Redondo Beach City Council aims to split Chamber and Visitors Bureau
Redondo Beach Councilman John Gran looks on as Mayor Bill Brand reads a letter submitted to the City Council. Photo
On Tuesday night, the Redondo Beach City Council began its attempt to reconcile the hundreds of thousands of dollars it sends to the Redondo Beach Chamber of Commerce and Visitor’s Bureau each year for tourism, promotional and event services.
The lengthy meeting, which stretched until 2:30 a.m., was also the first test for a council that introduced its newest member at the beginning of that meeting.
Recently-elected District 1 Councilman Nils Nehrenheim took his oath of office earlier that day, less than a month after his victory over incumbent Martha Barbee. The race ultimately concluded the saga following last year’s resignation of Jeff Ginsburg from the District 1 City Council seat.
The evening was a trial by fire for Nehrenheim, but it was one he was prepared for. Nehrenheim and Mayor Bill Brand alike ran on platforms opposed to the city’s existing agreement with the Redondo Beach Chamber of Commerce, which was approved in 2014.
“I’ve been doing this a long time, ran three or four campaigns, and the Chamber has never been on my side,” Brand said. “There’s a huge undercurrent of politics in all of this, but that’s not really what we’re here to decide.”
At issue was the City’s agreement with the Chamber to fund the adjoining Visitor’s Bureau using 10 percent of revenues from the City’s hotel bed tax, properly known as a Transit Occupancy Tax.
Revenues to Redondo Beach have steadily grown over the years, from $3.26 million in Fiscal Year 2010-11 to $5.62 million in FY 2015-16. Redondo is estimating to take in $7.7 million in TOT at the close of FY 2016-17, thanks in part to new and recently renovated hotels throughout the city.
But by virtue of its agreement with Redondo Beach, the Visitors Bureau is estimated to receive approximately $731,542 in compensation this year.
Compensation for what, however, was among the questions of the day.
The city began contracting with the Chamber of Commerce on a fee-for-service basis in the 1970s and ‘80s for promotional activities.
A new agreement was established in 1990, when hoteliers lobbied the City Council for an increase to TOT, from 9 percent to 10 percent. That additional one percent of revenues would then go to the establishment of a Visitors Bureau, focused on driving tourism to the area.
However, over the last decades, the Chamber has become increasingly politically active, establishing multiple political action committees to support local candidates and ballot measures. Notably, the Chamber PAC contributed $28,000 in independent expenditures toward District 3 council candidate Christian Horvath, who beat Brand-aligned candidate Candace Nafissi in a tight race. Council members John Gran and Laura Emdee also received support from the Chamber in their elections.
“For me, I think it’s clear that we need to address perceptions of ‘conflict of interest,’ which is what’s happened with this political football for the past 18 months,” Horvath said.
Gran, a former treasurer for the Chamber of Commerce during his membership with the organization, concurred.
“This isn’t about a political football, this is a revenue discussion; it’s how we’re going to move forward in marketing our city,” Gran said. “If you take the chamber’s name out of it, the discussion is, how much do we put aside for marketing?”
Gran’s concern was that an estimated $8.8 million that the city figures to receive through TOT in FY 2017-’18 could be negatively affected should the City Council decide to completely sever its agreement with the Visitors Bureau.
City Manager Joe Hoefgen’s proposed FY 2017-18 budget includes one-time funding of $350,000 to support a transition from the Visitors Bureau into its own, separate organization from the Chamber, in keeping with trends seen from cities across California.
For ten years, the Chamber and Visitors Bureau were separate organizations. But according to Chamber President and CEO Marna Smeltzer, the Visitors Bureau and Chamber merged in 2000 under recommendations from a consultant specializing in non-profit organizations.
“You’re confident you know where all of the TOT funds are?” Gran asked Smeltzer.
“I don’t do the bookkeeping, but I’m confident we’re tracking every dime,” Smeltzer replied.
Councilman Todd Loewenstein chose to see the agreement with the Chamber as a strictly-business agreement. He disagreed that cutting hundreds of thousands of dollars from the Visitor Bureau’s budget would cause Redondo’s hotels to drop occupancy.
“In terms of break-even…at $158 dollars a night, 15 nights [of hotel occupancy] would have to disappear, at all of our hotels, for us to just break even at $350,000,” Loewenstein said. “I agree, TOT is valuable; but what are we getting for our investment off of that?”
It’s about more than TOT for resident Eugene Solomon, who has made a mission out of digging into Chamber funding.
“To me, the biggest problem is that the Chamber has operated as a rogue entity,” Solomon said. He listed a series of errors made by the Chamber, from failing to submit financial records in a timely fashion to failing to get approval for hiring subcontractors.
“There’s been no penalty for doing so,” Solomon said.
By night’s end, the Council was largely in agreement. A motion made by Councilwoman Laura Emdee to begin negotiating a short-term transition contract with the Chamber, with the eventual goal of separating the Chamber and the Visitors Bureau, was unanimously accepted by the five council members.
The matter is scheduled to come back for discussion on June 20, 10 days before the agreement ends on June 30.