State Audit Finds Anaheim Tourism Bureau And Chamber Misused Public Funds

A state audit released Tuesday found that millions of Anaheim public dollars were routed with little oversight to tourism promotion groups. Some of those funds were improperly used for political lobbying and to support candidates friendly to Disneyland resort-area businesses.

The audit of city contracts with Visit Anaheim and the Anaheim Chamber of Commerce is the latest in a series of damning investigations and reports on potentially illegal and unethical activities among some former Anaheim leaders, and the extent of the tourism industry's grip on city affairs and funds.

Former Mayor Harry Sidhu and former Anaheim Chamber of Commerce President Todd Ament were both charged in 2022 with corruption-related federal crimes and later pleaded guilty. Both are awaiting sentencing.

Last year, a city-commissioned investigation found a "potential criminal conspiracy” to divert $1.5 million in federal COVID recovery funds through Visit Anaheim to a nonprofit controlled by the chamber.

The 51-page audit found that over $111 million collected from a 2% city assessment on hotel stays in the city's resort district have been provided to Visit Anaheim since 2010, of which $4.4 million was passed to the Anaheim Chamber of Commerce with little regard for how the public money would be spent and whether it was needed.

"Neither the city’s tourism director nor current Visit Anaheim staff believed that the tourism district assessment subcontract with the Chamber was necessary," auditors reported.

Specifically, auditors found:

• The local tourism bureau, Visit Anaheim, failed to get approval from the city, as required in their contract, to subcontract with the chamber. The bureau passed along $4.4 million in hotel assessment funds to the chamber over a period of 10 years. 
• Through that subcontract, the chamber used the funds for “supporting resort-friendly candidates through its political action committee” and lobbying for legislation that helped hotels near Disney. Auditors said these activities violated city rules. (Visit Anaheim canceled the chamber's subcontract after Ament's 2022 guilty plea.) 
• The chamber was unable to show auditors documentation that it delivered many of the services specified in contracts with the city of Anaheim and the tourism bureau, including a $500,000 contract with the city in 2020 intended to promote local spending and hiring.
• Visit Anaheim "engaged in a questionable transfer of funds" when it gave $1.5 million in pandemic relief funds from the city to a nonprofit affiliated with the chamber. The transfer had been flagged in an earlier, city-commissioned investigation as a possible “theft” of public money. State auditors found that the fund transfer resulted from a "verbal agreement between its former president and the former president of the Chamber" and that there was no formal written contract.  

Responses from the chamber and tourism bureau

The chamber and tourism bureau dispute some of the audit's findings.

In her official response letter to the audit, Anaheim Chamber of Commerce President Laura Cunningham said the chamber had engaged in legislative advocacy since 2015 and that "such activities align with standard operating procedures for tourism improvement districts across the state."

Cunningham wrote that the chamber's engagement in local politics was an appropriate use of public funds from the resort district, and that chamber activities carried out with the money "have demonstrably benefited the tourism and convention industries in Anaheim."

Lawyers for Visit Anaheim, in their response to the audit, said the city was well aware of its subcontract with the chamber and never objected. They noted that two city employees designated by the city manager sit on the tourism bureau's board of directors.

They also said auditors had taken too simplistic a view of the tourism bureau's finances when calculating its spending budget beyond the city contracts.

Last year, Visit Anaheim refused a city request to return the $1.5 million in pandemic recovery funds transferred by the tourism bureau to the chamber, saying the COVID-19 relief funds were "properly used" and that the transfer came from a separate part of Visit Anaheim's budget. State auditors noted the "re-accounting" of these funds, saying it brought up additional questions about the tourism bureau's use of city funds.

Audit recommendations

Auditors recommended the city include performance measurements in its future contracts for tourism and business promotion.

They also recommended the city renegotiate its largest contract with Visit Anaheim to ensure better monitoring of public funds.

And they suggest the city create an advisory board to make recommendations for spending assessments collected from hotels in the resort district.

Anaheim City Manager Jim Vanderpool said in the city's official response to auditors that the city was developing a plan to implement their recommendations, including improving oversight of contracts with Visit Anaheim and exploring whether there are sufficient grounds for the city to ask for its money back from several contracts with the chamber.

LAist’s Nick Gerda contributed to this story.