Huntington Beach politicians and tourism officials say the annual Pacific Airshow brings millions into the city every year, yet a Voice of OC review of financial data paints a cloudy picture.
It’s an event that essentially privatizes public land for a weekend: the city’s iconic pier and large swaths of the beach – charging as much as $75 per seat for tickets along the pier, which is otherwise free to taxpayers.
Seating at the event’s premiere club cost nearly $300 a head, while private cabanas along the public beachfront cost nearly $5,000.
Visit Huntington Beach – the local tourism bureau – claims the event is one of Surf City’s biggest for years, arguing that it produced over $120 million in its total economic impact last year.
It’s a claim that’s been repeated numerous times by a Republican city council majority who fought to keep the airshow in town after Code Four, the air show’s operator, sued the city and threatened to leave when part of the event was canceled in 2021 due to an oil spill off the coast.
But city finance documents show it’s unclear exactly how much the airshow actually brings home for the city government or to local businesses.
Visit Huntington Beach, managed in part by the HB Chamber of Commerce and the city government, has released multiple reports in recent years from consultant Destination Analysts highlighting the airshow as one of the city’s crown jewels.
Kevin Elliott, the owner of Code Four, also sits on Visit Huntington Beach’s board of directors according to their website.
In their 2022 report, the tourism bureau claimed the event generated over $70 million in direct spending on Surf City businesses, and an additional $50 million of “indirect and induced effect,” spending brought the total earned to over $120 million.
But no one knows where the $50 million figure came from.
How Accurate Are the Economic Reports?
David Bratton, the founder and managing director of Destination Analysts, said the software they use, dubbed IMPLAN, to calculate the “indirect and induced effect,” number is a “black box,” but is the industry’s accepted standard.
“I don’t like using a box you can’t check, but there’s no way anybody could do this without spending tens of millions of dollars,” Bratton said in a Monday interview. “It’s behind a curtain, to be frank.”
The $50 million figure is supposed to represent where businesses and their employees spend the money they made from the airshow, but Bratton noted that his company can’t see how the software arrives at that conclusion as they feed it some data and it spits out an answer.
“It’s generally accepted as the best approach,” Bratton said. “If you wanted to go and do the math yourself, you couldn’t.”
It’s a known problem with economic impact reports among researchers and independent economists – who are often critical of taxpayer subsidized venues like sports stadiums and concert halls.
In a 2015 study from the University of Massachusetts Amherst, researchers found that economic impact reports struggle to accurately predict or show how much an event makes.
“Economic impact analysis is an inexact process and the output numbers should be
regarded as a “best guess,” rather than as being inviolably accurate,” researchers wrote adding that “there is a temptation to embrace inappropriate procedures and assumptions to
generate high economic numbers that will support the sponsors’ position.”
They went on to point out that even with researchers who were behaving ethically, the results couldn’t necessarily be trusted.
“Economic impact studies should be regarded as suggestive of the impacts of an attraction, rather than as being definitively accurate,” researchers wrote. “Even when every effort is made by knowledgeable researchers to do them with integrity, it is inevitable they will have relatively large error margins.”
Bratton said the data they fed the software with about how much people spent while they were at the airshow was based on a survey that nearly 1,200 people responded to, or around .1% of the total attendees of the airshow according to the report.
He also said there’s no way to check the report’s accuracy by looking at the city’s sales and hotel tax revenues, insisting it wasn’t meant to be a “line-item comparison,” and that they tried to be conservative with their estimates on how much the airshow made.
“It’s really hard to get people to not think of it like an accountant where you add up line items,” Bratton said. “It’s more appropriately seen as a conglomeration of the many, many taxes people pay in different areas of their life.”
What Do The City’s Records Show?
The city’s tax records don’t make it easy to figure out how much money the event generated either.
Because of the way hotel and sales taxes are collected monthly, there’s no way to see how much tax came in over a specific day or week.
The city’s disclosures do list how much was brought in for a specific month, but due to the fact that the airshow falls on the final day of September and the first days of October most years, it’s impossible to look at just one month’s worth of data to see the air show’s impact.
But based on the city’s hotel tax data and the 2022 report on the Pacific Airshow, Destination Analysts claimed that nearly a quarter of the city’s entire hotel tax revenue for the months of September and October came exclusively from the three days of the Pacific Airshow.
When that was pointed out to Bratton, he wasn’t able to explain how one event generated that much buzz.
There’s no way to calculate the total amount of sales tax revenue generated by the event because the report from Visit Huntington Beach doesn’t specifically state how much sales tax was generated.
But the city’s sales tax reports, which divide the year into quarters, show that the September to November quarter made nearly $250,000 more than the December 2022 through February 2023 quarter.
The report also claimed the city brought in $2 million from additional property taxes, before noting that the airshow could not have influenced property tax values.
“All spending injections into the city are going to lift property values and hence tax collections, but the connection is indirect and not immediate,” the report states. “It is calculated and shown but it is understood that, in reality, property taxes don’t go up and down based on one event.”
When asked about that, Bratton said property tax was still “part of the impact.”
“Nothing’s perfect in this world trying to measure something as large and amorphous as that,” he said. “If you’re trying to look at a holistic picture of the event’s effect on taxation, why would you exclude that? It’s a big number, it’s something that happens over time.”
The Battle to Keep the Airshow
Despite the questions around how much the event generates, city council members have fought hard to keep the airshow in town.
Originally, it looked like the airshow could be leaving when a previous city council challenged the air show’s operator to go to court and prove how much money the shutdown due to the oil spill cost them, and prove that it was the city’s fault.
But that case never made it to court after the 2022 election, when the newly elected Republican majority voted to settle the suit for over $7 million without going to court, a move they celebrated as saving the airshow.
After settling the suit, City Attorney Michael Gates refused to release a copy of the settlement agreement publicly, and the city also allowed Code Four to take over a new chunk of the city’s beachfront and the pier to sell tickets to the show over the weekend.
The city also guaranteed Code Four at least $110,000 in parking revenue, but the final payout to the company hasn’t been determined yet.
During their campaign, Gates and the majority also paid Code Four, the airshow’s operator, for some of the banners and equipment they used during their final big event just ahead of election night.
That transaction is currently under investigation by the Fair Political Practices Commission, the state’s chief campaign finance watchdog.
Gates and other council members also received free tickets to the air show this past weekend, which he insisted were to visit an “Australian delegation,” who visited for the event.
“I was down there as a city representative to meet the Australian delegation,” Gates said in an interview. “I wasn’t able to go on Saturday or Sunday but the delegation was there the entire time, is my understanding.”
Code Four also operates another airshow in Australia, and did not respond to a request for the list of all those who received free VIP passes.
While Gates didn’t state specific names of anyone else who attended, he said that other city council members, state assembly members and a state senator were also given free passes.
City spokesperson Jennifer Carey said those special tickets weren’t distributed by the city.
“That is news to me,” Carey said in a text when asked about the Australian delegation’s visit. “None of it was communicated to the City or coordinated with the City.”
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at email@example.com on Twitter @NBiesiada.
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