Earlier this year, Anaheim City Councilwoman Natalie Rubalcava publicly pushed for city officials to get $1.5 million back from Visit Anaheim, the local tourism bureau that faced a scathing state audit last year.
State auditors found that Visit Anaheim didn’t need the $6.5 million bailout during the pandemic and city-contracted independent investigators alleged Visit Anaheim diverted $1.5 million to a Chamber of Commerce-controlled nonprofit.
“I also want to chat or hear more about the $1.5 million that we’ve asked them to return several times,” she said at the Jan. 14 meeting. “And I’d like to know which of their board members is not voting yes to return it to the City of Anaheim.”
[Read: CA Auditors Lambast Anaheim’s Tourism Bureau, Find Improper Tax Dollar Spending]
Yet roughly three months later, Anaheim taxpayers have not gotten a public update or an answer to these questions at a city council meeting.
Mike Lyster, a city spokesman, said the city is on record demanding the money be repaid.
“Conversations are ongoing,” he said in an email.
Rubalcava and the rest of the city council members did not respond to requests for comments Thursday.
It all stems from a $6.5 million bailout given to Visit Anaheim approved by city officials when the pandemic was hitting Orange County in March 2020.
The money, later backfilled by federal bailout dollars, was slated to advertise the Disneyland resort area and secure future convention hall bookings at a time when Anaheim’s tourism sector was shut down indefinitely.
[Read: Anaheim City Council Majority is OK with Visit Anaheim Holding Onto Millions of Bailout Dollars]
Former City Councilman Jose Moreno, who voted against the bailout, said the tourism bureau should pay the money back and that there needs to be accountability.
“I was hoping and expecting that there would be criminal prosecutions. It was a misuse of public funds,” he said in a Monday interview.
“No one has been held locally accountable.”
Visit Anaheim CEO Mike Waterman did not respond to requests for comment and questions on whether $1.5 million would be returned to Anaheim.
In 2023, Visit Anaheim’s legal counsel sent a letter to the city stating that the $6.5 million given to them by the city was properly spent.
They also said the $1.5 million sent to nonprofit did not come from the COVID funds.
“There is no basis for the demand for return of any part of this funding,” reads the Nov. 2023 letter.
“Our investigation also shows that while Visit Anaheim did transfer $1.5 million to the Anaheim Economic Development Corporation (“AEDC”), a non-profit organization associated with the Anaheim Chamber of Commerce, 2 these funds ultimately came from Visit Anaheim’s existing balance of operating cash, and not from its COVID relief funding from the City.”
Why Did Anaheim Bailout a Tourism Bureau?
Moreno said he and former Councilwoman Denise Barnes begged their colleagues at the time to use COVID bailout dollars towards helping residents with rent and public utilities but to no avail.
“As our budget was bleeding, that these funds were misused, misappropriated, and the public was manipulated into believing this was about our local economy,” he said.
Barnes, who abstained during the bailout vote, said the money should have been used to financially support residents and small business owners amid government mandated shutdowns in one of the hardest hit cities in OC by the pandemic.
Barnes also said city officials need to follow up on the money.
“These things are either falling through the cracks or someone isn’t taking the lead on this,” Barnes said in a Friday interview. “That has to be dealt with and if they’re going to say no way, then you know we need to take them to court. There’s no way around it.”
Barnes and Moreno weren’t the only ones to question the decision to give a multi-million bailout to the tourism bureau to market the Disneyland resort area at a time when the theme park was closed.
So did Chris Zapata, the city’s previous city manager, who was fired shortly after he publicly raised concerns and called for strict guardrails – like a performance review – and suggested the bailout should be lower than $6.5 million, or a loan along with a repayment plan.
Zapata’s concerns were disregarded by the council majority at the time, led by disgraced former Mayor Harry Sidhu.
Less than a month after Zapata publicly raised concerns about the bailout, he was out as the city’s top administrator.
[Read Anaheim City Council Sacks City Manager]
Late last month, Sidhu was sentenced to two months in federal prison on a host of federal charges.
[Read: Disgraced Former Anaheim Mayor Harry Sidhu Sentenced to Two Months in Prison
Moreno said he now hopes the elected official will use their resources to get the money back.
“I was glad to see that Councilmember Rubalcava took some leadership and was looking for that money to be returned to the people of Anaheim. However, we need that leadership to be shared across the Council, and the courage to hold up public integrity and accountability,” he said.
During his tenure, Moreno said he asked City Manager Jim Vanderpool about the Visit Anaheim bailout, but was told everything was fine based on documents from the tourism bureau.
“He refused to do a deep audit into where the money went, and just took their reporting at face value.”
In last year’s report, state auditors said the tourism bureau sent tax dollars earmarked to market the Disneyland Resort to the local chamber of commerce, which then improperly spent it on lobbying dozens of elected officials.
[Read: Is it Legal to Spend Tourism Dollars to Lobby Elected Officials?]
The state audit was sparked after court filings from federal agents and a city-commissioned corruption report from independent investigators found that Disneyland resort interests like the Anaheim Chamber of Commerce wielded outsized influence on city hall.
Rubalcava’s Request
At the Jan. 14 city council meeting, Rubalcava also asked for an update on how often the newly created Visit Anaheim oversight committee will meet.
She also wanted to know how the tourism bureau is making sure all the hotels in the resort area are benefiting from local conventions and to know whether tourism tax dollars would be used to help fund workforce housing – an idea she publicly supported last year.
And she wanted more information about Visit Anaheim’s request to increase the tourism tax levied on hotel guests to market the Disneyland Resort from 2% to 4%.
Lyster said Rubalcava’s request has not been scheduled for a public discussion.
“There is always the possibility of a discussion item but there is nothing scheduled at this time,” he said.
He also said it was too “premature” to speculate on whether tourism dollars would be used on workforce housing if the tax rate would go up 2%.
“But a 4 percent number isn’t a high expectation,” Lyster said.
Moreno said he is not surprised Rubalcava’s request hasn’t come back for a public update – pointing to how long it’s taking the city to assess the maintenance needs of Angel Stadium.
“The executive staff at City Hall has proven itself time and time again, that it does not work for the people of Anaheim. It works to protect its own interests, its own comfort, and the friends that they go out dining with and drinking with that provide them VIP and executive status in our city,” Moreno said.
“Why does it take so long to get a simple update and a simple agenda item? What is the status of getting a refund of taxpayer money that was misused and misappropriated as evidence through two formal investigations?”
On Jan. 28, Rubalcava had a private meeting with Brittney Malenofski, the assistant to the city manager who also sits on the oversight committee, for a follow up on her request.
That private meeting came about a month after Rubalcava publicly questioned why Waterman said he wanted to disband the state prescribed tourism tax dollar oversight committee at the committee’s first meeting.
[Read: Anaheim Publicly Grills Tourism Bureau CEO For Wanting to End Oversight]
Waterman apologized for his comments.
Private Meetings Tourism Bureau Officials
While it remains unclear whether the tourism bureau will pay back the city, officials have met multiple times this year with Visit Anaheim executives – along with Disney executives and hoteliers – to discuss the tourism bureau and tourism tax dollars.
Lyster said the meetings are taking place to discuss the potential of funding an affordable housing trust in Anaheim.
Public city official calendars show Mayor Ashleigh Aitken, along with resort-back Councilmembers Natalie Meeks, Ryan Balius, Norma Campos Kurtz, and Kristen Maahs attended Visit Anaheim’s annual meeting on January 15 – one day after Rubalcava publicly questioned where the $1.5 million is.
Councilmembers Carlos Leon and Rubalcava – who was backed by resort interests – don’t list any meetings with Visit Anaheim executives in January and February.
City Manager Jim Vanderpool, Deputy City Manager Ted White and Disney President Ken Potrock were also at Visit Anaheim’s annual meeting, according to disclosures.
On Jan. 8, Vanderpool, Kurtz and Meeks also met with Visit Anaheim leaders about tourism tax dollars collected to market the Disneyland resort.
On Jan. 28, the three met again with Visit Anaheim executives including Waterman Chief Operating Officer Christina Dawson and Senior Vice President Pepe Avila along with lawyers and auditors for an “auditors meeting.”
Meeks didn’t include the Jan. 8 and Jan. 28 private meetings on her calendar. Kurtz didn’t include the Jan. 28 meeting on her calendar.
The next day, Vanderpool met Clark Jones, senior vice president of Disneyland Resort Finance & Special Events, and Cathi Killian, vice president, Communications and Public Affairs at Disney Parks, Experiences and Products, to discuss the tourism bureau.
On February 12, Aitken, Vanderpool and Assistant City Manager Greg Garcia met virtually with Visit Anaheim executives including Waterman, Dawson, Avila and Visit Anaheim Board member Fred Brown to discuss their partnership.
On Feb. 18, Vanderpool attended Visit Anaheim’s executive committee board meeting.
On Feb. 20, Aitken met with Waterman to discuss the tourism tax dollars collected to market the Disneyland resort. That same day, Vanderpool attended the Visit Anaheim Board of Directors meeting.
The March calendars are expected to be released on April 14.
Editor’s note: Ashleigh Aitken’s father, Wylie Aitken, chairs Voice of OC’s board of directors.
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.