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Anaheim City Councilmembers dipped into city reserves during a special meeting Thursday night and authorized a $15 million economic relief package, including $6.5 million to advertise the Disneyland-area resort industry.
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The proposal brought forward by the city’s Republican Mayor Harry Sidhu also grants $2 million to the Anaheim Community Foundation to provide direct assistance to residents and community nonprofits. Up to $6 million will be directed to homeless services and housing assistance for residents.
One of the main dissenting votes, Republican City Councilwoman Denise Barnes, criticized the move, voicing specific concerns about funding resort advertising with reserves while the city is barely covering its current operations.
“It’s come to my attention we have a good healthy two-month reserve at this time,” said Barnes at Thursday’s special meeting.
Barnes said the city has to defend its current reserves and wanted to review Visit Anaheim’s finances, the organization that will get the $6.5 million to advertise.
“Are they showing their books on how much on their reserves?” Barnes asked. “Have we looked into the hotels who wrote all the emails to see what reserves are on their books?”
Councilwoman Lucille Kring, also a Republican, said the organization is hanging on by a financial thread, yet doesn’t know how much cash it has on hand.
“I don’t have any idea how much Visit Anaheim has in their reserves,” Kring said. “I know they’re on a shoestring budget, they have furloughed a lot of their employees … so they are hurting too.”
Sidhu proposed the $15 million package because large swaths of the economy shut down due to Gov. Gavin Newsom’s stay home order to combat the spread of the novel coronavirus. Bars, dine-in restaurants, nightclubs, theme parks, sports venues and other resort-related businesses have been closed.
Visit Anaheim is funded by an additional two percent increase on top of the citywide 15 percent hotel room tax. And 20 percent of that hotel tax goes to pay off 1997 resort bonds, while all of Disney’s incremental sales, hotel and property tax pays down the bonds.
The Council majority very clearly sees the resort district as Anaheim’s economic engine.
Councilman Steve Faessel, a Republican, said Visit Anaheim has already lost $10 million.
Barnes, along with Democratic City Councilman Jose Moreno, argued the hotels and other resort businesses should pay for the advertising. Moreno dissented and Barnes abstained on Sidhu’s proposal because of the $6.5 million earmarked for resort advertising through Visit Anaheim.
Democratic City Councilman Jordan Brandman supported the Republican majority, voting for the $6.5 million bailout package for resort advertising.
“We’re going to give that away. It’s important that we have enough help for all emergencies. Why would we give away our most precious operating reserves for agencies who should already have that?” Barnes asked. “I cannot, in good conscience, give our reserves to private businesses who have their own reserves.”
“Mr. Mayor … what should our priority be right now? It seems to me it should be on our residents and small businesses,” Moreno said.
City Manager Chris Zapata, through Moreno’s questioning, said he didn’t recommend the Council give $6.5 million to Visit Anaheim.
“Let me say this. I do agree on the plan’s three-pronged approach,” Zapata said. “However, I would not recommend the City Council commit the full amount of $6.5 million to Visit Anaheim. I believe we should commit a lesser amount at the onset.”
Zapata said he wanted the Council to give him the ability to negotiate with Visit Anaheim and draw up a strict performance review so he can track what the money is doing.
But his concerns were disregarded by the majority.
“Visit Anaheim’s revenue is directly connected to hotel stays … and we need Visit Anaheim to do their job and help drive our economy and we need to prop them up with his.” Councilman Trevor O’Neil said.
“I am so sorry — so sorry that we couldn’t put the $6.5 million to better use. That we didn’t listen to the city manager,” Barnes said before her vote.
During council comments after the vote, Sidhu accused Barnes and Moreno of grandstanding.
“They don’t see the actual real needs in the community as a whole — what it’s going to take to bring the community back,” Sidhu said. “They’re playing more politics rather than looking at the crisis we’re in in Anaheim.”
The Council majority argued the money they appropriated at Thursday’s emergency meeting would be largely or completely repaid when state and federal government relief packages come down.
The funding comes from a mixture of reserves, after Sidhu’s relief package was amended — it originally called for $15 million from general fund reserves. Now, up to $8.5 million will be drawn from the general fund reserve and $6.5 million will be used from the convention center reserve to drum up resort advertising.
Sidhu’s proposal, provides $2 million to the Anaheim Community Foundation to provide direct assistance to residents and community nonprofits.
Faessel sits on the foundation’s board, but City Attorney Rob Fabela said it was okay he participated in the vote because Faessel doesn’t get paid for his position.
And up to $6 million will be directed to homeless services and housing assistance for residents, overseen Zapata.
O’Neil, after giving his final comments on the issue, called the question, which forces a vote on the issue.
But Moreno still had questions over O’Neil’s claims that the convention center funds, where the $6.5 million to advertise comes from, are restricted to just the resort area.
“Mr Mayor at least clarify the lie that Mr. O’Neil keeps putting out there,” Moreno said.
A verbal tug of war followed.
“I’m not going to answer any more questions,” Sidhu said.
Moreno responded, “This is a travesty what you’re doing this evening.”