Visit Anaheim has agreed to repay the city of Anaheim $3 million of a grant given to the organization in the early days of the pandemic after a city audit found some of the money had been diverted and spent, officials announced Thursday, April 10.
The payment settles Anaheim’s demand for the money back, which was first made in summer 2023 after city-hired investigators alleged $1.5 million of the grant from the city was surreptitiously diverted by Visit Anaheim to a nonprofit operated by the Anaheim Chamber of Commerce. The money was sent to the chamber nonprofit without written approval from the city.
During the early stages of the pandemic, when Anaheim’s tourism economy had been devastated by sudden closures to the area’s top attractions, including the convention center, the Anaheim City Council gave Visit Anaheim a $6.5 million grant to help keep staff in place to reschedule events and to market the city once restrictions began easing.
A city audit conducted last year that looked into that grant concluded that Visit Anaheim did send $1.5 million to a chamber nonprofit, a move city officials have described as inappropriate.
The audit also concluded that Visit Anaheim spent a total of $3 million in “disallowed charges,” including prepayments for vendors, the inappropriate purchase of alcohol and subsidizing other organizations’ shared costs. Visit Anaheim spent some of the money two years after the grant was issued.
The audit noted that Visit Anaheim later received $3.6 million in pandemic assistance and tax credits, which eliminated the need for some of the grant funding, according to a city news release Thursday.
City Attorney Robert Fabela sent a letter to Visit Anaheim in 2023 demanding the city be repaid the $1.5 million. Visit Anaheim’s attorneys responded weeks later saying the organization saw no basis to return any of the funding.
City officials have maintained the demand for repayment after a 2024 state audit report said Visit Anaheim had changed the accounting codes used for the $1.5 million, initially marking it as coming from the grant and later updating it to “normal department budget codes.”
Visit Anaheim will repay the city in two installments, officials said. The first is due on April 30 and the second a year from then. The money is coming out of Visit Anaheim’s reserves and will go into the city’s general fund.
City Manager Jim Vanderpool, Visit Anaheim CEO Mike Waterman and Visit Anaheim Board of Directors Chairman Fred Brown signed the agreement.
Mike Lyster, a spokesperson for the city, said the City Council had been discussing the issue in closed session.
“I continue focusing on moving Anaheim forward,” Mayor Ashleigh Aitken said in a statement. “Finalizing this settlement underscores my commitment to accountability, transparency and fostering relations with community partners that share Anaheim’s values. I look forward to working with Visit Anaheim to support the growth of Anaheim’s visitor economy and all the benefits it brings to our community.”
The $1.5 million diversion to the chamber nonprofit was at the behest of former Mayor Harry Sidhu, city-hired investigators said in a report released in 2023.
Since the investigation, the city now requires all subcontracts for Visit Anaheim that are approved by the city’s tourism director to be reported to the City Council monthly.
This is a developing story, please check back.