A scathing report from the California State Auditor found that Anaheim’s tourism promotion agency inappropriately gave tax dollars to the local Chamber of Commerce, which then spent it on lobbying elected officials and supporting resort-friendly candidates for Anaheim City Council.
To review the State Auditor’s report, click here.
Now, state auditors are requiring both the City of Anaheim and the tourism bureau – Visit Anaheim – to track and prove where the money is going and how effectively it’s being spent, along with requiring the bureau to get approval from the city before they send money to any outside entity.
Visit Anaheim and the Anaheim Chamber of Commerce have been facing serious questions over their close relationship after a city commissioned investigation last year found Visit Anaheim gave $1.5 million of its $6.5 million COVID bailout to the Chamber.
Visit Anaheim’s CEO Jay Burress and Chamber of Commerce CEO Todd Ament have already left, with Burress abruptly resigning late last year and Ament pleading guilty to fraud charges.
[Read: Anaheim Chamber CEO Todd Ament Pleads Guilty to Fraud Charges, Could Face Decades in Federal Prison]
State auditors say that money didn’t need to be sent to the Chamber.
“The city of Anaheim paid Visit Anaheim $6.5 million for an economic recovery contract during the COVID-19 pandemic even though Visit Anaheim already had millions in estimated
tourism district assessment reserves,” auditors wrote.
Auditors wrote that by December 2021 Visit Anaheim had accumulated $6 million in unspent tourism district tax funds and that the city might not have chosen to give them $6.5 million in bailout money if they’d overseen the program properly.
“This surplus amount and the fact that Visit Anaheim had $1.5 million of additional funds to award to other entities call into question whether the city needed to award Visit Anaheim $6.5 million in economic recovery contract funds,” auditors wrote.
Through a law firm, Visit Anaheim officials pushed back on the findings of the report and argued that the tourism bureau did not have $6 million in reserves when the city gave them $6.5 million just as the pandemic was hitting – when the Disneyland resort district would be shut down for more than a year.
“Visit Anaheim only achieved a hypothetical [Tourism Improvement District] reserve amount in excess of $6 million after the close of fiscal year 2021, which was nearly two years after the COVID-19 Recovery Funds were provided to Visit Anaheim,” wrote Hilary Potashner, a lawyer representing Visit Anaheim.
Chamber of Commerce Spends Tax Dollars on Lobbying
After the city’s investigation, state auditors were called upon by state legislators to inspect Visit Anaheim.
State auditors found the tourism bureau and the city handed $6.2 million over to the Chamber without much oversight from 2012 to 2022.
[Read: What Have State Auditors Found in Anaheim’s COVID Bailout Spending?]
The Chamber then used those funds to lobby elected leaders over the years including city council members, congress members, a county supervisor, an assembly member and a district attorney – all of whom were unnamed in the report.
“The Chamber’s subcontract work plans and deliverable reports indicate that the Chamber used these funds for numerous services that involved political advocacy and influence, none of which fall within the allowable services,” auditors wrote.
Auditors also found the money was used for a variety of other purposes, generally to advocate for or against legislation, noting the city and Visit Anaheim failed to ensure they were getting any return on those dollars.
“Because the city did not have a meaningful process for contract monitoring, Visit Anaheim was able to pay the Chamber for unallowable services that involved political advocacy and influence, and the Chamber failed to deliver certain services without the knowledge of the city,” auditors wrote. “We also found that the city did not conduct substantive monitoring or oversight of these and other contracts.”
City Officials and Business Leaders Respond to Audit
In a statement to auditors, Laura Cunningham, the Chamber’s current CEO, insisted that while they couldn’t prove they did some of the work they were contracted to do, that doesn’t mean it didn’t happen.
“It is crucial to understand that an unsubstantiated deliverable does not imply the work did not occur. It is not a statement by the Auditor’s office suggesting the absence of the work,” Cunningham wrote.
She also said that the auditor’s claims they weren’t allowed to engage in political activity with the funds was incorrect.
“We respectfully disagree with this assessment, as these services and activities have demonstrably benefited the tourism and convention industries in Anaheim,” Cunningham wrote. “Moreover, such activities align with standard operating procedures for tourism improvement districts across the state.”
In a response letter to the state auditor, Anaheim City Manager Jim Vanderpool wrote city officials had no objections to the four recommendations put forward by the state.
Vanderpool also said officials will start looking at creating an independent advisory board to oversee tourism improvement district tax spending and improve contract oversight.
“The City is now preparing an action plan to implement the four recommendations well within the timeframes identified,” he wrote.
In a city news release, Mayor Ashleigh Aitken also welcomed the audit’s findings and highlighted the city’s other reforms following an FBI investigation and city audit.
“Oversight and accountability are vital to public trust, and we should always be expanding and improving,” she said. “The audit’s recommendations will be part of a comprehensive set of reforms to guide Anaheim.”
Editor’s note: Ashleigh Aitken’s father, Wylie Aitken, chairs Voice of OC’s board of directors.
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at nbiesiada@voiceofoc.org or on Twitter @NBiesiada.
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.
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