Community Commentary: City should push for audit of chamber

For years, the Newport Beach Chamber of Commerce has been a willing recipient of taxpayer dollars, via city "waived permit fees."

At expense to other community uses for the funds, the city (from its General Fund) forgave thousands of dollars in un-reimbursed city services provided to profit-oriented chamber events, thereby "freeing up" chamber operating funds for "other" uses.

In 2009 alone, the chamber had more than $55,000 costs waived. As documented in tax returns, the chamber generally runs its operation at a loss, yet continues donating to its own Political Action Committee (PAC), which provides campaign support (political donations and advertising) for the same council members who approve such waivers.

So where do the chamber's PAC donations come from and what controls exist to prevent abuse of these taxpayer funds?

Chamber President and PAC Vice Chairman Richard Luehrs offers that the chamber's PAC donations were from chamber members making PAC donations along with their annual chamber membership renewal, and these member donations were "cleared out regularly" to the PAC. (Editor's note: Luehrs has told the Pilot that the chamber suspended this process at the start of the year.)

However, state reports show the chamber typically makes PAC donations only once or twice a year, usually in fall months of election years, despite year-round membership renewal activity. Chamber PAC donations historically occur during the same period PAC expenditures are made, suggesting Chamber PAC donations are co-mingled with chamber general funds and really not "cleared out" a regular basis, as Luehrs claims.

To complicate matters, the city has never audited the chamber nor introduced any control procedures to prevent taxpayer money from going into PAC coffers. In 2011, the chamber flatly rejected calls to direct its PAC to document chamber donations on a donor name-by-name basis, as does Newport's firefighter PAC.

Such an approach would calm concerns of chamber co-mingling or redirection of taxpayer money into its PAC by showing each donation's origins. Instead, the PAC continues to report such donation activity in a single, lump-sum line item called "Monetary Contributions Received — NB Chamber of Commerce."

Such lump-sum reporting hides "over-contribution" by the chamber wherein it can use taxpayer money to make up for shortfalls in chamber member PAC donations in periods where the PAC needs to cover sizable political expenses. Furthermore, lump-sum reporting shields PAC contributors who wish to intentionally violate state and local campaign contribution limit laws. Contribution limit violations by individuals, developers and other corporate entities (such as rehabs, etc.) having local legislation or negotiations pending and who want to influence public officials, could easily go undetected.

Luehrs contends that this has never occurred, but has never offered proof, such as an audit.

Recently, Luehrs announced the chamber stopped collecting chamber member PAC donations with their renewals to provide assurance the chamber was not using that money for political purposes. But "separation" obviously does not protect taxpayer monies from going to the PAC.

While running losses and collecting taxpayer-based city funding, the chamber is not prevented from donating to its PAC by any law or regulation and so exposure to abuse of taxpayer money still exists. Without any evidence to back her words, Luehrs obfuscation was echoed by Councilwoman Leslie Daigle's recent quote that the chamber was being extra cautious and "…It doesn't mean anything nefarious is going on …They just want to be transparent …"

Daigle also didn't disclose that she's benefited significantly from chamber PAC donations and advertising support since her first campaign in 2006, with more PAC support likely in her current campaign for state Assembly.

It's very odd that this is the same Daigle who purports to be such a strong fiscal conservative on both her City Council and state Assembly websites, yet she dismisses the valid concerns of her constituency involving how their taxes are being diverted by the city to the chamber and perhaps PAC coffers.

If Daigle, the City Council and City Manager Dave Kiff expect the community to continue to trust them as conservators of taxpayer funds, before another dollar is given, they should immediately call for a multi-year chamber audit focusing on the areas of co-mingling, campaign contribution limit violations and over-contributions to its PAC.

BOB RUSH is a Newport Beach resident and City Council critic.

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