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CRVA bows to pressure to replace Newman

Embattled CEO will stay with the tourism agency as an executive.

By Steve Harrison
sharrison@charlotteobserver.com

Yielding to pressure from Charlotte Mayor Anthony Foxx, the board of the Charlotte Regional Visitors Authority announced Thursday it will hire a new chief executive - though current CEO Tim Newman will stay with the organization.

The authority has been under intense pressure from the City Council and Foxx over its management, and Foxx on Tuesday in a press conference suggested Newman should no longer run the organization.

Newman will remain as an executive responsible for sales, marketing and business development while the board conducts a national search, according to a CRVA memo.

Council members have twice voted 7-4 against giving the CRVA the $10 million it has requested for the current fiscal year. They voted instead to only give the CRVA $2.5 million. Foxx and the council said they wanted more information from the organization about how it was going to improve its organization before releasing the money.

The council is scheduled to vote again on Monday whether to release the $10 million.

The CRVA has faced criticism over its inflated attendance projections for the NASCAR Hall of Fame, for its discretionary spending on dinners and sports tickets for people who aren't clients, and for bonuses paid to an employee by the CIAA basketball tournament.

It's believed that the decision to hire a new chief executive will satisfy Foxx and the council, and they will support releasing the rest of the money Monday. That money is for Visit Charlotte, a branch of the CRVA that's responsible for marketing the city.

It's unclear how the CRVA will pay for the new position. Newman's total compensation is roughly $300,000, and the board has said in the past that is the going rate for a leader of a tourism authority.

The CRVA's total budget for administration is $3.7 million, meaning a new leader could increase those costs by nearly 10 percent if other cuts aren't made.

Newman will remain as CRVA chief executive until a new chief executive is hired.

Council member Andy Dulin voted earlier this month to withhold the full $10 million, saying that it was important to make sure tax dollars were being spent properly. He said he still has questions about how the CRVA will pay for the new leader.

"It will be adding another layer of administrative expense at CRVA," Dulin said. "If Tim was making $300,000, no telling what they will have to pay the new guy. What are they planning on cutting?"

CRVA spokesperson Molly Hedrick said the new chief executive will determine job duties and compensation for his employees, including Newman. The board sets pay for the chief executive.

She said the CRVA staff - including board members - weren't granting interviews Thursday.

Newman has been the CRVA leader since 2004, when the authority was formed. The CRVA is funded in part from taxes on hotel and motel rooms, along with a 1 percent tax on prepared food and drinks in Mecklenburg County.

Newman has had the backing of many in the hotel industry, who have said he helped them bounce back from a severe drop in business from the recession. The CRVA landed the CIAA basketball tournament, perhaps the city's biggest event, and helped bring the Democratic National Convention to Charlotte in 2012.

But the authority came under heavy criticism soon after the NASCAR Hall of Fame opened last May. The CRVA manages the city-owned hall, and had said first-year attendance would be 800,000 - a projection a consultant later said was made with little supporting evidence.

Paid attendance instead was about 262,000 and the hall will likely lose $1.2 million for fiscal year 2011. The bad news has continued: In May and June 2012, the first months in which attendance can be compared to the same period a year earlier, the number of hall visitors has dropped more than 30 percent.

Newman also rankled Foxx and other council members in other ways. In April, the Observer reported the CIAA paid a CRVA executive more than $115,000 in bonus payments. CRVA employees aren't allowed to be paid from outside the authority payroll, but Newman had routed the money through the organization - a move that angered some employees.

A consultant later said such payments were common and OK, though they should have been part of a CRVA contract.

In May, the Observer reported that Newman and the CRVA often treated local business leaders and public figures to expensive dinners, alcoholic drinks and to sports and concert tickets. And board members routinely accept thousands of dollars of free tickets to events at the Time Warner Cable Arena.

The CRVA board voted in April to hire PricewaterhouseCoopers for $25,000 to review management practices. That turned into another crisis, when the CRVA in June only released a board-written summary of what the consultant told them. The summary had little detail and nothing negative about the authority.

Under pressure from council members and Foxx, the CRVA then asked PricewaterhouseCoopers to write its findings. The consultant criticized some of management practices, including the inflated hall projections, and said the authority was suffering from a "crisis of credibility."

The CRVA board - appointed by the mayor and council members - has been working on an improvement plan to correct areas such as expense account reporting. The board hasn't discussed details yet.

Foxx released a statement Thursday afternoon that said the decision by the CRVA board "is its most decisive statement yet that important and necessary changes will occur, changes that will improve its performance, accountability, and efficiency. I do hope to learn more about their approach, which is a step forward, and I look forward to more conversation on Monday."

CRVA operating officer Mike Crum will also stay with the organization, but it's not clear what his role will be. Earlier this month, the CRVA board announced Crum and Newman would stay with the CRVA, but wouldn't work with a contract.

In its memo to Foxx and council members, CRVA board chair Joe Hallow and vice-chair Vinay Patel wrote that its operational improvement is ahead of schedule.

"Given our progress to date, we would like to request that the Council release the remaining funding for Visit Charlotte," they wrote.

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