In their first public discussion of a scathing state audit, Anaheim city officials questioned if the local Chamber of Commerce used public dollars to bolster the campaigns of city council candidates.
The state auditor’s report is the latest investigation into alleged public corruption in Anaheim – following sworn FBI affidavits in 2022 and an independent investigation report released in 2023 that allege Disneyland resort interests exert undue influence over city hall.
In their report, state auditors allege the Anaheim Chamber of Commerce improperly spent public dollars to lobby elected officials – money given to them by Visit Anaheim to promote tourism.
State auditors also allege some of that money was improperly used by the chamber’s political action committee to support its preferred candidates since at least 2012 – an allegation Anaheim officials publicly questioned Tuesday as they vowed to increase oversight of the spending.
“They did make a statement that some of those funds could be used for the PAC,” Deputy City Manager Greg Garcia said at Tuesday’s meeting. “But I think we’re still waiting on evidence to support that finding because that would be a very troubling finding if that was the case.”
In their report, auditor’s don’t specifically detail when and how the public money meant for tourism spending allegedly went to the chamber’s political action committee.
Did Tourism Dollars Help Fund a Political Action Committee?
Councilman Jose Diaz pushed back on state auditors’ allegations that the local chamber of commerce misused tourism dollars by lobbying elected officials and said there was no evidence that tourism dollars were used for campaign advocacy.
[Read: Is it Legal to Spend Tourism Dollars to Lobby Elected Officials?]
“I didn’t see any evidence that suggests there was any misuse of the funds. The state completely changed the concept of political advocacy,” he said. “But any Chamber of Commerce on the planet, their job is to advocate for businesses so every Chamber of Commerce on the planet is in violation, according to this report.”
Anaheim Chamber of Commerce officials have issued similar statements on lobbying after the auditors’ findings in recent weeks.
Both City Attorney Rob Fabela and Garcia said they’re contacting state officials to figure out if tourism money was used to fund the chamber’s political action committee.
“That would be the most troubling finding of this report,” Fabela said. “I’ve scrutinized that audit and have not seen the backup evidence to support that.”
“But if there’s actually money going to campaigns, there’s no question that would be inappropriate,” he continued.
Public Dollars or Private Funds?
At Tuesday’s meeting, City Councilmembers Natalie Rubalcava, Norma Kurtz and Natalie Meeks said they were surprised to learn that the tourism dollars collected by the city through the Anaheim Tourism Improvement District were public funds.
“The city did not believe these were public funds and therefore, not only did we not audit them strictly, we didn’t think we had a right necessarily to tell them how they were supposed to be spent,” Meeks said.
“The audit has identified that these are public funds, and we need to be auditing them.”
Visit Anaheim gets funding each year from a 2% tax local hoteliers impose on their rooms in the Anaheim resort area as part of the Tourism Improvement District the city established in 2010 to be used to market and improve the resort area.
In turn, the city collects that money along with the city’s hotel tax, then sends it to Visit Anaheim.
Rubalcava questioned if somebody else could collect the tax and direct the funds to Visit Anaheim – removing the city from the process – and suggested creating an ad hoc committee to help roll out the auditor’s recommendations.
She also questioned what impact the report would have on other tourism bureaus across the state including the state’s own tourism bureau – Visit California.
“Does this audit now create a new standard across the state for all of the tourism bureaus?” Rubalcava said. “That’s something that I would love to hear back from the state on when we are reaching out to them because I think it needs to be fair.”
Kurtz said it’s likely tourism bureaus all over the state don’t realize tourism improvement district money is public funds.
“This audit by the state is going to be far reaching across the state,” she said, adding that she is proud city officials didn’t push back on the money being public funds.
Auditor’s Recommendations
State Auditor Grant Parks recommends Anaheim officials create an independent advisory board to oversee the spending of tourism dollars, create contract oversights and renegotiate the city’s contract with Visit Anaheim by January 2025.
They also want city leaders to review two contracts given to the chamber in 2019 and 2020 that amount to about $1 million.
Officials say they intend to follow all the recommendations.
City staff say they will bring forth the overhaul proposals for the city council to take action on as soon as they can.
During the public comment portion of the meeting, Luis Andres Perez, a representative for State Assemblyman Avelino Valencia who called for the audit, read a statement on behalf of Valencia.
“The Chamber’s misuse of public dollars to engage in lobbying and to support candidates through a political action committee is a direct threat to the very fabric of our democracy,” Perez said on behalf of Valencia.
Valencia also called on the council to reform how the tourism dollars are distributed and said
“excess funds can be used to bolster city services, expand our green space and finance housing projects.”
City Councilman Carlos Leon questioned if the tourism dollars could be restructured.
Garcia, the deputy city manager, said that’s up to hoteliers.
“It requires the approval of all the hoteliers, they put this private assessment on themselves. It’s their assessment,” Garcia responded. “Any change to that would require their approval to do so.”
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.