VisitPittsburgh disputes Allegheny County audit questioning its fiscal practices

An audit released Thursday by Allegheny County Controller Corey O’Connor says the Pittsburgh region’s tourism agency has failed to follow proper financial management practices and should improve its transparency and reporting standards.

VisitPittsburgh receives more than 90% of its funding from public tax dollars, O’Connor said in a release. The tourism agency has commingled its public and private funding and cannot identify if its expenditures were paid for with private or public money, the controller said.

“When an agency receives over 90% of its funding from tax dollars, it needs to be held to a higher standard than other nonprofits,” he said.

VisitPittsburgh disputed the audit, and said that 85% of the agency’s income is generated by the hotel tax. The agency is arguing the audit included other factual errors, misleading information and the selective omission of relevant information.

Jerad Bachar, the agency’s president and CEO, said VisitPittsburgh’s accounting processes have been in place for more than 20 years and have been audited and validated many times by external accounting firms and Allegheny County officials.

“VisitPittsburgh is responsible for driving business, sports and leisure tourism into the county and we have a proven, documented track record of transparency and success,” Bachar said in a statement.

Five percent of Allegheny County’s hotel tax, authorized by the state government, is directed to the tourism agency and provides 40% of its revenue, according to the controller’s office. This has equated to $10 million in three of the past five years.

The controller’s office said VisitPittsburgh also received $1.25 million in federal funding from the CARES Act in 2020, and another $5 million from the American Rescue Plan in 2022. As a result, more than 90% of the agency’s revenue came from public funding last year.

The audit says VisitPittsburgh was holding more than $5 million in reserve at the close of last year, which was much higher than that of comparable tourism promotion agencies in other regions. Additionally, the agency committed $1.6 million to subsidize futures events, but improperly recorded those funds as event subsidy liabilities, which created “the perception that VisitPittsburgh had fewer liquid assets than it actually had,” according to the audit.

The audit also scrutinized VisitPittsburgh’s wages and benefits for last year. The audit said wages and benefits made up $4.4 million of the agency’s expenditures, or 40% of its overall expenses.

“This proportion was actually higher than in 2019, when the agency had nearly twice as many full-time employees. This suggests the agency retained mostly higher-paid positions,” the audit said.

Bachar criticized the audit for not reporting on VisitPittsburgh’s performance results. He said the agency confirmed 223 business and sports events in 2022. According to VisitPittsburgh’s annual report, the agency held 548 business and sports events in 2019.

“The deliberate omission of performance results in a performance audit is not only baffling and suspect, it also presents an incomplete and biased assessment to the public, who have the right to an impartial, comprehensive and factual report,” Bachar said.

The audit also said VisitPittsburgh has focused too highly on leisure activity, and not enough on the region’s major venues: Acrisure Stadium, PNC Park, PPG Paints Arena and the David L. Lawrence Convention Center. The audit said there was a lack of representation on VisitPittsburgh’s board from the city’s three major sports teams.

“This may have contributed to fewer than 10% of events attracted by VisitPittsburgh from 2017 through 2022 being held at the David L. Lawrence Convention Center, as the agency’s records show,” the audit said.

VisitPittsburgh implied a conflict of interest because the audit was requested by state Sen. Wayne Fontana, D-Brookline, who has been critical of VisitPittsburgh’s public funding and serves as the board chairman of the Sports & Exhibition Authority of Pittsburgh and Allegheny County, which owns the three major sports arenas and the convention center.

Fontana has publicly opposed a proposed 2% fee on hotel rentals in Allegheny County, which would increase public funding for VisitPittsburgh.

He rejected the implication that his involvement was political.

“I am not running for office, it is not political,” Fontana said. “The controller took six months to do this. The audit stands on the facts.”

Fontana said the Sports & Exhibition Authority and the convention center are in debt, and could use the some of the extra funding that is being requested by VisitPittsburgh.

He said the agency’s internal finances should be scrutinized before state legislators consider increasing the potential power to collect more funds through taxes.

Fontana said VisitPittsburgh is making the issue political by coming after him. “It is all about the spin,” he said. “They want to divert their lack of accountability with politics.”

The Sports & Exhibition Authority and Allegheny County receive nearly 70% of the hotel tax funding, while VisitPittsburgh receives 28%, according to the tourism agency.

The full audit can be viewed at the Allegheny County Controller’s website.