Thursday, September 9, 2010 | With the economy staying bad and budget deficits still going up, Anaheim is about to do what many other California cities have already done: pass another tax on tourists.
But unlike most other cities that have implemented such a tax — including San Francisco, Newport Beach and Costa Mesa — Anaheim doesn’t have concrete plans for strict oversight of the estimated $9 million that will be raised by the tax, nor for providing residents with the ability to hold those in charge of the largesse accountable.
Among the financial and public policy protections that other cities spelled out, but that Anaheim has not, are requirements for annual audits by a certified public accountant and public meetings by the tourism and transportation governing boards created to manage the money.
Anaheim officials say there will be some sort of audit requirement and they may consider public meeting and open records rules before the ordinance creating the “Tourism Improvement District” gets final City Council approval, which should happen this month.
But that is not the way it usually goes. San Francisco, Costa Mesa and Newport had the protections in place before government officials were asked to consider creation of the special tax and before hotels were asked for support. More important, state law requires the board meetings and agency documents to be public.
“These funds are taxpayer funds,” Costa Mesa Assistant City Manager Tom Hatch said.
Tourism improvement districts are special areas within a city where hotels are required to pay a tax, which they can pass along to customers. Money from the tax is collected by the city but turned over to a contractor who uses the money to promote tourism. The new tourism assessments are on top of hotel room occupancy taxes that most cities currently impose.
Hotels have pushed for these taxes in recent years because once a city enacts an ordinance creating such a tax, the city can enforce it, requiring hotels to pay up or face penalties or, in extreme cases, liens on property.
Anaheim intends to use the Anaheim Visitors and Convention Bureau as its contractor once the 2 percent tourism ordinance goes into effect later this year. The goal is to counter the booster ads of Las Vegas, San Diego, San Francisco and other areas and particularly to entice more big groups to use the Anaheim Convention Center.
Beyond Newport Beach and Costa Mesa, Dana Point has a tourism promotion fee. Garden Grove is also planning to impose a new tourism tax.
Anaheim will also use part of the money it raises to help pay for a new transit system to link its train station to the resort areas. Anaheim Mayor Curt Pringle sits on the Orange County Transportation Authority and is chairman of the California High Speed Rail Authority.
Garden Grove plans to use part of its tourism tax funds for improvements on Harbor Boulevard.
San Francisco asked its hotel managers to vote on its plan before it was adopted last year.
“We wanted to be sure we were asking the hotels to vote on something they knew what it was,” said Joe D’Alessandro, president and chief executive of the San Francisco Visitors and Convention Bureau. “We felt there was an obligation to the community that is participating to be as transparent as we could.”
Besides, he said, when they were forming the taxing district, they checked other areas and “we really tried to learn from the mistakes” of others.
Charles Ahlers, president of the Anaheim/Orange County Visitor & Convention Bureau said there was no hotel vote in Anaheim and the only documents provided in advance were the petition to the city asking that the district be formed and a general description of what it would do. But those who wanted more information could get it, he said.
“We didn’t have a vote” of the hotels, Ahlers said, but got approval “in spirit. Everybody knew about it and embraced it.”
When the issue came before the Anaheim City Council last week for a public hearing, there was no opposition. It still faces final approval by the council. During the last meeting, Pringle said he backed the plan and Councilwoman Lorri Galloway said she was “extremely supportive from the first time I heard” about the proposal, adding it “will make everything better.”
In its management plan, completed before the city took action on its new tourism tax, San Francisco requires that the tourism district be “very transparent and responsive to all sectors of the diverse TID hotel community.” It requires the board, which decides how to spend the money, to meet in public.
Newport Beach went further. It requires those who run its tourism improvement district to be specifically taught about California’s Brown Act and open meetings.
Neither Anaheim city staff nor Ahlers said they had considered whether the new tourism governing board or transportation board falls under the nearly 50-year-old Brown Act, which requires government agencies to hold meetings in public.
San Francisco’s rules specifically incorporate state law saying the management corporation and governing board “shall be open to the public” and “records concerning the TID are subject to public inspection in accordance with the California Public Records Act.”
In addition, San Francisco’s law permits it to disband the special tax district if there is financial wrongdoing.