A city performance audit critical of how the Anaheim Chamber of Commerce administers the city's enterprise zone found that the business group has been inadequately tracking expenses using staff time-keeping methods that are “not reliable,” according to sources who have seen the audit and said it's been delayed for months.
Despite not documenting staff time reliably, the chamber requested a $600,000 increase in its city contract earlier this year, citing the need to hire more staff for day-to-day tasks.
Council members awarded the requested funds at their May 14 meeting, bringing the total contract amount to $2.9 million over five years.
Mayor Tom Tait, the only council member to vote against the contract increase, argued that the council shouldn't be granting the chamber more funds without first seeing the performance audit, which has yet to be released.
At the May council meeting, Planning Director Sheri Vander Dussen said the audit would be complete in June, but sources said chamber President Todd Ament has been delaying finishing the audit for months.
Ament did not return a call seeking comment.
Paying city funds to the chamber has been one of many political battles fought between Tait and the council majority, which is supported by the Disneyland Resort and other high-powered business interests.
Enterprise zones grant tax credits to businesses that hire from economically disadvantaged areas.
Earlier this month, Tait pushed to have the contract terminated after word that the state would eliminate the enterprise zone program by year's end. The council majority argued that canceling the contract was premature.
According to City Hall sources who have seen a draft of the audit but would speak only on condition of anonymity, the chamber's four-to-five time keeping systems for its handful of employees are confusing, inadequate and not used consistently.
It was difficult to tell whether the chamber was using enterprise zone funds for other chamber expenses because of unclear time keeping, sources said. The audit didn't conclude that enterprise zone funds were being inappropriately spent.
Mayor Tom Tait said that such findings confirm that it was imprudent to award a contract increase before the audit was finished.
“Without an audit trail, the council cannot know whether our funds were spent appropriately,” Tait said. “It was irresponsible to vote for a $600,000 increase without such verification.”
Other council members could not be immediately reached for comment.
An agenda staff report submitted by Vander Dussen for the contract increase in May downplayed the draft audit's findings. It said that city officials had received “positive feedback” and mentioned only “minor” internal controls issues. There was no mention of the difficulty in tracking chamber staff time.
“These observations have related to minor elements of the administration of the [Anaheim Enterprise Zone] and do not involve any significant issues,” the staff report states.
The chamber has implemented a new system that Ament says will better track staff time, sources said.
Meanwhile, the chamber has also engaged in political spending.
Considering that it is unclear how the chamber is spending city funds, their political spending has raised eyebrows at City Hall. “It is very concerning,” Tait said.
Matthew Cunningham, a blogger who promotes the council majority, has received between $10,000 and $100,000 from the chamber, according to a statement of economic interest he filed with the county.
The chamber earlier this year purchased an advertisement in The Orange County Register touting the council majority. And the chamber's website has promoted Councilwoman Kris Murray's June 25 fundraiser.
Cunningham, who recently resigned from the Voice of OC Community Editorial Board, didn't deny that he is being paid by the chamber to run his political blog, but he also declined to comment on his contract with the business group or show it to Voice of OC.
“I'm a private business, and my contract is with a private organization … so no,” Cunningham said when asked for a copy of his contract.
The audit also found other issues, like a potential conflict of interest with having the chamber, which is controlled by businesses, awarding government tax vouchers to businesses, according to sources. And a chamber luncheon event that was supposed to achieve multiple goals under the program, like a youth networking event, appeared not to have fulfilled all those goals, a source said.
This isn't the first time a city-commissioned audit has found problems with the chamber.
In 2007, auditors found that the chamber was facing “serious solvency concerns” and a “potential inability to meet its short-term financial obligations.” In a 10-month period, the chamber turned a profit only during the three months it collected revenue for city events, according to the report, suggesting that the chamber had relied on city funds to stay afloat.
The business group was also not complying with generally accepted accounting practices, the report concluded.
That audit also found that the chamber was increasingly going into debt to sustain operations, including a $50,000 corporate loan and credit card debt. The review recommended “monitoring the Chamber's progress through future contract audits.”
However, the draft performance audit did not review the chamber's finances.