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LBReport.com News Council Votes 5-3 To Reverse Part Of March Vote, Won't Direct Convention & Visitors Bureau Boardmembers To File Financial Disclosure Form We include extended transcript excerpts (April 2, 2003) -- The City Council voted 5-3 at its April 1 meeting not to direct LB Convention and Visitors Bureau (CVB) Boardmembers to file a financial disclosure form required for members of many City Hall commissions and boards and LB elected officials. Vice Mayor/3d district Colonna agendized the item, seeking to reverse part of a March 4 Council vote directing boardmembers of the CVB -- which receives roughly 3/4 of its annual operating budget from LB's hotel "bed tax" (transient occupancy tax) but is a not-for-profit entity legally independent of City Hall -- to file a "Statement of Economic Interest" Form 700. On March 4, 9th district Councilman Val Lerch got a 9-0 Council vote expanding the disclosure directive to various City Hall entities as well as the CVB, fighting off efforts by four Councilmembers to send Lerch's proposal to a Committee. But on April 1, Vice Mayor Colonna took advantage of the scheduled absence of 1st district Councilwoman Bonnie Lowenthal -- who had voted with Lerch in March but would be out of the country on April 1 -- to propose rescinding the disclosure edict as concerned CVB boardmembers. On learning that Colonna was planning his item, Councilwoman Lowenthal advised her Council colleagues and the Mayor that she would be out of the country in early April...and asked that discussion of Form 700s be postponed until she returns. "The issue of Form 700 filing was an important issue discussed by the Ethics Review Task Force...and included in their final report to the Council," Councilwoman Lowenthal wrote, adding "Due to my close involvement with issues born from the task force, I respectfully request that any...discussions around Form 700s be layed over until the April 15 regular meeting." Reached for comment on March 28 by LBReport.com, the office of Vice Mayor Frank Colonna indicated that his CVB item would not be postponed. At the April 1 meeting, Councilman Lerch made a substitute motion to send the CVB item to the Economic Development & Finance Committee and request a ruling from the Fair Political Practices Commission (FPPC) on whether CVB Boardmembers had to file Form 700 regardless of what the City Council directs. Seeking an FPPC opinion was urged in public testimony by long-time neighborhood activist and 2d district resident Bry Myown, who said the reasoning of an FPPC decision concerning the Huntington Beach CVB meant LB CVB boardmembers had to file disclosure Form 700 regardless of what the Council did. Ms. Myown's interpretation challenged the opinion of Assistant City Attorney Heather Mahood, who said the Huntington Beach FPPC ruling did not require the filing of Form 700. Along with Ms. Myown, other veteran LB activists, including NLB's Linda Ivers, ELB's John Donaldson, and Wrigley's Richard Gutmann also urged the Council to oppose Colonna's motion and not rescind the Council's disclosure directive re CVB. No CVB officials spoke at the meeting. [LBReport.com plans to post transcript excerpts here. Please check back with this page, click "refresh" or "reload" on your browser for our update to this initial posting.] With Lowenthal absent, Lerch's substitute motion (send to Committee, seek FPPC opinion) failed 4-4. (Yes: Baker, Richardson, Reyes-Uranga, Lerch. No: Colonna, Carroll, Kell, Webb. Absent: Lowenthal) Colonna's motion to rescind the disclosure directive re CVB passed on a 5-3 vote; had Councilwoman Richardson not switched sides, it too would have failed on a 4-4 vote. (Yes: Colonna, Carroll, Kell, Richardson, Webb; No: Baker, Reyes-Uranga, Lerch). We provide extended transcript excerpts below. These are unofficial, prepared by us; not all speakers or their statements are included. Vice Mayor Colonna Vice Mayor Colonna: ...[After the Council voted on Mar. 4 to direct the filing of Form 700] there was a memorandum that was circulated to us from the City Attorney's office stating that there was a potential for an ambiguity and as a result, if the Council's direction was to require the CVB to file the form, that that would be an item that this Council should elect to perform." [This memo, and other referenced below, were not included with the agendizing materials. To view it, click March 6 City Att'y memo to Council re CVB.] In my particular discussions with the City Attorney as well as my concerns about where we could be going potentially with this, or the kind of message that we'd be sending, is that we do have a Convention and Visitors Bureau board that is not elected, and it is not appointed, and it independently operates and oversees the operations of the CVB. I received some information from the City Manager's office [March 26 City Mgr. Memo to Councilmember Lowenthal, cc'd to Council and Mayor] that was circulated to Councilmembers here that indicated that we have San Francisco, San Jose, Los Angeles and San Diego...that do not require boardmembers to file a 700 form. ...And I just want to make sure that the public is clear, and if the City Attorney could give her opinion, not only hers, but the opinion that is held throughout the state regarding conflict of interest... Asst. City Attorney Heather Mahood: ...The state law applies to all people who make decisions with government money, whether they file a Form 700 or not. All of your boards, including the CVB, including any organization that spends city money, is prohibited by state law to vote on anything that would provide a conflict of interest to their own personal financial ability. That's regardless of whether they file the form 700 or not. So regardless of your action tonight, members of the CVB are not permitted to take votes on items that would increase their financial benefits or whatever conflicts under the law would exist. Vice Mayor Colonna: Thank you. And I also believe that we have some inherent checks and balances within the make up of the CVB board. We have, as a matter of fact, a representative of our own City Manager's staff that sits on that board. Is that correct Mr. Miller? Acting City Mgr. Gerald Miller: Yes sir, that is correct. Vice Mayor Colonna: OK, thank you. So with that, and some other information that I know that you had given some other internal information to us as a Council regarding the capacity of the Board and how it functions with this City Council in terms of providing whatever information, only on request, but in fact the [CVB] board operates independently of the City Council, is that not correct Mr. Miller? Acting City Mgr. Miller: ...Yes, I believe that the memorandum you're referring to is dated April 1, 2003 [City Mgr. Miller memo to Councilwoman Reyes-Uranga], which does talk about the relationship between the city and CVB, which is governed basically through an annual contract subject to your budget appropriations for that organization. Vice Mayor Colonna: Thank you. With that, I really feel that what we need to do as a Council body is send a message that first of all, that we do have or are extending our full faith and confidence in the operations of the CVB board. They're such a critical part of this city and are responsible for an operation that definitely develops somewhere in the neighborhood of $12-$14 million that contributes to our Transient Occupancy Tax. And with that I'd like to make a motion to not require the Convention and Visitors Bureau to file a Form 700. In a colloquy with 7th district Councilwoman Tonia Reyes-Uranga, Ms. Mahood said the CVB does not advise the Council. "The Council actually just contracts, it's a funding contract each year in order to fulfill the tourism-promotion duties of the city. They bring a marketing plan to the City Council, which the City Council can approve, they can change, they can actually modify during the year, and it's totally governed by that contract. They do not formally advise you on any matter. They simply fulfill a contractual duty to City Council," Ms. Mahood said. Councilwoman Reyes-Uranga pursued the point.

Councilwoman Tonia Reyes-Uranga

Councilwoman Reyes-Uranga: ...[S]ince it is a contractual relationship,...is this something that goes out to bid, or are they an exclusive receiver of these funds?

Acting City Mgr. Miller: ...In anyone's memory, I'm sure that the CVB has always operated this program and in fact we believe that the CVB has been established as uniquely qualified to carry out the convention and tourism marketing function of the City of Long Beach, remembering that the City of Long Beach and Councils before you have made a very large investment in our tourism infrastructure vis a vis the Convention Center and the downtown waterfront and all the hotels and so forth. And the important role that the CVB plays is to make sure that we are marketing and properly filling those facilities with visitors.

Councilwoman Reyes-Uranga: So then are they the exclusive receivers of these funds?...My focus is on the contractual arrangement, not so much on the [Form] 700. It would seem to me that they're all interested in tourism, they're all players in the tourism industry...I mean they have a direct interest because the city, as the city grows and as we grow our tourist trade, we all have an interest for them to succeed.

Acting City Mgr. Miller: [Offers to go through review of how transient occupancy tax is distributed now or later]...Obviously we believe and you have affirmed that through your approval of their annual contract that the CVB is uniquely qualified to carry out this program and I think there is no reason to believe that there is anyone else in the community certainly that is qualified to do so and we certainly have not sought alternate proponents for this particular service.

[intervening colloquy, Reyes-Urangaraises issue of other city consulting arrangements having to file disclosure forms]

Ms. Mahood:: There's pretty much two issues here. One is if it's an organization such as the CVB, they would file if they were a formally designated advisory board, and a good example is the PCA [Public Corporation for the Arts]. They have been designated by the Redevelopment Agency to formally advise them on matters of the percent for public art program, so they have been formally designated. That would be one way for a contracting agency to become subject to the Form 700 requirement...

There is a specific rule with consultants in the law...There's two criteria. If [a consultant serves] the same function as a city employee could...if they fill that same function and the consultant's recommendations are generally followed by the city, that consultant then would be subject to the Form 700 requirement...

Councilwoman Reyes-Uranga: And the CVB has not been appointed by the Council as an advisory board?

Ms. Mahood:: No they have not. Now you may consult with them informally on matters but they have not been actually formally in a resolution appointed an advisory board...

..[T]hat's why we're asking for a clarification...The Council's motion of several weeks ago seemed to indicate that they wanted to include the CVB, not because they would be legally required to so, but because the City Council found it appropriate to do so.

Councilman Dan Baker

...It seems to me that there is an inherent conflict between the [CVB] boardmembers and their position just by the fact that everything they do is designed to bring in tourism dollars and, in addition to the city and the residents, they are the ones, or their employers are the ones, who are going to benefit from those tourism dollars.

So a Form 700 is not going to clarify that conflict at all. We all know that they are general managers of hotels who will benefit from their actions...

[question directed to Asst. City Attorney Mahood]...So is it your opinion that the CVB does or does not make governmental decisions?

Asst City Attorney Mahood: Again, under the law as the Fair Political Practices Commission has put forth criteria for CVB's, they do not fit that. They do not fit the category of a governmental decisionmaker, and that's a Fair Political Practices decision...

Bry Myown

I thank you for your March 4 vote and I hope you will uphold it, and I also thank you for this conversation about doing what is right.

But the people of California determined what was right when they adopted the Political Reform Act of 1974, and that law does not let you make these decisions about whom you want to file. That law gives you a duty to require filings from any body that meets the statutory requirements as they've been interpreted by the Fair Political Practices Commission...

Since its 1977 Siegel decision which I have distributed, the Commission's test of whether a corporation is subject to the Act have been:

Did the impetus to form it arise with a government body?

Is it substantially or primarily funded by a public source?

Does one of its principal purposes undertake traditional government obligations?

Is it treated as a public entity by other laws?

I've given you lengthy answers to those questions, but the [City] Attorney's opinion is based on a Huntington Beach decision that found HB CVB is subject to the Act. Their Clerk confirms its Directors do file, and our facts are more persuasive.

Our first publicly funded tourism body was created by a 1962 Council action that imposed bed taxes, formed Long Beach Promotion and appointed its members. Subsequent actions, funded numerous different public and private entities, mostly with the same players, until a 1982 Council-appointed Task Force approved a plan, recommended by that Task Force, and it reconstituted itself as a corporation and subsequently began appointing its own directors.

It has never had its contract put out for bid. I think it's clear the impetus to form it originated with a public agency.

Its funding averages 85% in the 14 years I've examined. That's substantial, primary and ongoing.

Those are two tests down.

Ms. Mahood told you it performs no city function. That was true for Huntington Beach with regard to promoting tourism. But the test is, does one of its primary purposes meet a government function. The "Purpose" clause of its by-laws show, and the recitals in its contract, that it promotes commerce, navigation, fisheries and aquatic recreation. This fulfills your obligations under the Tidelands Trust, which are a governmental obligation. That meets the third test.

Siegel holds that tax-exempt status meets the fourth. The FPPC finds that meeting three out of four [tests] is sufficient.

You are weighing a decision on matters of state law that are not within your discretion. I don't expect you to rely on my opinion, but neither should you hide behind the Attorneys because it could invite litigation. If you have any questions about what is right, do what the Huntington Beach City Attorney did, what most city attorneys routinely do. Please make a substitute motion and ask the regulatory agency for an opinion.

Members of the public are not allowed to do that. We're limited to asking its enforcement division to pursue an enforcement action against you if you're out of compliance. This would be a very bad time to do that.

You have just passed a three-year [financial/budget] plan based on the assumption that we will approve a tax [an increase in the transient occupancy tax]. Please don't be put in a position of waging a campaign for CVB secrecy instead of city solvency. That could be disastrous.

Linda Ivers

...I find it troubling that this issue is being addressed again four weeks later, all because of one entity that receives the majority of its funds, over $3.5 million annually from taxes levied by Long Beach. This is the same entity that will soon be lobbying the Council in support placing a measure on the ballot to increase the major source of its funding, the hotel "bed tax."

Apparently the board of the CVB believes they are special, and should therefore be exempt from the same type of disclosure that the majority of city boards and commissions...have been making for years. The claim has been made that because they are a non-profit corporation with a volunteer board, they should be exempt. In the eyes of the public, the CVB is no different than other special interest, non profit, corporate entities that receive public funds and work on behalf of the city...

Richard Gutmann

I think the Council is making a serious mistake even revisiting this issue. There is little to gain, and yet you will be further eroding citizen confidence in this local government -- and it is already extremely low. It is not easy to put your trust in leaders who already have you some $90 million in debt, but just months ago, right before the election, were telling us what great shape the city is in.

If you require the Convention and Visitors Bureau board members to file Form 700, the worst thing that could happen that would be that a few people might not serve...We can certainly live without the services of someone who's unwilling to reveal such information...

The very sparse backup material provided for this Agenda Item notes that the CVB is a unique case. Maybe. But, nevertheless, 85% of its funding comes from taxpayers -- taxpayers who have a right to know if board members are spending our money for their own gain or that of their business associates.

Besides, the CVB has a rather checkered recent past. Many residents, with good reason, lost confidence in figures provided by the bureau; important figures upon which many Downtown development decisions were based. Shielding the CVB board from financial disclosure is not the way for that organization to regain the public's trust...

You really need to do everything possible to restore trust. Exempting the CVB [boardmembers] from financial disclosure isn't the way to do it.

John Donaldson

...I can't believe we're here discussing this. I certainly applauded, and I think I wrote a number of you, for your acts on March 4. We should be here broadening that decision, not retracting it.

We need more openness, more honesty, more transparency in government...But here we go, backwards again.

Now I really don't believe all of you are in this. I believe this is Frank [Colonna] and Dennis [Carroll]...

You know, a CVB in and of itself is a troubled formula. It is rife, it is pock marked, with conflict of interest to begin with. And the one in this city has a sordid history...Now I thought we wanted to do something about that, we wanted to operate in the open. We certainly hired a much better director for the bureau who is giving much better numbers, but who do those numbers go to? The money comes from the taxes that this city collects...I do not see anything special about the CVB, nor its membership, and I take offense at someone trying to make them so.

The Mayor then brought the item back for Council discussion, and Councilman Webb invited Assistant City Attorney Mahood to discuss differences in the Huntington Beach CVB (the subject of an FPPC opinion) and LB's CVB:

Asst. City Atty Mahood: ...[T]he Huntington Beach CVB was actually formed by the government, and actually all their assets go to the government when they actually dissolve, so they are different...Our CVB was formed by the Chamber of Commerce. It was not formed by the City Council...

...The question [before the FPPC in the HB opinion] only applied to the Huntington Beach CVB and the specific facts of how that was formed. It was not meant to apply to all CVBs and that's why, as you know, all the other CVBs are not filing those. So it's not like a court case that would apply to all CVBs. It was very specific to the facts that were presented. When the Fair Political Practices Commission issues opinion, it only applies to the facts that are presented and only applies to the entity that asks, so it did not apply to other CVBs automatically.

Councilman Dennis Carroll

Councilman Carroll: I take it, Ms. Mahood, that our Convention and Visitors Bureau has never been required to file a Form 700, is that correct?

Ms. Mahood: Councilman Carroll, that is correct.

Councilman Carroll: And we've not been sued for that?

Ms. Mahood: That is correct.

...[projects portion of City Manager's memo on screen comparing SF, LA, SJ, SD and LB CVBs, page two of Mar. 26 memo]

I think it's important to note that our Convention and Visitors Bureau is one of the prime engines for our city. We are competing against other cities for this convention business...

...I think if we think of this as a team, we have brought together our most knowledgeable and skilled individuals in the area of conventions and entertainment from our city who are basically donating their time.

And if we think of it as a football team or a basketball team, the consequence of requiring something that none of the other cities with whom we compete would be is simply to limit the number of persons who would be willing to sit and serve and put in their time and energy on our team, the team with which we're trying to bring in the business for our city.

It would be the equivalent of telling these other cities we're willing to eliminate the criteria for our best players. We want to have the most mediocre team we could possibly field for some imagined benefit of this Form 700.

You've heard from the City Attorney, if there is a conflict, if any of those individuals have some financial interest in a particular decision, the law already requires that they disclose it and they avoid voting on that particular issue. That system has worked well here since the inception of our Convention and Visitors Bureau.

It seems to me unreasonable to suggest that we change it to our own detriment, to our own damage, to decrease our ability to compete, to minimize the ability to attract businesses here because we don't have the best team on the field.

Now I do appreciate that there is a movement afoot which has now been extended over the last couple of weeks even to crossing guard committees, that some great harm is going to come to this city because crossing guard committees don't have a Form 700 filed. But I suggest this revolution is on the verge of consuming itself and our city in the process. We have to stop, now.

It is always possible, should these issues become real, and they certainly haven't as far as I can tell, I've not heard anybody other than those who are legitimately concerned with the performance of our Convention and Visitors Bureau, cannot point to any instances that I'm aware of where someone abused their position as a director of the Convention and Visitors Bureau, that is, they made some decision there for which they personally financially benefited...

...It seems to me the appropriate action tonight is not to send this to Committee, not to tie our own hands, not to voluntarily restrict ourselves to those persons who are least qualified to give the city direction in this most important area, and tell these other cities, well it's a rule that we appreciate you don't have to follow but we're going to impose it on ourselves unnecessarily.

So for those reasons Madam Mayor, I'm going to be supportive of taking action tonight to not extent the requirement of this Form 700 to the Convention and Visitors Bureau at this time, and should circumstances arise that it would become indicated or necessary at that time, we can certainly take that action...

Councilman Val Lerch

...I've got to ask the City Manager, the City Attorney, when we give this Board $3.7 million of the taxpayers' money, and if they did not exist, that board did not exist, where would that $3.7 million be? Would it be spent here for the citizens of this city?

Acting City Mgr. Miller: ...A portion of the TOT [transient occupancy tax] is specifically set apart for Special Advertising and Promotions, and that would be carried out, either by some other entity or by the city itself, presumably.

Councilman Lerch: OK, so when the CVB decides to spend our money for advertising, does that budget come back to us, and we approve where they spend that money at?

Acting City Mgr. Miller: Well, yes sir, on an annual basis, the City Council reviews the Marketing Plan basically for the CVB and you authorize the City Manager to either enter into or to extend that contract by one year's period of time to carry out the work as consistent with that Marketing Plan.

Councilman Lerch: So they do come back and give us advice on how they're going to spend the money, and we approve how that money is spent?

Acting City Mgr. Miller: Yes sir.

Councilman Lerch: OK, so they do advise us on how they think is best to spend the money?

Acting City Mgr. Miller: [applause for Lerch's question] Well, I wouldn't say that they tell you that they're going to spend money down to a line item level. They would give you programmatic information basically, and then they would assign obviously values to that, and presumably we could come back to you and modify that if we felt there was a need to do so.

Councilman Lerch: Do we have a City Prosecutor in this city? OK. Does any other city in the state of CA have a City Prosecutor? Not to our knowledge. Do we have a Health Dept. in this city? Are there any other Health Depts. in this state of CA but three other cities? OK, there's three.

OK, so if we use the argument and the reasoning that because other cities don't do it in this state, let's go and fire [City Prosecutor] Tom Reeves tomorrow and do away with our Health Dept. We are a city that's unique. We are a city that looks at things differently, and the citizens of this city have said, we want transparency. The Code of Ethics Committee said they wanted transparency.

...[W]hat I think we should do with the CVB is we should go back to Committee [the Economic Development & Finance Committee], and ask for a ruling of the FPPC, ask for their ruling...[Councilman Lerch makes a substitute motion to do this, seconded by Councilman Baker]

Ms. Mahood: Madam Mayor, if I can point out, if the FPPC does rule that the CVB is subject to the requirement, it will no longer be in the City Council's jurisdiction. We as an office of course will then immediately require them to file a Form 700. So should you get an opinion from the FPPC that they are subject to those requirements immediately, they will be filing those Form 700s. Your only discretion will come if the FPPC comes back with an opinion that they do not have to legally file them, then it would be in the Council's discretion whether to choose to make them file or not.

Councilman Carroll: And let me inquire of Ms. Mahood. Is it your legal opinion that we are required to secure a ruling from the FPPC with respect to this issue before making our policy decision?

Ms. Mahood: No, you are not Councilman Carroll.

Councilman Carroll: Alright, so this is just someone's good idea that it might be helpful to have that guidance, and we've lived without it and can live without it for another hundred years.

Lerch's substitute motion (send to Committee, seek FPPC opinion) failed 4-4. (Yes: Baker, Richardson, Reyes-Uranga, Lerch. No: Colonna, Carroll, Kell, Webb. Absent: Lowenthal)

Colonna's motion to rescind the disclosure directive re CVB passed on a 5-3 vote; had Councilwoman Richardson not switched sides, it too would have failed on a 4-4 vote. (Yes: Colonna, Carroll, Kell, Richardson, Webb; No: Baker, Reyes-Uranga, Lerch).

"...One thing I do want to say is, and this isn't on whether they should file a [Form] 700, but the CVB has tried very, very hard to change the image that was set quite a few months back. And [CVB's new Exec. Dir.] Steve Goodling has worked very hard for that, and that's one of the three objectives of our city is to have a strong tourism business, and even though we may not get as much money as we think we want, that we have a group out there that is working to that objective. And it has increased over the past few years, and the board is working very well together, as I say it has nothing to do with the 700 form.

But to hear some of the comments tonight, they were just untrue. So much has been done to change that direction for our city, and CVB has done a very good job for our city in the last year."