Audit Finds Abuse of Discount Program at County-Owned Hotel

The Dana Point Marina Inn, the county-owned hotel where an employee discount program was abused. (Photo credit: Expedia)

The Dana Point Marina Inn, the county-owned hotel where an employee discount program was abused. (Photo credit: Expedia)

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The county-owned Dana Point Marina Inn handed out steep discounts to high-level employees of Dana Point Harbor and the city of Dana Point for hundreds of room nights at the hotel under a little-known and poorly documented program that had no approval or oversight from the Board of Supervisors, according to an audit released by the county Auditor Controller’s Office Wednesday.

All told, the hotel, which is operated by the Great Western Hotels Corporation through a contract with the county, gave employee discounts for 988 nights between 2009 and 2015, the audit found. And some of the officials who took advantage of the program had direct oversight responsibilities for the hotel’s contract.

In 2013, one key Dana Point official, who was a county employee on contract with the city, used the discount for 147 nights in a row, the audit found.

Through the program, employees and their friends and families enjoyed rates as low as $35 to $50 a night at the hotel, compared to the average room rate of $102. The discount is meant to fill rooms during slow seasons by offering friends and family of employees or county business partners a discount on rooms that otherwise might be vacant.

The discount has potentially cost the county an estimated $62,491 in room revenue, according to the audit. The county received $1.02 million in revenue from the contract during the last fiscal year.

Auditor Controller Eric Woolery said that while hotel discounts are a standard industry practice for filling rooms during slow times of the year, a lack of clear guidelines on who is allowed to use the discount opens up the potential for conflicts of interest and gifts that might go undisclosed.

Despite rules that required requests to be submitted in writing a week in advance, the hotel also failed to keep records justifying many of the discounted rooms, the audit found.

“You had key managers using it heavily, and you didn’t have controls so you could know who was getting the room and whether they bumping people paying the full rate,” said Woolery.

Conflicts of Interest

The audit raises the question of whether hotel management and Dana Point Harbor management had the authority to give the discounts without the approval of the Board of Supervisors.

A 2015 letter from a Great Western Hotels vice president suggests the discount program began in 2003, but it never came before the Board of Supervisors and has never been reviewed by county attorneys, leaving questions about what kind of employees should have access to the discount and potential conflicts of interest.

“For example, if a county employee is responsible for participating in ­the award of an operating agreement, extending the term or monitoring the performance of the operator, a concern could arise as to whether receiving discounted rates could potentially result in a conflict of interest for the employee, especially if the discount is utilized by a small group of…employees,” the audit reads.

The report also cites the county’s gift ban and the state Political Reform Act, which requires certain employees to disclose of gifts valued at $50 or more.

In addition to the Dana Point manager who stayed for 147 nights in a row, the audit identified another Dana Point official and at least two key county managers with Dana Point Harbor with oversight over the hotel operator’s contract, performance and budget, who used the discount.

All four of those managers are considered “designated filers” by the state, meaning they are required to report any gifts.

Between 2013 and 2015, hotel employees made up the majority of discounted nights. Of the 132 discounts given to employees of Dana Point Harbor, 75 were for a single manager, who is now retired.

Audit Recommendations

Dana Point Harbor management suspended the discount program as of October 23, 2015, according to Woolery’s office.

Should the program be revived, the report suggests the county create an official policy clarifying who is eligible for the discount and that it be reviewed by county attorneys for compliance with state law.

Supervisor Chairwoman Lisa Bartlett, who served as the mayor of Dana Point in 2014 before she was elected to the Board, and now represents that city as a supervisor, said through her chief of staff Paul Walters that she was not aware of the discount and had never used it.

The Marina Inn audit is one of four audits about Dana Point Harbor conducted by the Auditor-Controller’s Office. Additional reports will be released in the coming weeks, said Woolery’s spokeswoman Meg Waters.

Contact Thy Vo at tvo@voiceofoc.org or follow her on Twitter @thyanhvo.

  • UnitedWeStand

    Don’t you just love it when politicians bash the government, but then when something like this is revealed under their watch, they say they didn’t know about it. All politicians lie, the big problem in Orange County is that it is all one political party, 98% conservative, so there is no check and balance.

  • Shirley L. Grindle

    I am really disgusted with the discounted hotel room rates – especially when given to county employees. As far as I am concerned, these discounts are “gifts” and are prohibited by the County’s Gift Ban Ordinance. Msr. A on your June ballot will establish the “Campaign Finance and Ethics Commission” and one of its functions will be the enforcement of the Gift Ban in OC – which has been sorely lacking in the past.

    • Jacki Livingston

      A grateful client once gave me a small gift basket of Bath and Body Works bath gel and lotion. My supervisor made me donate it to Operation Santa Claus. So, um, yeah, it is being enforced for the little people…just not the bigwigs.

      • OCservant_Leader

        Oh yea. I remember when My manager (“Family” operative) made a big deal about a vendor dropping off bagels at X-Mas.

        It was laughable. He Personally threw them in the garbage as a heroic act. Then he went back to working on the BOS campaigns and giving himself a bonus.

        They are taught this in an effort to fool the little County Employees.

        • Jacki Livingston

          And they aren’t fooling anyone. They could’ve donated those to the food bank. What jerks.

  • John Claxton

    1 manager stayed147 nights in a row? Get a cop of his 700 form and let’s see what it says.

    • Kathleen Tahilramani

      Just think about the inflated salaries these managers were/are receiving. How cheap can they get? Were the rooms political favors/payback? Were they homeless Norby style? Talk about having zero pride or self-respect.

    • Jacki Livingston

      That’s not a hotel room, after that long. That is renting an apartment.

  • Philmore

    Um, has anyone told the Hotel management about websites like Travelocity, Expedia, Hotels.com, etc, which THE REST OF THE INDUSTRY uses to monetize unsold rooms (I guess, after they run out of friends and relatives ) ??

  • chubbers

    What is it with South County?
    You know who you deal with in North County. Sure it needs work and issues with homeless.
    Then on the other hand, in Gods Country, South County, beautiful communities, association fee galore, Capistrano School issues, the abuse at the Old El Toro Marine base, people who have a higher caste mentality dislike “illegals” but hire them under the table to do yards housework etc.
    The abuse at the hotel is not remarkable. Living in South County may seem as a land of calm but that is merely a rice paper coating.
    I remember many of the people who paid off their homes in the North County, and Los Angeles wanted a new place to live, a new start, in “better neighborhoods”.

    • Kathleen Tahilramani

      What exactly is your point? North/South the corruption is all the same.

      • chubbers

        My point exactly!
        No matter where you live, no matter how delusional a person is with regards to where they think a better caste of people live in South County.
        They can be criminals, sex offenders, embezzlers, cheats, thieves, overextended credit, tax evaders, basically the whole strata.

        • Kathleen Tahilramani

          It is the same corruption everywhere, different players same game.

  • Paul Lucas

    The county owns a Hotel?

    • Jacki Livingston

      Boggles the mind, doesn’t it?

  • OCservant_Leader

    See why you need to control County Audits?

    The scope and TIMING is all important to these scams. All the necessary moves and PR packages have been planned out.

    They always allow for the OC “Courtesy Retirement” of staff and sufficient time after Supervisor moves on if the stink of scam has to rise.

    • Kathleen Tahilramani

      Yes, what and when did Bates know about this? What about Giancola – yup there is a stink here.

  • Cynthia Ward

    Um….WHY does the County own a hotel?

    • David Zenger

      It’s all part of the DPH package. It owns the commercial stuff there, too. Then it hires people to oversee it.

      Funny stuff has been going on down there since Day 1, and everybody at the County knows it. But the harbor was also the plaything of the 5th District Supervisor, whoever that would be, and so nobody was supposed to ask questions.

      Tom Wilson made Dana Point Harbor a separate department from Harbors Parks & Beaches and that really took it off the oversight grid. Pat Bates continued to hunker over it like a hen on a clutch of eggs. But had no clue about what was going on, and her staff was useless. It was just the same old County song: don’t ask questions and whatever you do don’t bring a Supervisor bad news.

      And the band played on…

    • Jacki Livingston

      Because a homeless shelter would make too much sense?

  • David Zenger

    Wow, what a difference three years make. In April 2013 Peter Hughes whitewashed the Dana Point Harbor PDI monkey business and Brad Gross’s incompetence. The Board of Supervisors said nothing. This was Bates’s toy and she wanted a cover up.

    Later in 2013 Gross refused to answer questions put to him by the Grand Jury.

    This is precisely what happens under the noxious practice of “district prerogative.”

  • Can you believe that this atrocity was just discovered now after all these years. Government employees cannot receive discounts not available to the general public and certainly Brad Gross, as manager of the Harbor, and Dana Point City staff cannot either. Gross’ retirement is not coincidental. Dana Point Harbor has been a mess and a black eye on the County for years. The Board of Supervisors will ensure that any criminal activity found is forwarded to the DA. Thank you to you and your staff Mr. Woolery.

    • David Zenger
      • Kathleen Tahilramani

        Mr. Z – too funny! That clip made my day. It sums up nicely my feelings about Spitzer’s “outrage”.

        • David Zenger

          I wonder if Todd ever took complimentary tickets for shows and drinkies at the County Fair.

          Well, no I don’t wonder.

          • Kathleen Tahilramani

            Me neither. Bet his outrage is more about not being invited to the Dana Point hotel room party.

    • Kathleen Tahilramani

      Get off your plastic fake high horse cowboy. Your “outrage” is as fake as your smile. Your threat of criminal prosecution is a massive joke. You love all the done and over stories from another district but ignore what is right under your nose. But then again expectations for you are low given your poor judgment. You should have been prosecuted for pulling a gun on and cuffing an annoying but innocent man. So, your huffy calling out of the well known and long ignored Dana Point mess is just another one of your vapid publicity stunts.

      • Jacki Livingston

        *standing ovation*

    • OCservant_Leader

      NO ONE believes that Building 10 – didn’t know all about this scam. This is no surprise to anyone except the public.

      All involved knew the scam would have to be exposed when the Audit schedule was decided. Then the cleaning crew gets to work, moving operatives to other County jobs, arranging for retirements and negotiating what will be exposed.

      • Kathleen Tahilramani

        100 percent on target. For Mr. Ready,Fire,Aim to act all shocked and awed is laughabe; For him to “Thank” Wollery make me want to gag….what a farce.

        • Jacki Livingston

          Maybe this hotel is why Toddy keeps those handcuffs in his car?

          Fifty Shades of Spitzie *skips off*

          • Kathleen Tahilramani

            OMG that is funny but I did almost throw up in my mouth……

          • Jacki Livingston

            Sorry, Kathleen. *hands over Mental Magic Eraser (patent pending)*

            My bad.

          • Kathleen Tahilramani

            Hope you get that patent and make bazillions of dollars!!!!!

          • Jacki Livingston

            If I do, I am starting a firm and hire only former county employees who did the right thing and got screwed over for it. We will fight for people who have no voice, for the downtrodden people eyeing plastic forks and knives in fast food joints, and free them from their cuffs! *climbs up on table with cardboard sign a la Norma Rae* We will be the Breaker of Chains, like Daenerys! We will have dragons and justice! *shrugs* Awww, who am I kidding? We will sit around and make fun of Spitzer. But it will pay well!

    • John Claxton

      ” The Board of Supervisors will ensure that any criminal activity found is forwarded to the DA”. And what’s he going to to about it? We all know not a darn thing.

      • Kathleen Tahilramani

        The thought the T-Rack would care a wit about anything Spitzer fronts is funny. You are so right on – the DA will not even give this situation a passing glance.

        • Jacki Livingston

          Can you imagine the hilarity of T-Rack reading some self aggrandizing, pretentious scolding letter from Toddykins, maybe to SusieQ? Now that’s funny, right there. He might need help with the big words, but then it goes into the circular file, and the band plays on.

    • Jacki Livingston

      “The Board of Supervisors will ensure that any criminal activity found is forwarded to the DA.”

      *falls over screaming with laughter*

      Oh, dear….that’s funny. I doubt if even you could type that with a straight face. Priceless. I mean…it is just so ridiculous, so novel, so unheard of.

      Though, I suppose there is a first time for everything. But I won’t hold my breath.

    • Jacki Livingston

      Oh, and am I the only one who has noticed that you really are starting to sound more and more like that television star? You know? Eric Cartman? “You will respect mah authori-taaaaaay!!!”

      Just sayin’