Lawmaker wants federal agencies to investigate Anaheim’s use of pandemic relief money

A local lawmaker wants the U.S. Department of the Treasury and the Department of Justice to investigate if Anaheim and two nonprofits properly used $6.5 million in pandemic relief funds.

U.S. Rep. Lou Correa sent a letter on Wednesday, Jan. 31, to Attorney General Merrick Garland and Treasury Secretary Janet Yellen asking their agencies to investigate if pandemic relief funds from the city used by Visit Anaheim and the Anaheim Chamber of Commerce broke any federal laws.

“Anaheim is going through what I would call a dark chapter,” Correa said in an interview. “It feels like we are almost out of this thing. I want to make sure all questions are to be asked.”

The California State Auditor in a report released Tuesday said Anaheim hasn’t properly managed its tourism contracts and millions in related funding, and needed to implement additional oversight and performance reviews. Correa said he wants the agencies to investigate to ensure the public funds were properly used, including $6.5 million the city paid Visit Anaheim during the pandemic to promote tourism recovery.

Correa’s request points out how state auditors said the Anaheim Chamber of Commerce used public money from Visit Anaheim over the last decade for “unallowable services that involved political advocacy and influence.” That money came from tourism district funds that are raised from hotel stays. Visit Anaheim receives millions a year from a 2% assessment on hotel room rates in a city tourism district that includes 94 hotels.

“The findings of the state audit raise serious concerns for my constituents, and the initiation of a federal investigation into this matter is in the best interest of taxpayers,” Correa wrote.

Correa’s letter also asked for the city to clarify the source of funds for that $6.5 million, citing a 2022 city document that says Anaheim allocated federal coronavirus assistance dollars to Visit Anaheim.

City spokesperson Mike Lyster said that document was wrong because of a human error.

“The city filing referenced in his letter does contain an inconsistency regarding funding for Visit Anaheim,” Lyster said in a statement. “But other sections of the filing accurately indicate that local funding was used, and that all federal relief funding was used entirely for city labor expenses under the ‘provision of government service’ as allowed by federal guidelines. We look forward to correcting the filing.

“The city’s use of federal relief funds have been extensively reviewed by auditors,” he added, “we are happy to share information with Rep. Correa or any of our federal partners for further clarification.”

The state auditors reviewed that contract and said in their report the city paid for it using its Convention, Sports and Entertainment Venue Fund.

The chamber in a statement on Tuesday defended its work, saying the activity was allowed under its contract terms with Visit Anaheim. On Wednesday, in another statement, its officials pointed out the state auditor determined in its report that federal funding was not used to pay for those contracts.

Visit Anaheim received its pandemic payments from the city before Anaheim got any federal CARES Act funding, Lyster said.

Visit Anaheim in 2020 gave $1.5 million to a nonprofit controlled by the chamber. There’s been contention over whether that money ultimately came from the city’s pandemic relief funds given to the tourism bureau. Visit Anaheim’s attorneys have said the money came from its operational funds. The state auditors, though, said Visit Anaheim could not demonstrate how much of that money came from surplus tourism public money.

The city has demanded that money back. Visit Anaheim’s attorneys in November told the city that they would not be giving any of it back.

Visit Anaheim did not respond to a request for comment.

Chamber nonprofit invoices indicate the money was used to provide services to develop shop-and-dine-local programs, identify government resources for business relief, and coordinate virtual town hall seminars, according to the state audit.