source, but it’s not clear by how much.

“Revenue was so minimal,” said the source, who spoke on the condition of anonymity.

Costa Mesa officials again last week did not provide a full accounting of sponsors or revenue, but income that the Pilot was able to discern did not meet expectations.

The Costa Mesa Conference and Visitors Bureau provided just $41,000, according to a city announcement in July.

Only $25,000 of that was made as a donation for the city to spend as it pleased, according to bureau spokeswoman Kim Glen. The rest of the money was for marketing and other support.

As sponsors, Orange Coast College paid the city $2,000 to $3,000 for advertisements in a commemorative magazine and the Costa Mesa-Newport Harbor Lions Club donated $1,000.

The Orange County Fairgrounds, which donated $50,000 worth of parking, and the city itself are among the few sponsors listed on the event’s website.

However, the city still paid the fairgrounds $25,883 to rent space for the event, according to council documents. The event featured a large music stage set up on the fairgrounds property across from City Hall.

The only additional supporters named on the website are media sponsors, such as the Daily Pilot — whose advertising division provided space in a special section tied to the event — and Time Warner Cable.

As for revenue from the event itself, the city earned $2,000 from alcohol sales because of a profit-sharing agreement with the event’s food vendor.

Two other vendors did not return calls or declined to answer when asked if they had profit-sharing agreements that provided any revenue to the city.

*

Fewer than expected attend

Lower-than-expected attendance may have contributed to the apparent budget gap.

An April report to the council set expected attendance at 20,000 to 30,000.

In July, the city estimated that only 16,000 people turned out for the free street fair portion.

Members of the planning committee said attendance at the 60th’s music festival was also low.

“There were very few tickets sold,” said Mike Scheafer, 60th Anniversary Planning Committee chairman, who attended Saturday’s headlining night of concerts and heard the same story of low attendance from his wife, who worked the ticket booth the previous night.

A day pass for the event sold for $20 to $25, and a three-day ticket cost $50, but it’s unclear how much — if any — of that money went to Costa Mesa.

“I really think that [Joyce] thought we would sell out these concert venues and we didn’t,” Scheafer said.

The company that handled ticket sales, Ticketfly, does not release sales numbers on specific events or disclose details of its contracts, spokeswoman Meredith Klee said.

Peripheral events related to the 60th were also sparsely attended.

When the city bought a block of 200 tickets for an Angels game that was promoted as “Costa Mesa night,” fewer than 100 tickets sold, Scheafer said.

*

Consultant’s role

One consultant controlled an enormous chunk of the 60th anniversary’s budget, according to council documents.

The consultant, Roland Barrera, has since been accused of participating in an unrelated Ponzi scheme during the time he was working with the city.

Joyce brought aboard Barrera — who runs a marketing agency in Costa Mesa called The SUN Grp — to book musical acts, according to minutes from the 60th planning committee.

Over a period of more than six months, the city paid Barrera’s company almost $127,000 — more than the entirety of Costa Mesa’s authorized allocation.

Some of those payments indicate they were for specific purposes, such as a $12,550 deposit for Eric Burdon & the Animals and $20,000 for the main stage’s equipment.

Other checks are more vague, such as a combined $6,500 for consulting and $9,175 for an “extra invoice.”

On top of paying Barrera’s portion, the city spent more than $90,000 on other booking companies and musical acts, according to council documents.

The U.S. Securities and Exchange Commission this month filed a civil suit accusing Barrera of selling fake securities in gas and oil royalties.

One of his alleged targets was a Newport Beach man who invested $3 million, netting Barrera and his fellow salesman a $400,000 commission.

The scheme, run by two partners out of an office in Austin, Texas, allegedly scammed 80 clients out of $18 million.

*

Scheafer blames overreach

Scheafer said he had a feeling the event went over budget, but he said Joyce continually assured him that the visitors bureau would close the gap.

Excessive ambition — especially on the music entertainment side of the event — and a rushed planning schedule were a fatal combination for the 60th’s budget, according to Scheafer and another member of the planning committee who asked not to be named.

In July, at the first 60th committee meeting after the event, there was a consensus that attendees enjoyed themselves, but that it was some kind of “miracle” getting the three-day event done with only six months of planning.

Some of the complaints raised were seemingly small — like running out of ice cream and not having enough plates on hand for pieces of the 1,700-pound cake. Others were more serious, such as allegations of mistreatment toward the volunteer work force.

People also got upset that a city announcement of the Foo Fighters playing in Costa Mesa was not technically true, because not all the band members were there and they played as Chevy Metal. It was later deemed “a miscommunication” on city staff’s part.

Committee members, too, have been left in the dark about costs related to the event.

Originally, Scheafer said city staffers told him every contract would require his review and approval, but as it turned out, he only saw three or four.

“We didn’t have enough time,” he said. “We overdid it. We could have done just the street fair part of it. We didn’t need to do the fireworks. We didn’t need to do the concerts, and it still would have been a great community event.”

— Daily Pilot staff writers Jill Cowan and Bradley Zint also contributed to this report.