Event firm not billed by Maumelle

City failed to send invoices for functions held at Park on the River

MAUMELLE — A flawed billing system, the pandemic and even forgetfulness allowed an event company to hold functions at Maumelle’s Park on the River for years after their contract ended in 2020, and to not receive invoices for roughly 18 months prior, according to city officials.

The company, Team Summit, has since entered into a new short-term contract with Maumelle to continue using the space through the end of September, but City Attorney Andrew Thornton has recommended that the City Council vote to negotiate with them for rent payments for the months they were not invoiced.

Thornton estimated the cost of those rent payments to be about $28,000, before accounting for additional fees connected to the revenue Team Summit earned through events held at the space. One council member, though, said he believes the company ow- es more than twice as much.

Maumelle Mayor Caleb Norris, along with Thornton and several council members, have expressed optimism that Team Summit will agree to pay at least a portion of the money the city ultimately requests. However, the discovery of the mistake has led to months of discussion, investigation and debate over how the mistake happened in the first place and what should be done to prevent similar incidents from happening again.

The city purchased the property sometime between 2003 and 2004 and approved an initial contract with Team Summit beginning in 2006, according to a March council meeting. That contract established a shared revenue contract between the city and company.

The space sits alongside the Maumelle River, with a building available for rental and a boat ramp and park area open to the public when not closed for private events, according to the city’s website.

In November 2015, Maumelle entered a five-year lease agreement with Team Summit LLC/Timmons Arts Foundation to use the cityowned Park on the River, 11903 Crystal Hill Road, for weddings and other events. Under the agreed contract, Summit and Timmons agreed to pay the city $1,000 a month and 25% of the net revenue — which includes all expenses incurred, including the rent, “of all venue rental sold by Timmons at the property.”

That contract was set to expire in November 2020, but Team Summit did not receive invoices from the city from May 2019 onward. Even after the contract’s expiration Team Summit continued to use the property from December 2020 through March 2023, just before a new contract was signed.

That loss of revenue went unnoticed until late 2022, after changes made to the accounting system allowed city officials to better organize their finances.

“We had the benefit of now knowing that,” the mayor said in an interview on Thursday. “We had the regret of not knowing it for some amount of time, a couple of years.”

An independent audit requested by Ward 1 council member Steve Mosley and presented to the City Council during a Dec. 18 meeting states the city “did not have formal procedures or controls over billings related to leases” and that, “as a result, a lessee was not properly invoiced.”

Norris, the attorney and council members have said they aren’t sure why the invoices to Team Summit suddenly stopped. However, the mayor pointed to the city’s old accounting processes, and the difficulties those processes created in readily accessing needed information.

Prior to the arrival of new Director of Finance Beatriz Sousa in March, the mayor and city council members had expressed frustration due to a general lack of organization and structure within Maumelle’s finance department. That disorganization also caused the city to fall behind on its annual reports and invoices, among other areas. Technology was also a critical issue, according to Norris.

“The accounting software we had was garbage,” he said.

That software was outof-date, with a physical copy that could receive only limited maintenance, according to the mayor. The system included a “catch-all” category called “miscellaneous income,” and within that category would be reports on, for instance, money received from an insurance company following a car accident.

It’s also where the invoices for Team Summit went.

After moving the city over to a new accounting system, officials were able to pull out smaller line items and place them into their own categories. That was how the city discovered revenue from Team Summit for their use of Park on the River “had just been nonexistent,” the mayor said.

Upon making the discovery, city officials went back through those finances, hoping to determine why the invoices stopped. While officials said they still haven’t determined the root cause, they made other discoveries that suggest such a lapse would be difficult to catch.

They put together a spreadsheet showing when each month was invoiced going back to 2018, according to Norris. Their exploration took them backward through time, from digital copies to paper copies, but they couldn’t go back further than 2018 “because the records just didn’t exist,” he said.

The mayor said the invoices didn’t seem to be sent on a monthly basis.

“It appeared to me as what happened was they’d forget about it and they’d invoice multiple months at a time,” he said.

The months of January of 2019 through April of that year were all invoiced in May, for example. The city found similar instances of months being grouped together in 2018 records.

The audit presented at the December meeting by national accounting firm Forvis, LLP recommended that invoices be sent to lessees “as soon as possible to expedite payment and keep the accounting system current and financial statements accurate. We recommend that processes be put in place to ensure that lessees are invoiced timely.”

The audit also recommended the city protect itself and eliminate problems that might arise from oral agreements by ensuring written lease agreements “always be prepared and signed.”

Norris has said during several City Council meetings that, despite the accounting issues, at least some of the blame for the contract lapse and invoices not sent is his own.

“It was out of contract, and ultimately that falls on my shoulders for making sure there was a contract,” he said during a Nov. 20 meeting. “And I just didn’t do that.”

The mayor said while being questioned by Mosley that he recalled during covid someone saying the contract was about to or had already expired. At the time, though, events weren’t happening and the requirements of the medical emergency made the Team Summit agreement a lower priority. As such, it went forgotten.

Mosley has criticized the lapse, describing it as a “high profile situation.”

“The mayor has taken responsibility, and that’s all he’ll say,” he said. “He’s saying ‘I’ve taken responsibility so we need to forget about it,’ and I’m not sure that we need to forget about it yet.”

Ward 4 council member Jess Holt has also decried the use of the Park on the River space, calling it in March “a financial travesty.”

NEGOTIATION

Team Summit entered into a new contract in April to continue using Park on the River through next September for a flat fee of $1,500 per month, according to Thornton, the city attorney.

Team Summit founder Timmons attended a March 6 City Council meeting to request the new contract. She reminded the council that they had known her for years, and agreed that it was the council’s responsibility to look into what they thought was not happening, according to minutes from that meeting.

Following questions from Mosley, Timmons said in a “good year” renting the facility out, the company hosted roughly 20 events. She added that many of those were non-paid events hosted by city staff or organizations, however.

What remains is for the city to determine to what degree, if at all, they will attempt to negotiate with Team Summit to cover unpaid rent for the time in which the company didn’t receive an invoice.

For the period from May 2019 to November 2020, when the company was still under contract, Thornton recommended in a letter to city officials that Maumelle submit an invoice for no more than $27,761.09, plus one-quarter of Team Summit’s revenue for that period. The amount was calculated using the formula in the 2015 contract.

For the period from December 2020 to March 2023, Thornton recommended the city submit an invoice for somewhere between $619.58 to $861.83, plus one-quarter of the company’s revenue for that period, assuming Maumelle uses the 2015 formula. The attorney said he found 13 events for Team Summit on the city’s Parks and Recreation Department calendar, and another five events on a written list.

Thornton acknowledged in his letter, though, that negotiations with Team Summit may result in the company ultimately paying a smaller amount. The dollar amounts the attorney listed in his letter are the maximum he would recommend should the city ultimately pursue litigation over the issue.

Norris said last month, though, that he is “optimistic that Team Summit will come to the table on this. They’ve never given me any indication otherwise.”

The mayor said the company had paid every invoice that was sent to them, and that he knew the character and reputation of Team Summit, “and Timmons in particular.”

Thornton similarly expressed optimism. He said that he had talked with Timmons about the issue and that she was willing to provide the attorney with the revenue information necessary to calculate the potential cost to the company above the monthly fee.

“She’s certainly not said anything to suggest she’s going to refuse or anything,” he said.

Mosley said, “I’m confident we’ll get some money back, probably at least the $28,000.” However, the council member added that he thinks the city should get a figure closer to $70,000.

“I’m probably going to be the most aggressive one for collecting,” he said. “And there’s going to be others that are not so aggressive.”

Mosley said he believes the discussion over negotiations with Team Summit will likely take place over a single meeting.

Thornton said that if Team Summit gets him the revenue information he needs he will update the council on his recommendations during that meeting. His update will include revised figures for the proposed settlement he previously recommended.

“I don’t expect it to be a big discussion, but also I can’t control that,” Thornton said.