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Fiestas Market Square sees hard times on Produce Row

Fiesta del Mercado may never be the same.

The City Council burned the midnight oil last week over a massive agenda that included inking a contract with the San Antonio Parks Foundation to operate the annual Fiesta del Mercado event at Market Square. That move takes the celebration from the hands of Fiestas Market Square Inc., a non-profit group of El Mercado merchants and citizens who have organized the only free Fiesta event for the past 20 years.

A five-year contract between the city and FMS Inc. expired in April, and Mayor Ed Garza, with a governance committee that includes Councilmen Julián Castro, Art Hall, Richard Perez, and Carroll Schubert, ordered negotiations on renewing the contract halted in 2002 after a member of FMS' board of directors questioned how the 10-day event was operated. The governance committee then requested an audit by Patricia Major, the city's independent auditor.

Major's preliminary report suggests that FMS has seriously breached its contract with the city while conducting Fiesta del Mercado.

"They have no grasp of cash control and business practices. They should not be allowed to participate until the repercussions of the audit is solved."
— Auditor
Patricia Major
According to the city contract, the FMS board of directors couldn't pay themselves for work performed during the popular event, which features mariachi, conjunto, Tejano, country, and rock music at Market Square. Despite this restriction, Major said that board members collectively received $107,000 over the past five years, adding that the amounts paid and reported to the city do not jibe with the numbers several board members reported to the Internal Revenue Service.

"The `board's` minutes said their intent was to pay themselves, not to adhere to the contract," Major said.

Furthermore, people who were paid for working at the event weren't issued 1099 forms to report their income to the IRS.

Various food booth operators at the Fiesta event ran a lottery, where tickets cost $25 apiece. Major reported that her audit found operators earned $169,000 from these tickets. "We believe it was a gambling practice that is not acceptable," she said.

Major also found that some people had contracts to run booths, but didn't operate them. One vendor at the event had no sales tax permit, and another, from out-of-state, did not have a Texas tax certificate, and didn't pay taxes after the event. Even some local vendors didn't have city permits.

The League of United Latin American Citizens, which ran 12 booths, hasn't paid Fiesta Market Square five years' worth of operating fees. Invoices and other paperwork are missing, prompting allegations of sloppy bookkeeping.

Major recommended that the City Council "debar tenants and the association from participating in other events. They have no grasp of cash control and business practices. They should not be allowed to participate until the repercussions of the audit is solved."

Patricia Horsford, director of FMS, who has been on the job for 14 months, defended her organization and pleaded with the council to slate a smaller B session to allow the group to respond to the preliminary audit. "We've tried to correct issues. We haven't had a full audit."

She addressed the auditor's charge that FMS wrongly expanded Fiesta del Mercado and conducted other events besides the main Fiesta party. This violated the contract because City Council was supposed to approve the extra venues. "City staff knew what we were doing. We were led by the city staff. We had the authorization from the city."

Major's audit prompted Councilman Castro to mention his distaste with a "shut up and vote" mentality that has prevailed in City Hall over the past two years. He had circulated a six-signature memorandum to bring the issue into B Session because those involved in staging past Fiesta del Mercado celebrations have a spirit of family and community that should be accounted for when considering the contract. He also said the city manager's response to the audit would "define what kind of culture we have at City Hall."

Parks and Recreation Department Director Malcolm Matthews admitted that city staff assigned to help the FMS group stage Fiesta del Mercado might be guilty of helping the organization too much - in the name of customer service. District 5 Councilwoman Patti Radle acknowledged FMS fears that once the contract for the event is taken away, FMS might never retrieve it, unless they resubmit another proposal.

The audit also heightens tensions between Major and City Manager Terry Brechtel, who said she would have to reconsider how internal audits are conducted by city staff.

"We don't agree with everything in the audit either," Brechtel said. "There's more to come on this issue." •

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