Report 2023-133 Recommendation 1 Responses

Report 2023-133: City of Anaheim: It Has Not Properly Managed Tourism-Related Contracts and Millions of Dollars in Related Funds (Release Date: January 2024)

Recommendation #1 To: Anaheim, City of

To ensure better oversight of tourism district assessment funds, the Anaheim city council should by July 2024 designate an advisory board to make recommendations regarding how such funds should be spent. The advisory board should include, at a minimum, some of the owners of the assessed entities within the tourism district, legal counsel, and a person knowledgeable in government finance.

6-Month Agency Response

On June 18, 2024, the Anaheim City Council established the Anaheim Tourism Improvement District (ATID) Advisory Board by resolution. Following the State Auditor's recommendation, the Advisory Board consists of two hotel representatives from assessed properties within the district, one representative from the Contracting Entity, the City Manager or their designee, the City Executive Director of Convention, Sports and Entertainment, the City Audit Manager, and the City Finance Director. The City's representatives will be the current incumbents in these positions. The representative from the Contracting Entity will be the President/CEO of that entity or their designee. The two hotel representatives from the ATID boundary will be recommended by the Contracting Entity and approved by the City Council. The city met the State Auditor's recommendation by the July 2024 deadline and is presenting the two recommended hotel owner representatives to the City Council for appointment in August 2024.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

The city council has approved a Anaheim Tourism Improvement District (ATID) Advisory Board that will make recommendations to the City Council regarding ATID expenditures. Board members must include hotel owners and the city's finance director. The City Attorney or designee will provide legal advice.

60-Day Agency Response

The City of Anaheim has recently retained outside legal counsel specifically for the purposes of advising the City on a handful of ATID related issues that need to be addressed as a result of the state audit findings. The first of these issues is the creation of a new advisory board. In addition to retaining an outside law firm and consultant to assist with this recommendation, staff has completed its research of the cities mentioned in the State Audit report that have advisory boards (Morro Bay, Santa Rosa, Palm Springs, and San Luis Obispo). The city is now in the process of drafting the appropriate Resolutions and related documents for the establishment of this advisory body and we aim to present this information to the City Council within the next 90 days for final action.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2023-133

Agency responses received are posted verbatim.