Visit Anaheim says it will not pay back $1.5 million in pandemic relief funds that the city of Anaheim said appeared to have been inappropriately diverted.
Lawyers representing the tourism bureau said in a Wednesday, Nov. 22, letter to the city that while Visit Anaheim did send an Anaheim Chamber of Commerce nonprofit $1.5 million, the money came from the agency’s operating funds and wasn’t pandemic relief money.
The city in 2020 gave Visit Anaheim $6.5 million to help promote tourism recovery. City-hired investigators alleged that $1.5 million of that grant was surreptitiously diverted to a chamber nonprofit. City Attorney Robert Fabela in August demanded that Visit Anaheim immediately return the $1.5 million.
However, Visit Anaheim’s lawyers said the $6.5 million given by the city in 2020 to help promote tourism recovery was properly spent, and they are confident that the California State Auditor, who is investigating how the tourism bureau has spent public funds, will prove that.
“We see no basis to require the return of any portion of this funding,” Visit Anaheim’s attorneys from the firm Larson LLP wrote in the letter.
Visit Anaheim’s response, said city spokesperson Mike Lyster, “falls short of our request regarding the $1.5 million given the questions that have been raised.”
“We will continue to review the response and look to any direction and next steps from our City Council,” Lyster said.
Former Mayor Harry Sidhu directed then-president and CEO of Visit Anaheim Jay Burress to divert the $1.5 million, according to the city-hired investigators.
Visit Anaheim’s lawyers called the terms of the 2020 agreement broad. The lawyers said they’ve been able to track and review the entirety of how the $6.5 million was spent, with the majority of money going toward marketing, sales and communications. They added that Visit Anaheim initially marked the $1.5 million as coming from the coronavirus recovery funds but was changed to “normal department budget codes.”
At the end of 2021, Visit Anaheim had more than $10 million in net assets, according to tax filings with the IRS. Tax filings for the chamber’s nonprofit, called the Anaheim Economic Development Corporation, show revenues of around $750,000 a year in 2020 and 2021. Before that, the nonprofit’s revenues were far lower, having not eclipsed $200,000 since 2011.
Visit Anaheim in September ended an ongoing funding agreement with the Anaheim Chamber of Commerce, according to the letter. Burress, who resigned on Nov. 10 from his job leading Visit Anaheim, told city-hired investigators that the chamber was estimated to receive $700,000 in 2023 from a portion of Visit Anaheim’s share of a hotel tax.
Burress, according to a city-commissioned investigative report released in July, said he approached the chamber a few years ago and said Visit Anaheim was paying them too much money and there needed to be a cap.
The State Auditor is examining how Visit Anaheim and the Anaheim Chamber of Commerce have used public money. The city expects the state audit to be out in early 2024.
