Anaheim Council’s Imperative: Shovel Money into the Chamber of Commerce!

The naked imperatives of local politics don’t get much more naked than what happened last night at the Anaheim City Council meeting. Cancel those civics classes, teachers; this is what backscratching politics at its skeeviest is all about.

Anaheim Chamber of Commerce CEO/Pres Todd Ament

Todd Ament — happy to see me, but not going on record about the Chamber getting money for nothing.

1. The Very Brief Ament Video

I’ll start at the end, because I presume that Todd Ament may be waiting to see it, with my conducting a rare and in this case unplanned brief “interview” at the City Council meeting at the close of the item on which I write today.  I had simply hoped to give Anaheim Chamber of Commerce Supreme Leader Todd Ament the chance to deny for the record, on camera, what struck me as a damning assertion made against his group.  That didn’t turn out so well.

My question to Ament was: “will you get the full amount in September for the year?”  The “full amount” referred to $460,000 that the City Council was paying to the CoC annually to administer the city’s “Enterprise Zone” program, which was designed to give companies tax breaks for new job creation.  (It didn’t turn out quite that way, which is why the state government just canceled the program effective at the end of this calendar year.)

I was asking Ament whether Mayor Tom Tait was correct is stating that, as things stand, the CoC is going to receive a full dose of almost half a million dollars from the Council in September 2013.  This is intended by contract to cover its operations (marketing, validating vouchers, and reporting on the Enterprise Zone program) from sometime in September 2013 through that same date in September 2014 — despite the fact that the program would no longer exist as a going concern as of January 1, 2014.

That prospect was what prompted Tom Tait to bring his motion for yesterday to start notify the CoC of impending contract termination, discussing how to wind down the contract for the expiring program, and planning for what would come next.  This is a plain vanilla approach to what you do when performance on a contract becomes impossible due to outside circumstances.

I had thought that Ament would say “no,” that they weren’t getting the full amount — because, if the answer was “yes,” that would be crazy.

Specifically, I expected that he’d say (the possibility of which Tait had already noted in asking City staff to negotiate the wind-down of the contract) that there would be a residual amount of work to be done after December 31, 2013 — no marketing of the program, obviously, but perhaps a little validation of vouchers issued late in the year and some reporting) — for which the CoC would need to be compensated if it did the work. But I also expected him to admit that the appropriate compensation to CoC for that work, on top of what they would do between September the Whateverth and December 31, would not, no matter what, no way, be legitimately valued at $460,000 under this contract.

This 12-month contract would have to go away.  The City could create a new contract for the scope of work to be done between January 1, 2014 and whenever it would end, if it chooses,  but given the imminent demise of the program the CoC would obviously not be given the entire bleeding $460,000 next month to hold onto — because that would be much more than would be required for its authorized operations.  It would go beyond mere overpayment to the the equivalent of stuffing public money into the G-strings of stripper at the clubs for the owners which Matt Cunningham more or less says he does not technically work.  You can’t do that.  (Seriously — some have tried.)

So that’s what I expected of Ament.  He didn’t say “no” — didn’t want to talk to me about it at all, in fact.  I take no offense — Ament has good reason not to want to talk to a blogger who has been critical of Anaheim’s Council majority, especially one who happens to be an official for the opposing political party and an attorney with a keen and growing interest in Anaheim politics, despite that I would have printed his answer verbatim.  I just want to show you that I did ask.

Now on to the main show, which Jason Young has distilled into this video:

Hope you’re ready, because here we go.

2. Supply-Side Subsidization

You might well wonder why the Chamber of Commerce — which has a web of powerful personal and political connections to each member of the Council, including as a donor and assembler of donors — is administering a contract to implement a program involving public funds that is generally administered by public servants.  The answer you’d get from the Council majority includes a lot of harrumphing and unsupported (indeed, unmeasured) assertions about why the Council is so much better equipped to do this job, but that dances around the real answer, which is this:

The City Council majority’s priority, well over that of serving the public efficiently and effectively, is to shovel public money with great force into the coffers of the Anaheim Chamber of Commerce — no questions asked.

For the benefit of certain Council members, that underlined section is a metaphor; I will clarify as required.

Now let me bend over backwards to be fair here: the Council majority — I usually call it the “Murrjority,” but last night it wasn’t clear that the Murrbot was taking the lead or that she even clearly understood what was going on, as she exhibited several programming deficiencies that will be noted in a later story when we review up to a half-hour of video because that’s what the public wants — may think that what is good for the Anaheim Chamber of Chamber of Commerce is of necessity or by definition good for the City of Anaheim.

In a larger sense, they may then argue that whatever they can do (or get away with doing) — subverting the democratic process, ignoring standard management procedures, and sucking money out of taxpayer wallets into the pockets of Todd Ament and his band of merry men and women whether they do diddly to earn it or not — is in fact serving the public efficiently and effectively.

That’s crazy, of course, but debatable — and so far as they follow the law it is up to the voters to remove them with great force (although courts can and have and will continue to intervene and stop them at times.)  They’ve clearly decided that they won’t be removed so long as they have an overwhelming advantage in campaign financing — and can maintain a citywide-election district system that makes that advantage critical to electoral success by pricing insurgent competitors out of the market.

Of course, we should not concede that they will necessarily follow the law.  What, for example, would happen if they overpaid a private agency with gobs of public money to do something that was not pursuant to a contract?  That’s where — to give them every benefit of the doubt, they might cross the line.

Well, guess what?

Now, hiring private enterprises for more money than the city would spend doing it on its own to perform service is the sort of thing happens sometimes — especially in the highest commercial reached of OC, where the parasite is the county’s official bird.  It makes campaign contributors rich — which is not necessarily bribery or a gift of public funds or something else not only tawdry but illegal — and in some circles that’s a good thing.  This is what “privatization” sometimes yields — what ends up driving the bus is not “how can we best get things done for the public?” but “how can we get this money that we control into the pockets of our friends and contributors?”  And, usually, there is little that we poor citizens can do about it.  (Of course, such a desire to siphon off public money doesn’t usually stroll around naked rolling its hips, as it did last night.  That is another metaphor.)

However, this was a pretty rotten piece of privatization to begin with.  (For more background, you can read Save Anaheim’s post, which I hadn’t seen before the meeting, here — including a heaping helping of commentary from OJB’s own — so we like to think, although her writing is found elsewhere as well — Cynthia Ward.)

First, in most other cities this is not a job that is even big enough to be farmed out, usually being handled by one administrator — whom I’m pretty sure made less than $460,000 a year.  Anaheim has only had its program in effect since February 2012 — while the city’s elite hailed it as a model program of its type last night I’ve also heard it described as the straw that broke the camel’s back and let to the elimination of all Enterprise Zones in the state — and has made “marketing” of the vouchers a high priority.

The CoC reportedly hired a half-dozen or more people to go out and spread the gospel of free money from the state’s coffers to local businesses — and clearly wants to ramp that effort up as much as possible during the 4½ months remaining between now and New Year’s Eve.  So far as I know, the City can do that — even if it’s not adhering to the spirit of the law phasing out the program because of abuses.

(It wouldn’t surprise me, though, if the state does whatever it can to object to it — after all, if other cities have one administrator with other responsibilities on the job, as opposed to Anaheim’s fleet of privately managed full-time sales reps, Anaheim will get a disproportionate share of the soon-to-disappear free publicly funded loot.  I don’t really trust the Council majority to have a firm grip on the realities and legalities here.  Their priorities appear to be elsewhere: just get that money into Todd Ament’s hand while we can, dammit!)

So the first problem with this particular privatization is that it is the sort of “innovation” that shouldn’t happen at all — one that, sure enough, seems to have killed the golden goose for every municipality.  I suppose that the state owes the Anaheim Council some thanks, in the same sense that the nation owes the owners of the Triangle Shirtwaist Factor thanks for spurring occupational safety laws a century ago.

The second problem is that, having received from $1.4 to $1.8 million (I think it’s the latter, but I’ve seen the former number reported) the CoC then went back to the City Council to ask for a big second helping of General Fund money, so that they now have what was reported last night as $2.37 million over five years.)  As Mayor Tait pointed out at the meeting, this was not for an increase in the scope of the contract — asking the CoC to do more for more money — but just giving it more money for the same job.

This makes sense if you accept the hypothesis that the Council sees its actual purpose as being to shovel as much money to the CoC as it can get away with.  It also makes one wonder whether the initial proposal for the five year contract may have, uh, left some things out, and whether leaving those things out to induce the city to sign the contract in the first place (rather than hiring or retaining an employee to administer the vouchers) may have been a little … improper.  An actual City Council, or an attention paying District Attorney, might inquire into how the heck that happened — and might have even asked before rushing through the emergency boost of the contract size when it became clear in May that Enterprise Zones were doomed.  But we live in Orange County, so who are we kidding?

As aside before leaving this point: Tait also noted dryly that earlier in yesterday’s meeting a bunch of non-profits had shown up, tin cups in hand, asking for more support for their worthy enterprises — and the Murrbot in particular had asked about both performance audits (“are they doing what they say they’re doing with the money?”) and financial audits (“are they financially stable and sound?”) being done of them as a condition of their receiving public funds.  Well, you may wonder, then, whether such audits were done of the Chamber of Commerce back when it got its extra money in May — or even by last night?  No, no one except Tait even brought up the disparity of how the pittances give to poor non-profits were subjected to far more oversight than the flood of money to the CoC.

So that’s an act of privatization that should never have happened, followed by a boost in the amount (over)paid that should never have happened.  It would seem hard to make things worse, right?   Well, friends and readers, third time’s the charm.  Here, let me beat Vern to the punch here and give you a nice video as a break:

Let’s not complain here and now — as we might — that Anaheim should not be running around trying to sign more and more people up for a program that the state had spiked because it was being abused (with lots of people apparently pointing their fingers towards the City Hall): that’s for someone else to do.  Let’s presume that that’s OK.  The question then is: how much should the Chamber get paid for what its doing during the time remaining for it to be done?

Here’s a simplistic version of what a city contracting out a service one might expect a private agency to do: if they are to be paid $462,000 per year, which I choose to simplify the math, they might be expected to expend $38,500 per month.  You would not accept a trash-pickup service, for example, that after signing a contract said that it would spend $100,000 for each of the first four months and then $7,750 per month for the rest of the year.  In law, we say that that is not the sort of service that the contract contemplated.  Often, with a decent lawyer, that sort of thing is expressly provided in the contract, but even if it isn’t there are tools for trying to figure out what’s reasonable.

Now, the City contracted for administration of the Enterprise Zone voucher program.  Presumably, this is primarily verifying the eligibility of applicants for vouchers, and completing the necessary reporting to the state.  The city wants to include in that the marketing the prospect of receiving vouchers to business owners; some of that is probably within the scope of the contract, but a program that went from, say, 20% marketing to 80% marketing would substantially change the contract and the city would have to approve such a change.  (Instead, the city apparently just threw more money at the Chamber.)  If the Council members represent the City rather than the Chamber — and yes I said “if” — they would also exercise some oversight, including negotiating changes in the scope of the contract, in the rate of delivering services, and they might well want to do some freaking performance auditing before things get too deep.

Because the City is apparently due to send the Chamber a lump-sum check — correct me if I’m wrong, Todd Ament! — in September for $460,000 for 12 months of work, do you know what would be a really good idea?  That’s right — start the process of reworking the contract and its expectations in AUGUST, which is RIGHT NOW — before the check goes out.  Exercise some oversight over public funds!

That’s what Mayor Tait asked the Council to do last night.

And the other four Councilmembers said “no.”

The question of oversight of this contract given the cancellation of the Enterprise Zone program would not be taken up by the Council.  The prospect of cancelling this contract on the date that the program expires does not rule out creating a new one to shovel money into the CoC if the Council duly votes for it; it can have the Chamber clean the bathrooms or reboot Kris Murray as the need arises or whatever supposedly justifies the expenditure, but it will have to answer to voters and potentially courts.  But even Tait’s agendizing this item was termed by Councilman Jordan Brandman as a “reckless act” creating “irreversible harm” to the Chamber of Commerce.  I should have the video of the entire thing by tomorrow, with a story up tomorrow or Friday.

Here’s some law to know: if you have a contract to photograph Cory Monteith for a magazine cover, but Cory Monteith dies from a drug overdose, then you cannot perform on your contract.  If your contract is with Cory Monteith’s heroin dealer, who perhaps should have known of this possibility, then perhaps you can collect some or all of it anyway.  But if it was not foreseeable, then unless the contract specifies otherwise the doctrine of “impossibility” kicks in and both performance and payment are excused.  Does this doctrine apply here?  I don’t know — that would be a really good thing for the Council and the Chamber to discuss — right now.

I will say this: if you’re a private party not acting as a fiduciary (such as, for example, trustee of an estate), then you can sign any damn stupid contract that you want and it’s your loss.  But if you are administering public money, and you are paying — and arguably already overpaying — an organization that is your political patron and contributor, you are going to want to have a really good explanation if you’re paying for performance of a task after the point that performance becomes impossible.

The Council, again, passed the over 30% increase in the amount to be sent to the Chamber even after they knew that the Enterprise Zone program was going away.  They should have — they really, really should have — address the question of what would happen if the program expired at that time — but they didn’t.  Lacking that foresight, they should be addressing it at this time — before the September payment to the Chamber of Commerce of $460,000 that may potentially not be usable to fulfill the original purpose contemplated in the five-year contract — but so far they aren’t.

Councilman Brandman, before debate began on this issue, pointedly asked City Attorney Michael Houston whether the Council was running afoul of public anti-corruption law by voting on a contract to an agency from which each of them — Tait included — had received campaign contributions.  Houston, correctly so far as I know, answered the question as phrased: no, the law does not provide a general bar preventing elected representatives from voting on appropriations to contributors.

I doubt that this would be news to Councilman Brandman, but he didn’t ask exactly the right question.  I expect that Tait knows the right question — which is strongly hinted at in this article.  If not, Lucille Kring is also a lawyer, so maybe she can figure it out.

More on the precise debate is one its way after the videos arrive.  My insincere apologies for the “ocean of words,” but for the record only one of them apiece were “Cunningham” and “stripper,” so I hope that that will by some comfort to the blogger who, discovery may show, is being paid in part out of this contract.

As for the possibility that the Chamber itself may be in financial trouble if it doesn’t get the full $460,000 by when it’s due in September: that, and how a majority of the Council may be aware of it, if so, also bears watching.  If the non-profits have to face fiscal audits over receiving a relative pittance of coin, why doesn’t the Chamber face one over a relative pile?

The Council Majority may want to help out their patrons in the Chamber if it’s in a fix — but there are limits on what they can do.  (Michael Houston probably knows them.)  Some “imperatives” aren’t really imperative.

Update: Damn, that Jason is fast!  While I was composing this, he was able to snip off and upload the entire 39-minute discussion on this item.  For those who want a head-start on the next piece, you can view it below.

And I’ll put in another pitch.  Are you someone who enjoys the Juice, doesn’t want to blog, but would like to do something really helpful?  You can volunteer to do all or part of a transcript of the above discussion, which would help my writing task immensely.  We can crowd-source this: if seven other people want to take 5-minute blocks, just announce that you’re willing to do it, and I’ll volunteer to do the 8th one!

About Greg Diamond

Somewhat verbose attorney, semi-disabled and semi-retired, residing in northwest Brea. Occasionally ran for office against jerks who otherwise would have gonr unopposed. Got 45% of the vote against Bob Huff for State Senate in 2012; Josh Newman then won the seat in 2016. In 2014 became the first attorney to challenge OCDA Tony Rackauckas since 2002; Todd Spitzer then won that seat in 2018. Every time he's run against some rotten incumbent, the *next* person to challenge them wins! He's OK with that. Corrupt party hacks hate him. He's OK with that too. He does advise some local campaigns informally and (so far) without compensation. (If that last bit changes, he will declare the interest.) His daughter is a professional campaign treasurer. He doesn't usually know whom she and her firm represent. Whether they do so never influences his endorsements or coverage. (He does have his own strong opinions.) But when he does check campaign finance forms, he is often happily surprised to learn that good candidates he respects often DO hire her firm. (Maybe bad ones are scared off by his relationship with her, but they needn't be.)