‘Sell the heck out of Anaheim’: City approves new contract for tourism bureau after critical state audit
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The Anaheim City Council increased its oversight of Visit Anaheim, a bureau that promotes tourism to Disneyland and other city destinations, in a new contract that followed a state audit last year.
The amended agreement comes in the wake of a scandal, which involved former Visit Anaheim chief executive Jay Burress resigning in 2023 after an independent investigation and audit found the bureau improperly diverted $1.5 million in federal pandemic relief funds to the Anaheim Chamber of Commerce.
Negotiations between the city and the bureau over the matter led Visit Anaheim to agree to pay $3 million back to Anaheim, with the first $1.5 million paid last month.
The audit, which Assemblyman Avelino Valencia requested, called for the Visit Anaheim agreement to be amended by June 2025 with more performance standards and subcontracting oversight.
Councilmember Carlos Leon emphasized that point during his remarks at Anaheim City Council on Tuesday.
“We’re not here because the contract was up for renewal,” he said. “We’re here because there was misuse of funds from the organization.”
Anaheim Mayor Ashleigh Aitken touted DisneylandForward, OC Vibe and other entrepreneurial efforts underway during her State of the City address.
Under the new contract approved by the council, Visit Anaheim will issue annual reports to its board of directors and the city on performance standards, including the number of convention events booked and occupancy rates for hotels within the Anaheim Tourism Improvement District, which assesses a 2% fee on nightly room rates within its boundaries.
Visit Anaheim will also disclose unspent ATID funds, which are culled from 75% of the fees collected by the city, and reserve balances, one of several requirements incorporated from a state audit’s list of recommendations.
As the audit additionally found that Visit Anaheim improperly subcontracted with the Anaheim Chamber of Commerce, any future subcontract totaling more than $150,000 must be approved by Anaheim’s city manager.
During the council’s deliberations, Leon sought to change the contract’s three-year term to one-year, with an annual review determining whether or not the panel would approve a two-year extension.
Several of his council colleagues pushed back on the proposed change, including Mayor Ashleigh Aitken, who called a clause allowing for a 180-day termination of the contract without cause a “ripcord” that sufficiently strengthens the city’s hand.
“If we were genuinely upset about something that happened in six months, we could invoke that 180-day termination clause,” she said. “That’s what actually gives me peace about this.”
Aitken also noted the importance of sending a message of “continuity” regarding Anaheim’s tourist economy.
Mike Waterman addressed Anaheim City Council and offered an apology for past comments that were seen as dismissive of an advisory board overseeing Visit Anaheim following scandal.
Councilmember Natalie Rubalcava voiced other concerns about the contract before voting on it.
She brought up the idea of setting a cap on reserve balances to compel Visit Anaheim to spend and wanted transient occupancy taxes, or TOT, to be a key performance indicator of the bureau’s work, especially as the city’s tourism-reliant general fund faces a budget gap next year.
“That’s an issue for me because our TOT revenue is down,” Rubalcava said. “[Visit Anaheim’s] CEO makes $500,000. That’s a significant amount of money for not having our TOT revenue where it should be.”
She also noted that smaller hotels among the 90 within the ATID boundaries have indicated to her office that they’re struggling.
“We really need to be booking enough conventions or youth sports events so that we’re really helping everybody, and not just the hotels that are in and around the convention center,” Rubalcava added.
According to city spokesman Mike Lyster, TOT revenue in Anaheim is down by 1.2% over the past 12 months after seeing a post-pandemic boost of pent-up tourism.
Councilmember Ryan Balius asked what would happen to any reserve balances if the city decided to discontinue its contract with Visit Anaheim. Tom Morton, executive director of convention, sports and entertainment said that the funds would carry over to a new contractor.
But the council did not entertain taking such a measure on Tuesday and voted unanimously to approve the updated agreement.
“We want them to sell the heck out of Anaheim,” Balius said.
A contract amendment tasks Visit Anaheim with monitoring and reporting on TOT revenue collected within the Anaheim Resort, while a revenue cap is something that could come back as a future recommendation and change.
Regarding the timeline of the contract’s terms, Leon amended his proposed change to have a two-year automatic renewal of the contract after its initial one-year term, with one-year automatic renewals every year afterward.
“We still believe in Visit Anaheim because, clearly, we could dismantle you today,” Rubalcava said sternly. “We need to make it clear and really reinforce the fact that we need you to do your job.”
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