Anaheim chamber criticized in audit

The Anaheim Chamber of Commerce is having serious financial problems and has fallen well short of its goals to increase membership, a city audit has found.

The report comes at a sensitive time for the chamber, which has been criticized for its political involvement in a fierce zoning debate that pits housing advocates against the city’s top employer -- Disneyland.

Councilwoman Lorri Galloway, who has positioned herself as a champion of providing low-cost housing in the city’s resort district, has called for the city to pull its funding from the business group because of its political posturing.

The council is poised to decide tonight whether to give $150,000 to the group for the next fiscal year. The chamber received $205,000 from the city this year, about 9% of its annual budget. The allocation is reviewed annually.

“Why would we be so callous as to give money away to an organization that is insolvent?” Galloway said. “This is taxpayer money we’re talking about.”

Chamber President Todd Ament disagreed with Galloway’s characterization of the audit as being negative.

“We achieved all but three of the 60 items in the contract,” he said. “For us, it was really a great report and a great year. We’re seeing a surplus now, and we’re much healthier. I am confident the majority of the council sees the benefit in continuing to support job growth in Anaheim as well as economic prosperity for our residents.”

The audit, which covered the period from November 2005 to August 2006, was requested by Councilman Bob Hernandez, the lone council member to vote against funding the chamber last year. Hernandez said he hasn’t decided how he will vote tonight.

“One of the main benchmarks for a chamber is to increase its membership with the various businesses in the city,” he said. “Quite frankly, they didn’t do that. In fact, they failed miserably.”

The chamber established a goal to increase new membership by 10%, but the audit showed actual membership increased by only 1.9%.

Galloway said she was more concerned with the chamber’s long-term financial stability. The audit concluded that the chamber group is “operating with significant solvency concerns.”

“They need to clean up the dirt,” she said. “They need to become solvent for a year or two before they come asking for more money.”

Ament blamed the down financial year on a “buildup in staffing and leadership changes.” He said a reinvestment in staff helped the group’s budget grow from $945,000 to $1.2 million over the last year.

Galloway had earlier voiced her concerns with the chamber’s role in the city’s yearlong, high-profile squabble with Disney.

The chamber organized two Disney-backed ballot measures, an initiative and a referendum, aimed at preserving nonresidential zoning in the area surrounding Disneyland and California Adventure. The referendum would overturn a council action to clear the way for a 1,500-unit housing complex near where Disney is planning a third theme park.

Hernandez said he wasn’t as bothered by the chamber’s political activity as Galloway but did have some questions about its involvement in the ballot measures.

“I want to make sure the money we give them is to promote business in Anaheim, not to become political,” he said. “There shouldn’t be any commingling of funds.”

Despite Hernandez’s concerns, the city staff recommended renewal of the contract.

City spokesman John Nicoletti said various protections have been built into the new contract, ensuring that the chamber will live up to the terms of the agreement. He also said there will be a separate accounting system for city-issued dollars and an annual audit of the chamber by an independent firm.

dave.mckibben@latimes.com