CitiFest, Erie St. Market fail to pay employees

11/6/2007

At least 10 employees of the Erie Street Market and CitiFest Inc. - some part-time, some full-time - didn't receive their biweekly paycheck Friday because of the financial problems of the market and its management agency, CitiFest.

It was not clear yesterday when the employees would get their pay.

Brian Epstein, chairman of the CitiFest board, would provide no details of a board meeting held yesterday but said he believed the board was close to a solution.

CitiFest is overdrawn by about $40,000 on its account at Fifth Third Bank.

CitiFest has overseen the Erie Street Market through a management agreement since 2004, and the funds of both organizations are kept in one account, officials have said.

The financial crisis of the nonprofit agency, which manages entertainment events downtown and in Promenade Park, burst into the open Friday when employees did not get paid.

Yesterday, Mayor Carty Finkbeiner reiterated that he wants a third-party audit done as soon as possible. He said it could be done by City Auditor Scott Wheelock to save money, and findings could come by the end of this week or next week.

He stressed that the holiday parade set for Nov. 24 will go on as planned.

"If those books are in order, all of us will look at how that situation was allowed to develop, and, board members and city alike, how we move from here to correct that," the mayor said. "We're not going to correct it at the expense of the Thanksgiving Holiday Parade, and we are not shutting down the Erie Street Market."

He speculated that CitiFest would be reorganized or moved under another organization in 2008, possibly the Greater Toledo Convention & Visitors Bureau.

Mr. Finkbeiner said he didn't realize until last Tuesday that CitiFest was in a financial crisis. Mr. Epstein attributed CitiFest's shortfall to operational losses of about $90,000 from the Erie Street Market.

CitiFest began raising warning flags more than a month ago:

•Minutes from CitiFest's board meeting of Sept. 20, attended by 10 people, including a member of the mayor's staff, show that the board discussed "the lack of reimbursement from the city of Toledo on expenses incurred by CitiFest to operate the market."

•A letter to the mayor and City Council dated Oct. 25 said CitiFest is "in a poor financial situation," and the board had decided to terminate its oversight of the Erie Street Market and turn it back to the city as of Jan. 31, 2008.

•In a letter to Todd Davies, commissioner of economic development, dated Oct. 25, Mr. Epstein requested reimbursement to CitiFest of $91,848 for its expenses in managing the Erie Street Market. In the same letter, Mr. Epstein reminded Mr. Davies that the city, not CitiFest, is responsible for the market's financial obligations.

Mr. Finkbeiner said CitiFest should have dealt with the financial problem earlier in the year.

"CitiFest knew from the beginning of the year 2007 what they were receiving from the city of Toledo and were moving forward until Oct. 30 without any words of crisis or emergency," the mayor said.

Connie Hoffmann, manager of the market, was not ready to concede that the market has indeed run up $90,000 in red ink.

"I don't know. I'm waiting for the audit," Ms. Hoffmann said.

Employees of the market received a letter from the mayor on Friday apologizing that they weren't paid, and assuring them "we are working to resolve this issue immediately."

Ms. Hoffmann said three full-time maintenance staff and six or seven city police officers who provide security part time at the market did not get paid.

Also not paid were the employees of CitiFest.

Ms. Hoffmann said she did receive a paycheck because she is paid through Erie Street Market Catering LLC, which owns the liquor license and operates the Civic Center Promenade catering and event space, which occupies one of the four bays of the Erie Street Market.

Contact Tom Troy at:

tomtroy@theblade.com

or 419-724-6058.