By J.B. Smith

Tribune-Herald staff writer

Downtown Waco Inc.’s last employees are dismantling their office and preparing to ship all records to City Hall, while board members consider pulling the plug on an institution wracked by financial scandal.

The 50-year-old downtown development agency will no longer have an office or employees by month’s end, interim executive director Toni Herbert said Tuesday as she boxed up records in the agency’s office at 801 Washington Ave.

Board members earlier this year discovered financial irregularities they have attributed to former executive director Margaret Mills, and Waco police are investigating allegations of misuse of funds.

The agency this month lost its funding contracts with the city of Waco and McLennan County, which together provided three-quarters of Downtown Waco’s budget. Downtown Waco Inc. officials say the organization cannot subsist on member dues alone.

Herbert said the Downtown Waco Inc. board met Monday and for the first time discussed the possibility of dissolving the nonprofit agency.

“Nobody has any experience with that,” she said. “We’re not certain what the criteria are to make that decision. What we do know is that we don’t have the resources to stay open past the end of the month.”

Board president Scott Felton has previously said the agency could go into “hibernation,” and Herbert said that may still be an option.

Strict stipulations

City officials have said they would not consider renewing Downtown Waco’s contract unless the agency met several goals, including a complete audit, verification that no public funds were misappropriated, stricter internal controls and more defined performance measures.

But Herbert said Downtown Waco Inc. may never be able to prove whether any misappropriated funds might have been “public.” And she said the agency can’t afford the estimated $15,000 cost of an audit, especially with no assurance of continued city funding.

“We don’t have money for an audit, and it’s not going to keep us alive anyway,” she said.

She said the police investigation would probably be more useful than an audit anyway in determining how much money is missing.

She said an audit would merely do a “spot check” for financial irregularities, then suggest internal controls for better accountability.

“We know what they would say, that we don’t have sufficient internal controls,” she said. “We could put those controls in place, but we don’t have anything to motivate us to do that, because no one can tell us if we did all those things that we would get a contract to continue.”

Herbert has been doing an internal investigation of Downtown Waco Inc.’s finances dating back to 2002, but she said police may go back further.

She said Downtown Waco Inc. is continuing to press for restitution of lost money beyond the $70,000 payment made on Mills’ behalf in late September.

She said Downtown Waco Inc. would like to have enough money to refund some $33,000 in member dues and to reimburse the city about $40,000 for an economic resource guide the agency started but didn’t finish.

As Downtown Waco Inc. executive director, Mills, 65, one of Waco’s best-known civic leaders, worked with business and property owners, city and county leaders, and others to increase downtown property values, boost its workforce and spark economic development through downtown and the Brazos River corridor. Board members and others had credited her with much of the area’s revitalization.

Herbert, who was a board member before taking Mills’ place Aug. 1, said the prospect of Downtown Waco Inc.’s demise saddens her. She said she wishes the city would give the agency a chance to get back on its feet under new management.

“This is an institution with a 50-year-old track record, and that is something that is being lost,” she said. She said Downtown Waco Inc. has accomplished great things since it became a partner with the city of Waco in 1988 under Mills’ leadership.

“I know what this place looked like 15 or 20 years ago,” she said of downtown. “It was full of empty wine bottles, tumbleweeds and dead pigeons.”

She added that Mills, despite her now-tarnished reputation, was undeniably an important force in downtown’s turnaround.

“Whatever else you can say about what has happened at this organization, there was one driving individual who did think about downtown and the river night and day,” Herbert said.

“The work that has been done in that time has included some excellent projects. She was able to move mountains.”

jbsmith@wacotrib.com

757-5752