Audit: Anaheim Chamber of Commerce Tracking of City Funds Spotty

From The Voice of OC: 

A city performance audit critical of how the Anaheim Chamber of Commerce administers the city's enterprise zone found that the business group hasn't been adequately tracking expenses, with staff time-keeping methods that are “not reliable,” according to sources who have seen the audit and say its been held up for months.

Despite not documenting staff time in reliable ways, the chamber requested a $600,000 contract increase earlier this year, citing the need to hire more staff for day-to-day tasks.

Council members awarded the requested funds at their May 14 meeting, bringing the total contract amount to $2.9 million over five years.

Mayor Tom Tait, the only council member to vote against the contract increase, argued that the council shouldn't be granting the chamber more funds without first seeing the performance audit, which has yet to be released.

At the May council meeting, Planning Director Sheri Vander Dussen said the audit would be complete in June, but sources said chamber President Todd Ament has been delaying finishing the audit for months.

Ament did not return a call seeking comment.

Todd Ament

Todd Ament

Paying city funds to the chamber has been one of many political battles fought between Tait and the council majority, which is supported by the Disneyland Resort and other high-powered business interests.

Tait earlier this month pushed to have the contract terminated after news that the state would be eliminating the enterprise zone program – which grants tax credits to businesses that hire from economically disadvantaged areas -- by year's end, but the council majority argued that canceling the contract was premature.

According to City Hall sources who have seen a draft of the audit but would only speak on condition of anonymity, the chamber's four-to-five time keeping systems for its handful of employees are confusing, inadequate and not consistently used.

While the audit didn't find that enterprise zone funds were being inappropriately spent, it was also difficult to tell whether the chamber was using enterprise zone funds for other chamber expenses because of unclear time keeping, sources said.

Mayor Tom Tait said that such findings confirm that it was imprudent to award a contract increase before the audit was finished.

“Without an audit trail the council cannot know whether our funds were spent appropriately,” Tait said. “It was irresponsible to vote for a $600,000 increase without such verification.”

Other council members could not be immediately reached for comment.

An agenda staff report submitted by Vander Dussen for the contract increase in May downplayed the draft audit's findings. It said that city officials had received “positive feedback” and mentioned only “minor” internal controls issues. There was no mention of the difficulty in tracking chamber staff time.

“These observations have related to minor elements of the administration of the [Anaheim Enterprise Zone] and do not involve any significant issues,” the staff report states.

The chamber has implemented a new system that Ament says will better track staff time, sources said.

Meanwhile, the chamber has also engaged in political spending.

Considering the fact that it is unclear how the chamber is spending city funds, their political spending has raised eyebrows at City Hall.

“It is very concerning,” Tait said about the situation.

Matthew Cunningham, a blogger who promotes the council majority, has received between $10,000 and $100,000 from the chamber, according to a statement of economic interest he filed with the county. The business group earlier this year purchased an advertisement in the Orange County Register touting the council majority. And the chamber's website has promoted Councilwoman Kris Murray's June 25 fundraiser.

Matt Cunningham

Matt Cunningham

Cunningham didn't deny that he is being paid by the chamber to run his political blog, but he also declined to comment on his contract with the business group, or share it with a Voice of OC reporter.

“I'm a private business, and my contract is with a private organization... so no,” Cunningham said when asked for a copy of his contract.

The audit also found other issues, like a potential conflict of interest with having the chamber, which is controlled by businesses, awarding government tax vouchers to businesses, according to sources. And a chamber luncheon event that was supposed to achieve multiple goals under the program, like a youth networking event, appeared not to have fulfilled all those goals, a source said.

This isn't the first time a city commissioned audit has found problems with the chamber.

In 2007, auditors found that the chamber was facing “serious solvency concerns,” and a “potential inability to meet its short-term financial obligations.” In a 10-month period, the chamber only turned a profit during the three months it collected revenue for city events, according to the report, suggesting that the chamber had relied on city funds to stay afloat.

The business group was also not complying with generally accepted accounting practices, the report said.

That audit also found that the chamber was increasingly going into debt to sustain operations, including a $50,000 corporate loan and credit card debt. The review recommended, “monitoring the Chamber's progress through future contract audits.”

However, the draft performance audit did not review the chamber's finances.