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It’s a rare thing in Anaheim to see a resort industry executive publicly questioned over how taxpayer funds are being used in a city still grappling with the fallout of a corruption scandal.
Councilwoman Natalie Rubalcava did just that this week, publicly posing a series of questions to Visit Anaheim President and CEO Mike Waterman – focusing on transparency, oversight and just how the money is being spent after a searing state audit of the tourism bureau earlier this year.
[Read: Anaheim’s Scathing Audit Marks Another Chapter in a Corruption-Plagued City Hall]
At Tuesday night’s city council meeting, Rubalcava publicly asked Waterman why – at the inaugural October meeting of Visit Anaheim’s oversight board – he expressed hope the board would disband after three or four meetings.
“I apologize for my comments. I was out of line and did definitely not use the appropriate words. What I was trying to articulate was is many of the state’s [tourism district] boards that were created – usually years ago – have been disbanded because some of those cities found it to be redundant,” said Waterman, who started his current job in April.
Rubalcava asked, “Did you actually think you could disband this?”
Waterman responded that he can’t disband the oversight board – it’s up to city officials.
The seven-member oversight board – known as the Anaheim Tourism Improvement District Advisory Board – is made up of two hotel representatives, four city executives and Visit Anaheim’s CEO.
City officials rolled out the board earlier this year after state auditors began questioning how effectively Visit Anaheim was spending tourism tax money – which is supposed to be used to bring in new tourism.
State Auditors Force Oversight
Tuesday’s meeting comes after a harsh state audit earlier this year found Visit Anaheim improperly sent public tourism money to the Anaheim Chamber of Commerce, which was then used to lobby a host of local elected officials.
State auditors also found that the tourism bureau gave $1.5 million of its $6.5 million COVID bailout from the city to the chamber, which was then sent to a chamber-controlled nonprofit in an apparent verbal agreement between the two former presidents of each business interest group.
[Read: CA Auditors Lambast Anaheim’s Tourism Bureau, Find Improper Tax Dollar Spending]
“What were those mistakes that you were alluding to in that article,” Rubalcava asked Waterman on Tuesday night, referring to an OC Register story.
“My predecessor, the past president, made some mistakes and paid for those with his job. And my promise was we’re going to be much more transparent, be much more communicative,” Waterman responded.
Visit Anaheim is supposed to attract more tourism through advertising the Disneyland resort area and secure convention center bookings for the city – through using an additional room tax self-assessed by hoteliers on room stays.
For example, a majority of the self-assessed tax that funds Visit Anaheim stems from an additional 2% on top of the city’s 15% hotel bed tax, which goes into the municipal general fund.
Now, city officials have more oversight on how that 2% tax is being spent after state auditors recommended Anaheim create an advisory board to better keep track of Visit Anaheim’s spending after auditors determined that the self-assessed hotel tax are public funds.
[Read: Anaheim Institutes Oversight of Controversial Tourism Bureau]
Rubalcava said Visit Anaheim needs to provide a more detailed breakdown of exactly how they’re spending the tourism tax dollars.
“It would be great for you to provide additional metrics and ROI on the investment and exactly where those dollars are going,” Rubalcava said.
“I love to see that we’re investing in our digital buys, but I’m really not seeing how those dollars are being spent to generate more conventions to our convention center because ultimately that’s what fills the 94 hotels and it can’t be limited to the Disney hotels and the bigger hotels.”
A Questionable Pandemic Bailout
State auditors also found Visit Anaheim likely didn’t need the $6.5 million bailout that was spearheaded by disgraced former Mayor Harry Sidhu when the pandemic first kicked off in March 2020.
[Read: Anaheim Mayor Wants Disneyland Reopening Clarity as Visit Anaheim Bailout Questions Swirl]
Sidhu who would later go on to plead guilty to a series of federal crimes, including obstruction of justice for lying to federal investigators about trying to ram through the now-canned Angel Stadium deal for $1 million in campaign contributions.
It also comes after federal agents and independent investigators found Disneyland resort interests wield outsized influence on Anaheim policymaking.
[Read: Anaheim’s Own Look at City Hall Finds Disneyland Resort Businesses Improperly Steer Policymaking]
The state audit was spearheaded by former Anaheim City Councilman and current Assemblyman Avelino Valencia, who had expressed concerns about findings from city-contracted independent investigators that detailed Visit Anaheim’s murky spending.
“Our city has been through a lot over the last 5 years. Do you know why Assemblymember Valencia initiated the state audit originally?” Rubalcava asked Waterman.
He responded, “I have a general idea, yes … I think there was questions on whether or not the funding – the way some of our expenses were expensed, and I can’t really elaborate on it a whole lot because there’s some legal issues.”
Waterman also said the intention of the oversight board “is to understand how we’re spending money and share that with the city council.”
Councilmembers Carlos Leon and Natalie Meeks also expressed concerns over Waterman’s comments about wanting to abolish Visit Anaheim’s oversight.
Leon pointed to the host of reforms made at the city since the corruption scandal first broke in 2022.
[Read: Anaheim Begins Implementing Changes From Fall of Reform Debates]
“I just want to make sure you understand the gravity,” Leon said. “The gravity of making comments like that given what we’ve been through as a city, all the work that we put in and the effort to build that public trust – those comments don’t help us do that.”
Meeks echoed a similar sentiment, and also said she wants to see a more detailed spending breakdown like Rubalcava.
“I want to make sure that we are using those funds really driving visitors to Anaheim – and all levels of visitors,” Meeks said. “Your contract is with the city, so let’s be partners in this and make sure we’re serving the people of Anaheim at the end of the day.”
Spencer Custodio is the civic editor. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.
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