Conroe hotel tax fund audit shows $155K in plane trips and other expenses without receipts

March 21, 2024

Conroe Assistant City Administrator and Director of Finance Collin Boothe, left, visits with Councilman Harry Hardman in this file photo. A year after the city of Conroe fired its former Convention and Visitor’s Bureau director and an assistant, councilmembers say an audit of hotel occupancy taxes showed “out of control spending” that ran “amok.” Jason Fochtman/Staff photographer

*Originally posted on the Houston Chronicle. Read original article here. 

A recent city of Conroe audit of hotel occupancy tax spending between 2021 and 2022 showed “out of control spending” that ran “amok,” city leaders said this week.

The audit, which comes a year after the city fired its former Convention and Visitor’s Bureau director and an assistant, showed thousands of dollars in undocumented travel expenses for former staff.

“We were unable to determine whether or not the expenditures were an allowable use of hotel occupancy tax funds.”

Invoices for travel and training

Lupe Garcia with Houston-based Whitley Penn presented the results of the year-long audit Tuesday, noting almost $155,000 in undocumented travel, training, and contract services.

“We were unable to determine whether or not the expenditures were an allowable use of hotel occupancy tax funds,” Garcia said of the lack of documentation on more than 1,000 transactions.

Several council members were shocked at the totals, which included numerous flights to College Station, Dallas, Odessa and Detroit and dozens of ride-share trips in several cities, including South Padre Island, Houston, Irving, and Brownsville.

“I guess if there is any upside, I didn’t see Twin Peaks anywhere so there’s that,” Councilman Harry Hardman said referencing invoices the city received from California-based DPR Construction in 2022 that billed the city for a $2,000 trip to the restaurant in Shenandoah.

The city commissioned the audit after former director Shannon Overby accused the city of misusing hotel occupancy tax funds and claimed she was being harassed by Councilwoman Marsha Porter. An internal and external investigation into Overby’s claims against Porter found no merit.

Overby and her assistant Jodi Willard were hired in 2017 and terminated April 11. City officials declined to release specific details leading to the firings.

What hotel occupancy taxes fund

According to the Texas State Comptroller, hotel owners, operators or managers must collect state hotel occupancy tax from their guests who rent a room or space in a hotel costing $15 or more each day. The tax applies not only to hotels and motels but also to bed and breakfasts, condominiums, apartments and houses. Local hotel taxes apply to sleeping rooms costing $2 or more each day.

Conroe’s hotel occupancy tax rate is 7 percent of net receipts. Those funds must be used for promoting the city and can be used for events and festivals.

“What we want to do from here on out is to tighten up the external control,” said Collin Boothe, assistant city administrator and director of finance.

Nancy Mikeska, assistant city administrator and director of community development, called the audit on the the hotel occupancy funds “very strategic” and “planned.”

“I know in other departments we take great effort to make sure we document,” Mikeska said. “This is not the routine that happens at the city.”

City Administrator Gary Scott said the city no longer employs the people involved with approving and reporting those expenditures.

“We haven’t seen this in any other city department,” Scott said. “We have people in place to prevent this from happening again.”

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