An accountant’s report on Fair Park’s finances released Wednesday showed $5.7 million was misspent on projects that didn’t meet stipulations set by donors.
Fair Park First, the nonprofit that manages the Dallas park, said Wednesday it was looking to recoup the money.
The nonprofit pointed its finger at Oak View Group, the park’s operator subcontracted for day-to-day operations, accusing the for-profit company of ineligible expenses. OVG denied any misuse and said expenditures were approved and directed by former Fair Park First CEO Brian Luallen and former board president Darren James.
When reached by phone, James did not immediately comment on the report, which was obtained by The Dallas Morning News.
Luallen said by text late Wednesday 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.
In a news release Wednesday afternoon, Fair Park First said it has shared findings put together by Malnory, McNeal & Company, PC with Dallas Mayor Eric Johnson, the Dallas City Council and the Dallas Park Board.
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.
Donor-restricted funds were meant for capital projects in the 277-acre park, including a promised community park and art deco structures.
In a statement to The Dallas Morning News on Wednesday afternoon, Greg O’Dell, OVG’s president of venue management, said the company isn’t responsible for any deficiency in the fundraising cash account balance at Fair Park.
“More importantly, the audit report confirms there has been no fraud or misuse of funds,” O’Dell said. “OVG executed its responsibilities according to our contract. All fundraising cash was spent on Fair Park and Fair Park First exclusively, and all uses of donated funds were directed or approved by Fair Park First in writing. We have not received a demand from Fair Park First for payment of any amounts, but if received we will respond accordingly.”
The News is reviewing dozens of documents provided by OVG and Fair Park First.
In a letter sent to Lill on Tuesday, Michael Ahearn, OVG senior vice president of operations, strongly questioned the methodology of the accountant’s report and refuted its findings.
The two entities have been at loggerheads over expenses attached to projects such as the parking garage on Fitzhugh Avenue. They cannot agree on what counts as donor money that was restricted.
Fair Park First raised $17 million through April 30. Of that total, about $5.7 million in donor-restricted funds was misspent and should be repaid, the report said.
The report said OVG “failed to comply with the requirements” of the agreement between the city and Fair Park First and transferred money into accounts the nonprofit manager should have had exclusive authority over.
When accountants compared the donor-restricted receipts between 2020 and 2024 with the amount that was left in the donor account, they noticed a deficiency of $5.7 million.
Fair Park First has a goal of raising $85 million in donations and grants from state and federal sources. About $35.46 million would go to the long-awaited community park. A parking garage structure on Fitzhugh Avenue would get $30.6 million. Just over $10 million would be spent on building and art restoration projects.
Lill said Wednesday the contracts between Fair Park First and OVG and the manner in which OVG set up bank accounts led to the current mess.
A review of the contracts showed the agreement between Fair Park First and OVG limited the nonprofit’s authority to manage the park’s operator. The contract gave OVG control over funds that belong to the park — including money raised for improvements in and around the city’s 277-acre crown jewel.
OVG said although it maintained the accounts for capital improvements, financial decisions were directed and controlled by Fair Park First.
At the moment, it’s still unclear how money moved around, and that lack of clarity is at the center of the blame game between the two entities.
Missing from the picture and no longer attached to the park are the officials who were approving contracts. OVG points at Luallen and James. Lill leveled some of the blame at former OVG general manager Peter Sullivan, who was asked to leave his role by Dallas park officials late 2023, according to public records obtained by the News. It’s unclear why he was asked to leave.
Sullivan hasn’t responded to previous requests for comment and didn’t immediately respond to requests late Wednesday.
The first clarification the report gives is that it was never an audit, though it has been repeatedly referred to as one by both parties. Rather, it says, the document was an agreed-upon procedures engagement, which is narrower in scope. It does not cover all financial statements and is only focused on a specific area.
In this case, the accountants focused only on donor-restricted funds.
“Justice denied is justice delayed,” Park Board Chair Arun Agarwal said Wednesday. Agarwal said he wasn’t impressed with how the report was done and how long it took to complete. He told The News he questioned business practices used to maintain the park.
“The accounting itself shows that we need to make changes to Fair Park,” Agarwal said. “We cannot accept doing the same thing and expect different results.”
Dallas Park and Recreation Director John Jenkins said the department’s leadership was reviewing the report and would update the City Council and Park Board on next steps.
Fair Park First and OVG will brief the City Council and Park Board next week on the audit and the existing agreements.
“In all cases, we firmly believe the existing contracts with Fair Park First and the OVG360 [Oak View Group] need to be substantially amended to resolve identified contractual concerns,” Jenkins said.
Separately, the city of Dallas contracted Baker Tilly to conduct an audit of Fair Park’s finances. It’s unclear when that will be made public.
At a committee meeting Monday morning, several council members appeared frustrated they couldn’t discuss the report on donor funds because it wasn’t on the public agenda, even as Lill and current Fair Park First CEO Alyssa Arnold were there to give an annual report on activities in and around Fair Park.
“We’re going to have many questions, and it is very hard for us to hold back today,” council member Kathy Stewart said.
In a September briefing to the Park Board, Fair Park First and OVG officials told board members the cost of maintaining Fair Park far outweighs its annual revenue, especially in times of extreme weather. They noted the complexity of refurbishing old architecture.
For the fiscal year that started Oct. 1, the park has a $3 million shortfall in its accounts. The shortfall has been a pain point for both Fair Park First and OVG. Officials are missing money that could be used to make quick repairs and payments.
Part of the revenue generated in Fair Park also goes toward paying off the debt the city took on to refurbish the Cotton Bowl. For instance, excess revenue from the State Fair of Texas, which largely pays for capital improvements to Fair Park, is promised to flow into debt repayments for the next 10 years.
To raise more funding, officials have suggested that Fair Park partners, such as Live Nation, could charge a 2% service fee on tickets. That money, too, would go into repaying the city’s bonds.
But none of that money would help Fair Park First and OVG pay for repairs or daily operations. Lill has said the park needs an economic impact study and a financial plan.
Luallen raised the issue of possible fund mismanagement in April.
“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 at the time. “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.”
OVG, meanwhile, denies any wrongdoing.
“We are confident — and have documentation to support — that all uses of donated funds were with the full knowledge and approval of Mr. Luallen, acting on behalf of Fair Park First,” said Brian Rothenberg, an attorney for OVG, Oak View Group’s hospitality division that oversees Fair Park’s operations.
The city has for years envisioned refurbishing Fair Park to revive South Dallas and mend its history with the residents in the community, who have yearned to see economic progress in their neighborhoods.
Lill took the reins of the board’s management amid rapid turnover. 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.
