Anaheim leaders want to explore if they can halt funding to Visit Anaheim, following allegations the agency may have diverted $1.5 million in coronavirus pandemic relief funds to an Anaheim Chamber of Commerce nonprofit in 2020.
Anaheim councilmembers agreed in a 6-1 vote Tuesday night to ask city staff to come up with options and to see if the city can also force Visit Anaheim to end its contracts with the Chamber of Commerce.
Tuesday’s council meeting came after the July 31 release of a city-commissioned investigation into City Hall dealings, including questions of corruption, past campaign contributions, contracts, city dealings, council decisions and potential Brown Act violations.
Also see: Anaheim residents call for transparency, reforms at council’s first meeting following probe results
It was the first council meeting after the report on the investigation’s findings and the council was considering a slew of initial reforms in response.
Visit Anaheim markets the city for tourism and books the Anaheim Convention Center. It gets a steady stream of revenue from a 2% assessment on hotel rooms rates in a city tourism district, which is separate from the 15% hotel tax the city collects.
“So, what Visit Anaheim does with those funds once they are released to them, it’s really between Visit Anaheim and the chamber,” City Manager James Vanderpool told the council, but added, “It’s certainly something we can explore.”
In 2020, the city gave $6.5 million in support to the tourism agency during the early months of the pandemic to promote tourism recovery. Investigators from the JL Group alleged that $1.5 million of that money may have been diverted to an Anaheim Chamber of Commerce nonprofit, but they couldn’t determine how it was used.
Visit Anaheim and the Chamber of Commerce did not respond to a request for comment.
Mayor Ashleigh Aitken said she potentially wants to request Visit Anaheim give back the $1.5 million.
Councilmember Jose Diaz was the lone vote against exploring cutting off funding to Visit Anaheim, raising concerns that action against the agency could harm the city’s tourism business. He said the city should wait for a state audit that was approved over the weekend into public funds sent to the agency and to the chamber to be finished before taking action.
“We are rushing before having information,” Diaz said. “I don’t support these people. I just believe it’s gonna hurt the people of Anaheim.”
Councilmember Natalie Rubalcava argued Visit Anaheim would be able to survive without funding for a period of time given its reserves, and that if an audit determined there was no misuse of funds, the city could return any held-up money.
While the council had discussed doing their own audit, they agreed to write a letter of support to the California State Auditor and have city staff assist its efforts.
While looking at the proposed initial reforms, the council also directed city staffers to come back with options for potentially strengthening the city’s lobbying ordinance. And councilmembers agreed to rebrand the city’s fraud hotline to encompass whistleblower reporting by employees.
The JL Group investigators recommend the city create an ombudsman/ethics officer to monitor, in part, city campaigns and lobbying. Councilmember Stephen Faessel stressed the importance that the city work quickly to take up that recommendation to create an ethics officer.
Early in the more than seven-hour meeting, Rubalcava gave an impassioned speech for how the City Council should move forward. She said the report got it wrong in parts where it accused her of violating the city’s charter, including by giving direction straight to a city staffer.
“I respect our city staff and I have actually read our city charter and I know what it says and I have not directed staff to do anything,” she said. “As a matter of fact, I always work with our city manager to collaborate respectfully with city staff.”
Rubalcava pointed out the report made no suggestion that any current councilmembers did anything to warrant stepping down, adding that the council should take its time to consider the JL Group’s recommendations.
“I welcome thoughtful considerations.of the report’s recommendations and any beneficial insights that can be gained,” Rubalcava said. “We must resist pressure campaigns and rushed reactions to the results of this investigation.”
The City Council did not move forward with a proposed resolution to lower the threshold for what contracts the city manager has authority to sign, instead opting to study best practices from other cities and the county.
