Dallas City Council Probes Alleged Misuse of $5.7M in Fair Park Donations

Nearly 200,000 people took to Fair Park last weekend, where the University of Texas claimed victory over Oklahoma University, but there’s a dark shadow over what many call “the people’s park.” A week after the Dallas Morning News broke the story, the City still doesn’t know why Fair Park leaders can’t explain a $5.7 million discrepancy in how donor funds were spent.

After the News‘s report on Oct. 9, the City’s Park and Recreation Department responded with a brief press release that acknowledged the report’s findings but offered little reassurance that swift action would be taken. 

A memorandum from accountants with Malnory, McNeal, and Co. to Fair Park First Chief Operating Officer Alyssa Arnold was on Wednesday’s Dallas City Council agenda. However, a portion of the discussion — including the City of Dallas’ contract with Fair Park First, the non-profit organization responsible for the park’s day-to-day management — was held behind closed doors. 

A key takeaway in the accountants’ five-page memo is this statement: 

“Determined that as of April 30, 2024, that campaign collections less net qualified expenses was $6,058,475. Compared this amount to the restricted cash account balance at April 30, 2024 in the total amount of $353,823 and noted a deficiency of the restricted cash account balance of $5,704,652.” 

The accountants say they were not tasked with expressing an opinion on the accounting records and therefore did not do so. Fair Park First officials dispute the allegation that the funds were misspent, rather saying they were “reclassified” by former leadership of the nonprofit’s board.

Deputy Mayor Pro Tem Adam Bazaldua pointed out after the council’s executive session that no one is talking about theft or fraud; there’s a question of how funds were allocated. 

“Trust was compromised,” he said. “I think it’s also important to note that is not a result of anything nefarious, criminal, or fraudulent. It was not … misuse of our tax dollars. However, someone needs to be held responsible for the trust that has been compromised with our public, with the crown jewel of our city, with the momentum and the progress that has been made at the 277 acres that does happen to sit in District 7 but is near and dear to everyone around this horseshoe as a citywide asset.”

It’s been reported that the City of Dallas hired Baker Tilly to conduct an audit of Fair Park’s finances but the results have not been released. Baker Tilly is also involved in Dallas’ national search for a city manager. 

The Dallas Park and Recreation Board is posted to review the Fair Park matter at 10 a.m. Thursday. Watch the Oct. 16 Dallas City Council meeting.

Former Fair Park First CEO Brian Luallen sounded the alarm in April, identifying the possible mismanagement of funds. 

“If the inaccurate and unauthorized reallocation of funds occurred, it is a significant matter and shakes our confidence and trust,” Luallen said in a statement this spring, according to last week’s Dallas Morning News report. “If we discover any restricted funds donated to Fair Park First were utilized incorrectly, we will do everything in our power, in partnership with the City of Dallas, to ensure those funds are returned and redirected as envisioned by the donors.”

The local newspaper said the nonprofit pointed the finger at Denver-based sports and entertainment real estate firm Oak View Group (formerly Spectra), the park’s operator subcontractor for day-to-day operations, accusing the for-profit company of authorizing ineligible expenses. Oak View Group denied any misuse and said expenditures were approved and directed by the former CEO Luallen and former board president Darren James.

Luallen reportedly told the News that when he was approving payments, it was with an incomplete picture of which dollars were going where.

“Because of the unique structure of the contract, neither I nor the board of directors had visibility into accounts payable or whether the dollars being used to pay for expenses were donor dollars or not,” he said.

Oak View Group senior vice president of operations Michael Ahearn sent an email to “undisclosed recipients” early Tuesday morning, obtained by CandysDirt.com, that many interpreted as “receipts” that Luallen was clear on the funding streams being used when expenditures were approved. The email included attachments of several email exchanges with Luallen and Oak View Group representatives. 

The newspaper reported that there’s no clarity on how the money will be recovered. 

“But Fair Park First board chair Veletta Forsythe Lill said an ongoing fight between the two organizations over the misspent donor money could worsen before it gets better,” the article states. “Donor-restricted funds were meant for capital projects in the 277-acre park, including a promised community park and art deco structures.”

Oak View Group has not only denied wrongdoing; they’ve disputed with Fair Park First for months over “what counts as donor money that was restricted,” according to reports. 

According to the News report, Lill took the reins of the board’s management amid rapid turnover earlier this year. 

“Luallen was fired, then reinstated. James left days after. Soon, five board members followed suit. Five new board members — an architect, two auditors, a banker, and a former U.S. attorney — were brought on board,” the article states. 

For more on how the City of Dallas’ contract with the nonprofit Fair Park First is structured, check out Matt Goodman’s article “Fair Park’s Misspent Millions: The Call Came From Inside the House” in the Oct. 11 edition of D Magazine. 

Dallas City Council Weighs In 

Dallas Councilwoman Kathy Stewart, who chairs the Parks, Trails, and Environment Committee, said Wednesday her committee met with those involved this week and she was profoundly disappointed. 

“We have disappointment for the people who treasure Fair Park as an asset for the City of Dallas,” she said. “We have disappointment for the neighborhoods that surround Fair Park and for the people who have made generous donations to support Fair Park.” 

Several council members questioned whether the city would be asked to reimburse funds that were misspent.

“I’m trying to understand what is the universe of outstanding funds that are owed,” Councilwoman Paula Blackmon said. “According to the contract, anything that comes as a delta, you could ask us for money. And we don’t have any money. I feel like I’m talking to my kids here. We just don’t have any money.” 

Councilwoman Carolyn King Arnold harped on the fact that numerous vendors have not been paid. Officials later confirmed outstanding invoices amount to about $6 million. 

“Fair Park is the people’s park,” Arnold said, arguing that taxpayer money is at stake. “We need to move forward, city manager, with a contract that is clear, concise, binding, no ambiguity about language, no opportunity for anyone to be arbitrary and capricious in their actions. I ask you today to do what you need to do … and we do the same as a council.”

The council did not take action at Wednesday’s briefing but Councilman Chad West suggested that after the next steps are determined, the contract language must be clarified so the chain of command is clear between Fair Park First, its operating company, the Park and Recreation Department, and the City Council.

“In my own business, if I don’t make it really clear who’s responsible for paying the credit card bill, it’s not going to get paid, and ultimately it’s going to fall on me,” West said.

Interim City Manager Kimberly Bizor Tolbert said she would work closely with Park and Recreation Director John Jenkins and report back to the council once audit results are digested.

“I think we’ve got to move with the speed of urgency, and I think Mr. Jenkins is prepared to work with us to do so,” she said. “I think we understand clearly what your expectations are. I feel that we’re going to be in sync and will be able to … keep you abreast of where we are throughout this process.”