Both the City and Denver Zoo management need to comply with terms of their operating agreement, and the zoo’s board of directors needs to follow its bylaws and adopt some best practices, according to a report released by Denver Auditor, Timothy O’Brien, in January. Zoo president and CEO, Sharon Block, agreed with the recommendations and agreed to implement all changes by September.
Although the zoo property is owned by the city, the Denver Zoological Foundation operates it and owns the animals. That working relationship is governed by a Cooperative Agreement created in 1956, and last updated in 1998.
African Black-footed Penguins are a regular attraction at the Denver Zoo. Photo by Sara Hertwig.
“The purpose of the audit was to assess the Denver Zoological Foundation’s … role and activities associated with managing the Denver Zoo as well as the City’s and Foundation’s compliance with the Cooperative Agreement…” per the audit report.
The foundation objected to the audit—the first in 120 years—when initially notified in November 2015, only cooperating in April 2016, after the auditor sent a letter to the mayor and issued a press release calling out the obstruction.
Although the audit found the foundation follows accounting rules and some best practices regarding its Board of Trustees’ activities, the City and the foundation were not complying with four provisions of the agreement, and recommended better monitoring to improve compliance.
“Denver Zoo is on track with implementing the City Auditor’s proposed recommendations and we plan to meet all our deadlines,” said Zoo Spokesman, Sean Andersen-Vie. “In fact, some measures are already complete, such as the analysis of our Special Revenue Fund and the appointment of a City representative to our executive committee in Happy Haynes, Executive Director for Parks and Recreation.”
As to the first two issues, the audit found the foundation was not reimbursing the City for the costs of the City’s Career Service Authority (CSA) employees working at the zoo, instead, letting the City pay that out of a Special Revenue Fund, and that the City was not paying the zoo’s utility costs, both requirements under the agreement. 26 full-time CSA employees worked at the zoo in 2016, at a cost of $1.9 million, while the zoo’s utilities cost $2 million. Although the city and the foundation decided to pay the other’s expenses as a matter of expediency—the two expenses have been roughly equal—they did not amend the agreement to reflect that.
The report also found that the agreement did not require the zoo to maintain its federal license and accreditation with a national zoological association, although it has done that. The foundation agreed to develop a plan of action to update the agreement by July 1.
The third issue was that the foundation does not regularly submit its annual budget to the City prior to its approval by the foundation, as required by the agreement; in the past three years, 2014 was the only time the foundation complied with this.
The fourth issue was that both the City and the foundation were unclear about the agreement’s requirements for approval of fee changes; neither believed approval by City Council or Denver Parks and Recreation’s executive director were required to change membership and night fees, but it was.
The report said this raised questions regarding the City’s monitoring and compliance efforts, and the foundation agreed to work with Parks and Recreation to create a policy document to strengthen monitoring practices by May 1.
As for the foundation, the report found its board of trustees “could strengthen its governance practices.” While it found the board usually operated properly—e.g., kept minutes of meetings, received financial updates, etc.—its role and activities were not consistent with internal policies and additional best practices.
For example, only between 19 and 29 percent of board members were attending all meetings—bylaws require attendance at minimum of six per year, and there are currently only six meetings per year. The foundation agreed to review the attendance requirement and revise as needed by September 1.
No representative of the City had served on the foundation’s board, although the agreement required at least one; the foundation agreed to do so immediately.
The foundation also agreed to the auditor’s recommendation to provide formal board member orientation and training by April 1.
How the zoo ended its “Poop to Power” program was addressed as an accounting issue, and found to be proper. The project, terminated in 2015, was to convert zoo animal waste into fuel pellets that would be burned to heat buildings and generate electricity. The zoo wrote off $1.7 million as a loss, but Anderson-Vie said they’re still looking for someone to take on the project.
“We are open to a partnership to transfer the technology, including the equipment, programming and intellectual property, to an offsite location. We still believe in the technology and hope one day that a party with a strong desire to further their sustainability efforts will be able to apply it successfully.”
The report included an overview of the zoo’s use of recycled water and regulations under an “Other Pertinent Information” section, but issued no recommendations. It found the use of recycled water to be in compliance with government rules, it called the safety of using it in pools, ponds and tanks “uncertain” and that state and federal regulations needed to be clarified.
“The City Auditor took a great deal of time to explain the complexities of this issue and Denver Zoo is in full compliance with guidelines prescribed by the USDA,” said Anderson-Vie.
The auditor’s report is available at denvergov.org/auditor, report number A2015-021.