YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

 

July 30, 2003

Report No. 2003-75

 

Inadequate insurance coverage and improper closed meetings noted in audit of St. Louis Regional Convention and Sports Authority

This audit reviewed practices and procedures of the St. Louis Regional Convention and Sports Complex Authority (the Authority) for the three years ending December 31, 2002.� The Authority was established in 1989 to finance, construct, operate and maintain a multi-purpose convention and sports facility, which expanded the existing A. J. Cervantes Convention Center with a new 70,000-seat domed stadium.� The stadium, named the Edward Jones Dome (the Dome),� hosts conventions, trade shows, exhibitions, concerts and sporting events, including St. Louis Rams games. �The project was a joint venture between Missouri, St. Louis City and St. Louis County.� The state will ultimately spend $355 million for its portion of the project through 2021.

50-day lapse in adequate earthquake insurance coverage for sports dome

For 50 days in the summer of 2002, the Dome was not adequately insured against earthquake damage.

The Authority owns the Dome and is responsible for its maintenance and preservation.�� However, the Authority has leased the Dome to the St. Louis Convention and Visitors Commission (the CVC), which is also responsible for the rest of the America's Center complex.��� Under the lease with the Authority, the CVC �maintains and operates the Dome and is responsible for obtaining and paying for the insurance on the Dome.

During the period from July 1, 2002 to August 19, 2002, the CVC maintained only $80 million in earthquake insurance on the America's Center (including the Dome).� CVC �officials said the shortfall in coverage was due to difficulty in obtaining insurance and sky-rocketing prices following the events of September 11, 2001. �The proximity of St. Louis to the New Madrid fault also added to the cost of earthquake insurance. �CVC officials initially estimated total insurance costs at $1.5 million for fiscal year 2003, but actual bids were approximately $2.8 million. �Due to the large increase, CVC �officials initially obtained insurance closer to the original cost estimate, which did not include adequate earthquake coverage. �However, �effective August 20, 2002, the CVC purchased additional earthquake insurance totaling $475 million, equal to the approximate value of the America's Center facilities and the amount needed to meet legal requirements.

Although Authority officials had discussions with CVC officials regarding insurance difficulties well before the July 2002 renewal date, additional efforts were apparently needed to resolve the difficulties before the lapse in coverage.

In a response to the finding, the Authority asserted it had properly exercised due diligence to ensure the CVC fulfilled it responsibilities regarding the lease. �When the Authority became aware the earthquake insurance was less than necessary, it made demands on the CVC to obtain additional insurance. ��However, the Authority stated it has taken steps to improve interaction and communications with the CVC. ��(See page 5)

Some of the Authority's closed meetings did not fully comply with the Sunshine Law

Auditors found several examples of items improperly discussed in closed session meetings, such as the use of the Authority's suite at the Dome by current and former commissioners and �inquiries from the St. Louis Mayor's office regarding the purpose of the Authority and its budget.� Authority officials agreed that sometimes matters such as these came up in closed session, but then quickly terminated and handled later in open session.� Meeting minutes did not show the length of such discussions. �In addition, the meeting minutes do not specify the particular reasons for going into closed session, which is required by state law.�

In a response to the finding, the Authority disagreed with the auditors' conclusions and asserted that the Authority's meetings are in full compliance with the Sunshine Law; however, it indicated it �has since distributed information to commissioners detailing appropriate closed meeting subjects and will endeavor to be as specific as possible when citing statutory authority to go into closed session. �(See page 8)

Complete Audit Report

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Missouri State Auditor's Office
moaudit@auditor.mo.gov

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