Copyright, Los Angeles Wave 2008

Chamber of Commerce still at odds with city over audit

By Brian Frank
5/22/08

A dispute between the Chamber of Commerce and the City Council has reached a bitter stalemate, with the business organization refusing to submit to an audit and the key question left unanswered: how has it spent the money it received from the city?

For more than two decades, the chamber has worked with the city to promote businesses and to stimulate Lynwood’s lackluster economy. The city has paid an annual fee for the chamber’s services — $95,000 a year since at least 1998 — and during that time, the chamber has frequently submitted financial reports and openly disclosed its activities.

Chamber President Maria Garcia told the City Council at a regular meeting in February that the chamber had recruited 350 new members but also acknowledged spending $25,000 on furniture, a purchase she claimed was necessary to enhance the organization’s professional appearance and to boost member confidence.

But Garcia would not answer more pointed questions about the chamber’s expenditures and asked instead for more time to gather the requested information.

The council gave her a one-month extension and then in a follow-up letter asked the chamber to voluntarily submit lists of its current members and its current board of directors, along with information about any other sources of income, documentation of its expenditures, and how those expenditures have benefited the city’s business community.

Garcia responded with a scathing letter, accusing Councilwoman Aide Castro and Mayor Maria Santillan of making “defamatory accusations” about her, demonstrating a “hostile attitude,” and refusing “to allow me to complete my report” in February, which she believed was “a violation of the Brown Act” — a law which restricts council members to discussing only those items listed on the agenda.

But interviews with current and former chamber members and a review of court documents and records on file at the city clerk’s office reveal a history of embarrassing mishaps, from failure to pay taxes to former directors being arrested on criminal charges, all of which suggest the city at least has reason to question the chamber’s effectiveness. Yet, to date, the chamber has not supplied the information requested.

The city attorney sent a letter to the chamber on April 4 warning that the Redevelopment Agency’s board (the same men and women who sit on the City Council) would “consider terminating the agreement and pursue the agency’s legal options for moneys paid to the chamber” if they received no response by April 17.

“These are very simple things that we are asking them,” City Councilman Ramon Rodriguez said shortly before the extended deadline. “We’re not asking them anything out of this world. I would be more than glad to continue providing them with the funding if they’re using it for the proper purposes.”

Rodriguez, who used to be a member of the chamber’s board of directors, added that as a business owner, he knows how easy it should be to pull the financial documents the city wants to see.

The chamber’s board, for its part, may no longer be interested in renewing its contract with the city, Garcia said in a recent telephone interview.

“If you don't support [the City Council] in their campaigns, if you don't agree with them, they always threaten us with the contract, because they didn’t like how we talk, they didn’t like what we did. So just for $95,000, I don’t think it’s worth it,” she said.

The current troubles are only the latest in a string of controversies surrounding the chamber. In 2004, former executive director Errick Lee was convicted on one count of oral copulation with a minor. His departure was an embarrassment for the chamber and left a vacancy in its management that was filled by city employee Mark Flores. Flores worked simultaneously for the city and the chamber (which Garcia has claimed was a conflict of interest). Then, when Flores resigned in January 2006 and tried to collect his severance pay, the chamber claimed he was ineligible, so he sued. His lawsuit is still tied up in court.

The chamber hasn’t always been straightforward in handling its finances, either. The IRS finally released a tax lien against the chamber last July, according to a letter the chamber’s accountant sent to the city. Before that, it had owed the Internal Revenue Service at least $20,000 in unpaid taxes and penalties which had accrued between 1997 and 2004, according to chamber reports and other documents.

Garcia points out that it was under her administration that the chamber finally resolved its issues with the IRS and insists that the chamber is now working to restore its reputation. But without a full disclosure of its recent activities, it is difficult to know whether the chamber’s current activities are a boon to business, or business as usual.

“It’s hard to see how they’re in compliance with the terms of the agreement,” Lynwood City Attorney Fred Galante said in a telephone interview. “In that light, it’s easy to understand why the city is upset.”

The agreement stipulates that the chamber will deliver to the city twice per year “a review of its activities accomplished during the past six-month period that relates to the scope of services” listed in the contract. But nowhere does it specify the chamber must submit to a financial audit, which is why the city had to ask the chamber to do so voluntarily.

The agreement does specify that the chamber will maintain an office in Lynwood “which is accessible to the public and fully equipped for the purposes of disseminating information and answering inquiries” relating to Redevelopment Agency projects, such as expansions of commercial developments and recreational facilities.

But Councilman Jim Morton, another former board member of the chamber, has said he made repeated trips to the organization’s Imperial Highway office since the February meeting and found it closed every time.

“You can’t be closed and just go out and make speeches. That doesn’t help the business community,” Morton said.

A reporter made numerous trips to the chamber during regular business hours, only to find the lights out and the doors locked on all but one occasion — a luncheon that Garcia referred to as a press conference.

Garcia recently allowed the reporter to tour the chamber’s renovated office, where the bottom floor was indeed stocked with shiny new desks, copy machines, telephones and brand new carpeting. The carpet on the floor above was stained and smelled of mildew, while every available space seemed to be temporary storage for the old furniture — disintegrating desks and chairs — hinting at the office’s state of disrepair when the current board came on.

But so far, Garcia’s claim to 350 new members has not been verified. In several interviews by phone and in person, she would not name any of the new members or even confirm the number of new members. She claimed, instead, that she had received phone calls from angry members demanding that she no longer give out their personal information, and she insisted that it was her duty to protect members’ privacy.

A reporter was able to speak with several members, anyway, after obtaining contact information that was readily available on the chamber’s Web site.

The list was outdated and several contacts claimed they were no longer members of the chamber. Of those who were, many claimed they had not been contacted by the chamber in more than a year. Some pointed out that in that time they had received no request from the chamber to pay their dues.

Garcia insisted the chamber has been campaigning for new members for months, and said a member directory will be published soon, perhaps as early as this summer.

But she also acknowledged that it has been difficult to persuade businesses to join the chamber — not necessarily because of its own tarnished reputation, but because of its damaged relationship with the city.

“A lot of businesses want to get involved with us but say they don’t want to get involved with the politics,” she said.

Still, several former members have reported being dissatisfied with the chamber’s service, or lack of it.

“I got nothing for my $100 [dues],” said Rebecca Wells, who now sits on the city Planning Commission.

And at least one non-Lynwood business has reported having unfair dealings with the chamber.

The Mexican National Circus may not be a paying member, but it visits Lynwood once a year and last year relied on the chamber to ease negotiations with the City Council. The chamber helped them secure a location, file city permits, and pay necessary fees, but this year the circus opted to work directly with the city instead.

“We thought it would be cheaper to work with the chamber, but it turned out the opposite,” said Jessica Aramini, the circus promoter and the owner’s trapeze-artist daughter.

It is typically difficult for the circus to negotiate with cities over permits and fees, especially when they must do so while performing elsewhere, said Aramini, speaking outside her trailer on a dirt lot tucked between Imperial Highway and Fernwood Avenue.

So last year the chamber agreed to help the circus secure a spot at Plaza Mexico and offered to pay part of the cost for permits in return for a cut of the ticket sales. But at the last minute, when it was too late for the circus to relocate, Garcia told Aramini the circus would need to pay for the permits after all or they would not be able to work.

“We paid double. We paid for the permits and a percentage of the ticket sales,” Aramini said.

In a subsequent telephone interview, Garcia rejected Aramini’s version of events. It was the chamber that decided not to partner with the circus, she said, because the board was afraid their sour relationship with the city would somehow provoke the council to reject the circus’ permit application.

The chamber’s board had wanted the circus to come to Lynwood, and that’s why they recommended Aramini deal directly with the city this year, Garcia said.

What happened with the circus was another prime example of the city’s corrosive influence on business in Lynwood, she said. However, she made no direct comment on Aramini’s claim that the circus was better off this year than it had been with the chamber’s support.

In the eyes of Lynwood’s former City Clerk Andrea Hooper, who served for more than 25 years and saw councils and chamber boards come and go, all the fighting boils down to a conflict of personalities.

“You wouldn’t believe me if it was business as usual in Lynwood — because in all my years of being there … nothing has changed,” Hooper said.

In her view, the current City Council members are trying to distance themselves politically from the previous ones, who had agreed to pay the chamber in one lump sum rather than in installments. And four of the previous council members were recalled last September over a deal that would have wiped out 1,000 homes to make way for a major redevelopment project that might have included a National Football League stadium. Courts have yet to decide whether that deal was enacted legally or whether the council had already lost its authority to pass ordinances because of the recall.

“I mean [the chamber’s] grabbing at straws to discredit [the former council] on anything that they did,” Hooper said, but she added that the chamber, for its part, should not be afraid of an audit if it has nothing to hide.

The current city contract with the chamber ends June 30, and as of now, neither party seems very interested in renewing.

“I think it’s unfortunate, because the city and the chamber should have the same goal of improving business,” Galante said.

Ironically, Garcia is planning to conduct an internal audit going as far back as 2004, but says she won’t share the results with the city.

“We are going to start as soon as the fiscal year ends [June 30],” she said. “We need to know how and where the money has gone through all these years, how we can correct these mistakes, but not because the city is threatening to sue us.”