+ ETA Advertising -- Sold In July By 2nd Dist. Council Candidate Cindy Allen With Provision To Receive 10% Of Its Net Revenue For Three Years -- Bids On New City Of LB Contract (2 Yrs/Up To 3 One Yr Renewals); ETA Received 2015 City Contract That With Amendments Thru 2020 Totaled $431,000
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ETA Advertising -- Sold In July By 2nd Dist. Council Candidate Cindy Allen With Provision To Receive 10% Of Its Net Revenue For Three Years -- Bids On New City Of LB Contract (2 Yrs/Up To 3 One Yr Renewals); ETA Received 2015 City Contract That With Amendments Thru 2020 Totaled $431,000



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(Oct. 11, 2020, 6:40 a.m.) -- Public record materials show that ETA Advertising, the firm sold in July 2020 by 2nd Dist. City Council candidate Cindy Allen with a provision allowing her 10% of its net revenue for three years, submitted a bid between June 30 and Aug 11 on a new City of LB contract for the same types of services (2 years/up to three one year renewals.).

Under a 2015 City of LB contract subsequently amended/extended four times, ETA received awards totaling $431,000 by January 2020. That contract expired on July 31, 2020 and city staff began soliciting bids for a new contract for basically the same type of services. The bid period opened on June 30, 2020 and closed on Aug. 11. Public records indicate Adam Carrillo (Mayor Garcia appointee to LBTransit governing board, spouse of former Councilwoman/now state Senator Lena Gonzalez) submitted a bid on behalf of ETA during this period. ETA is among 91 firms that have submitted bids.

Bid solicitation documents indicate the City anticipates the value of each awarded contract to be between $25,000 to $100,000.

The ETA sale agreement surfaced as an attachment to a 10 page civil lawsuit brought by ETA's buyers (LBREPORT.com coverage here and here).

As of dawn Oct. 11, to our knowledge only two LB news outlets -- LBREPORT.com and the Beachcomber -- have told their readers that the July 2020 ETA sale agreement contains a provision entitling Council candidate Allen to 10% to ETA's net revenue on certain terms for three years.

City staff will ultimately bring the bids it considers most worthy to the City Council for voted contract approval. It's unclear whether that will happen before or after balloting ends in the 2nd dist. Council election (with vote by mail ballots flying now.) Ms. Allen, endorsed by Mayor Garcia and a majority of Council incumbents, is battling Reform Ticket candidate Robert Fox.

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As previously reported by LBREPORT.com, Ms. Allen declined to answer and abruptly exited an Oct. 8 Zoomed election debate presented by the Alamitos Beach Neighborhood Ass'n when asked if she acknowledges or disputes that if elected, her ETA sale agreement would create potential conflicts by entitling her to 10% of the firm's net revenue under certain terms for the next three years.

A few seconds after the moderator mentioned ETA, Ms. Allen interrupted and indicated she wouldn't respond to the question. At one point she labeled it an "attack question." Ms. Allen thanked ALBA for the debate opportunity, announced she was leaving and disconnected electronically from the Zoomed event.

A third party has webposted a video clip of the exchange at this link..

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In April 2013, LBPost.com told its readers that Ms. Allen had became a "partner" in its operations and Ms. Allen ultimately became its publisher and acquired the entity from Robert Garcia and Dezire Lumachi. At the same time, Ms. Allen's ETA Advertising also performed services for Garcia's 2014 Mayoral campaign, including nearly $11,000 in services for which Garcia's campaign hadn't paid. After Garcia took office as Mayor, his campaign labeled the sum an "overestimate" for which it didn't pay ETA.

In 2015, ETA used the City's public RFP process to seek a contract to provide various services to City Hall and was among eight firms chosen by city management to do so. It began by receiving a two year contract for $160,000. Over time, the contract was amended and extended four times, ultimately providing ETA with up to $431,000 in awarded city sums by Jan. 2020.

LBREPORT.com reported these developments in detail in February 2020. To view our coverage of that issue, click here.

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The July 2020 ETA sale agreement provides in pertinent part:

Section 1.02 Purchase Price. Subject to the terms and conditions set forth herein, and in consideration of the Company retaining the two SBA loans and Company credit card debt currently in place at the Closing Date rather than requiring the loans and credit card to be paid in full prior to the Closing Date, the amount of SBA loans not to exceed $86,933.84 on the Closing Date and Company credit card debt not to exceed $41,104.56 on the Closing Date, the aggregate purchase price for the Shares shall be equal to the payments in accordance with this Section 1.02 (the "Purchase Price"):

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(a) During the Payout Period, Seller shall be entitled to 10% of the Net Revenue actually earned by the Company during the Payout Period from the Company clients listed in Section 1.02(a) of the Disclosure Schedules, or from future clients of the Company, in either case if Seller meaningfully participates in securing the Net Revenue for the Company. In order to verify the calculation of Net Revenue, Seller shall have the right to audit and review the Companyís books and records during the Payout Period upon reasonable notice; provided, however, that Sellerís right to audit the Companyís books and records shall be limited to once a quarter.

(i) "Payout Period" means a period of 36 months starting from the Closing Date.
(ii) "Disclosure Schedules" means the disclosure schedules delivered by Seller concurrently with the execution, closing, and delivery of this Agreement.
(iii) "Net Revenue" as used in subparagraph (a) means gross revenues actually collected by the Company under the applicable service agreement, less any costs, fees, taxes, or other expenses incurred by the Company related to the service agreement. "Net Revenue" shall not include any income, taxes, or other expenses reimbursed to the Company. "Net Revenue" shall not include any salaries, compensation, benefits or other forms of compensation or perquisites provided by the Company to any of its officers, directors, or shareholders. For the avoidance of doubt, "Net Revenue" shall include any salaries, compensation, benefits or other forms of compensation or perquisites provided by the Company to its employees.
(iv) Any dispute over the definition of Net Revenue or whether the Seller "meaningfully participates" in delivering the Net Revenue to the Company shall be decided by the Company in its sole discretion.

(b) The Company shall pay Seller its revenue share on a quarterly basis, within 30 days following the close of each calendar quarter during the applicable payout periods. Each payment to Seller shall be accompanied by a written statement signed by Buyer showing the method and the specific dollar figures used by Buyer to calculate the amount of the Net Revenue and the Sellerís payment amount for that period.


Support really independent news in Long Beach. No one in LBREPORT.com's ownership, reporting or editorial decision-making has ties to development interests, advocacy groups or other special interests; or is seeking or receiving benefits of City development-related decisions; or holds a City Hall appointive position; or has contributed sums to political campaigns for Long Beach incumbents or challengers. LBREPORT.com isn't part of an out of town corporate cluster and no one its ownership, editorial or publishing decisionmaking has been part of the governing board of any City government body or other entity on whose policies we report. LBREPORT.com is reader and advertiser supported. You can help keep really independent news in LB similar to the way people support NPR and PBS stations. We're not non-profit so it's not tax deductible but $49.95 (less than an annual dollar a week) helps keep us online.


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