Anaheim City Council members are inching closer to requiring the controversial local tourism bureau show how many hotel rooms and convention center bookings tourism officials have secured.
It could mark another major change following a corruption scandal that rocked Anaheim, with two separate investigations showing how Disneyland resort interests wielded outsized influence on city policymaking.
[Read: Anaheim’s Own Look at City Hall Finds Disneyland Resort Businesses Improperly Steer Policymaking]
Council members are considering instituting new oversight measures in an effort to see if the tourism bureau – Visit Anaheim – is spending the tourism tax money properly, along with a host of other transparency measures.
It comes after state auditors concluded last year that city officials failed to properly oversee Visit Anaheim’s spending, leading to improper use of tourism tax dollars.
The audit found Visit Anaheim was improperly subcontracting with the Chamber of Commerce who then improperly spent tourism dollars to lobby elected officials and also used the money to support its preferred candidates through the chamber’s political action committee for years.
[Read: CA Auditors Lambast Anaheim’s Tourism Bureau, Find Improper Tax Dollar Spending]
While a majority of council members backed the proposed overhauls Tuesday night, they voted 5-1 to hold off on approving the Visit Anaheim contract in order to change a host of other revisions city staff suggested.
Mayor Ashleigh Aitken was absent from the meeting and Councilman Ryan Balius was the dissenting vote.
Councilwoman Natalie Rubalcava said she supported the state auditor’s recommendations, but questioned why the amended proposal drafted by city staff and Visit Anaheim included changes beyond the recommendations from state auditors – like using the term housing instead of lodging.
“This is a convoluted red lined version of this agreement,” Rubalcava said.
“Everything’s red lined. I mean, I appreciate the red line versions for the parts that are supposed to be part of the audit,” she said. “There are things removed from here that I didn’t even bring up, but are concerning to me.”
She also raised concerns that smaller hotels in the city – who help fund the bureau – have not reviewed the proposed agreement and have not been included in the process to book conventions which she said is impacting the city’s general fund.
“This is public funds,” said Rubalcava, who requested the item be continued and for city staff to engage with hoteliers. “We need to engage the 90 hotels who are actually paying Visit Anaheim.”
Visit Anaheim’s money comes from the Anaheim Tourism Improvement District, which is funded by an additional 2% tax on hotel rooms. The tourism bureau gets 75% of that money and is supposed to secure bookings at the city-owned convention center and boost hotel stays through advertising.
Balius said the proposed contract includes the recommendations by state auditors.
“In the end, we’re talking about a marketing contract, and we want it to be marketed to everybody. And I think Visit Anaheim probably understands that,” he said.
Councilman Carlos Leon questioned why the contract would last three years and renew automatically given the recent history between the city and the bureau.
“I think there needs to be some additional checks and balances in terms of looking at it. Maybe it’s a year by year agreement or timeline to see what has been done and what metrics as was brought up before have been met, so that we can renew the contract,” he said.
“These are public dollars. We want to make sure that they’re being spent correctly and legally but also effectively.”
Councilwoman Natalie Meeks opposed limiting the contract to one year.
“They’re booking things several years in advance,” she said at Tuesday’s meeting. “When do you start advertising for a new contract? You’ve got at least six months to do that if you’re going to replace this entity, because it is a critical operation of the city, and you would have nobody.”
Meeks also said they can review the contract every year and opt out of it six months in advance if necessary.
A few local activists questioned if city officials should continue to contract with Visit Anaheim in the wake of a scathing state audit and city commission corruption probe report or bringing marketing of the resort district in-house.
Resident Jeanine Robbins said city officials shouldn’t contract with groups detailed in two separate corruption probes and a state audit.
“You are actually considering renewing a contract with Visit Anaheim. I don’t understand how stupid you guys can be. Where is the audit of Visit Anaheim with verified documentation?” Robbins said during public comment.
“Visit Anaheim worked hand in hand with the chamber, with (former Mayor Harry) Sidhu, with city staff all to embezzle as much money as possible from the residents of this city. The head of the Hydra that is Visit Anaheim needs to be cut off, and services that they provided need to be brought in house.”
Visit Anaheim’s Spending Gets a Close Look
State auditors said Visit Anaheim didn’t need a $6.5 million COVID bailout elected officials gave them to market the resort and book conventions at a time when the tourism industry was shut down indefinitely when the pandemic first hit in March 2020.
The audit was initiated after city hired independent investigators with decades of experience alleged that $1.5 million of the bailout was improperly diverted by Visit Anaheim to an Anaheim Chamber of Commerce-controlled nonprofit as part of a conspiracy.
City auditors’ own look at the spending following the state audit found Visit Anaheim improperly spent roughly $3 million – most of which was used to cover normal operating costs after the city’s tourism economy bounced back to pre-pandemic levels.
Earlier this month, tourism bureau executives agreed to pay the city $3 million back from the bailout after refusing to do so for years, while still maintaining they used the bailout dollars properly – despite city auditors and independent investigators saying differently.
[Read: Tourism Bureau to Repay Anaheim $3 Million From Controversial Pandemic Bailout]
Meanwhile, the Anaheim Chamber of Commerce – a group at the center of the city’s corruption scandal – is expected to close at the end of the month after federal agents detailed Disneyland resort interests’ outsized influence over city hall years ago.
[Read: Anaheim Chamber of Commerce To Close in Aftermath of Corruption Probes]
Tuesday’s meeting comes as local elected officials have met privately with tourism bureau executives this year to discuss the Visit Anaheim and tourism tax dollars.
What Did The State Auditors Recommend?
State auditors last year recommended city officials renegotiate their contract with Visit Anaheim by January 2025.
The auditors recommended barring Visit Anaheim executives from transferring tourism tax dollars to another organization without written consent from the city and forbidding them from commingling tourism tax dollars with money from other revenue sources.
The proposed amended agreement requires Visit Anaheim to get permission from the city to enter an agreement with a subcontractor if the subcontract is more than $150,000.
They also recommend Visit Anaheim to track all spending related to the contract, report to the city unspent tourism tax dollars, develop a plan to oversee subcontractors work and make an annual report to city leaders.
And recommended the tourism bureau to report on new key performance indicators like hotel occupancy rates and convention center bookings so city officials can gauge how effectively Visit Anaheim is spending tourism tax dollars.
The proposal presented Tuesday also included those recommendations.
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.