City Council to Look at $50,000 Donation to YES on Measure B

A $50,000 donation by the Burbank Hospitality Association (BHA) to the organizers of the YES on Measure B campaign will be looked at by the City Council on Tuesday.

A complaint by a group of citizens was brought to the council’s attention at a previous meeting citing how a City of Burbank agency was able to donate $50,000 in tax money collected for a campaign. Since the donation was also not part of the agenda, they are also claiming that the Brown Act was in violation.

David Spell, who admits he was a vocal opponent of Measure B, accepts the outcome of the election but states, “When any citizen finds potentially illegal activity at city hall I think it’s their duty to report it. In this case, the largest amount of money donated to the Committee for Yes on Measure B was made with public funds which is a violation of the law.

The day after the election I went to the city’s’ website to see who had donated money to the Committee for Yes on Measure B. This had been on my to-do list during our campaign against B but I didn’t have the time to really dig deep until too late. When i realized the largest donation had come from the city, alarm bells started going off. I am not the type of person who can accept wrongdoing by my city government.” said Spell in an email.

The City Council originally created the Tourism Business Improvement District (TBID) in 2011 and designated BHA to administer the program. The City also has a PBID which is the Downtown Burbank PBID agreement, which establishes a tax on local businesses that will be used to promote those businesses. A Magnolia Park PBID agreement was voted out several years ago by the land owners in the Magnolia Park area.

In the TBID, the City imposes an assessment on hotels with over 25 rooms. The assessment is to fund the purpose of the TBID, which is to increase room night sales for the 17 eligible hotels.

Spell said he filed a sworn complaint with the Fair Political Practices Commission on December 6th which enforces campaign laws for the state through the Secretary of State’s office.

“For my complaint to the FPPC, a team of three people did the research on this matter.  Myself, Amanda Biers-Melcher and Greg Sousa who is running for city council. Our investigation started before Greg decided to run if I recall correctly. I should know more around the 20th of December.” said Spell.

In a Staff Report to be taken up by the Council on Tuesday, Staff recommends the following actions be taken:

1. Urge BHA to provide Brown Act training to its Board and staff; and provide the training to new Board members as seated;

2. Reduce the TBID’s FY 2016/17 budget by $50,000. This may be accomplished by suspending collection of the assessment for an appropriate period of time;

3. Bring back an amendment to the TBID agreement, as well as the Downtown PBID agreement, prohibiting assessment funds from being used for political campaigns. The next time any management district plan is being considered by Council add a provision prohibiting assessment funds from being used for a political campaign; and

4. Negotiate amendments to the BHA/City agreement to remove the CD Director as a voting member of the board; convert payment for City staff program services to a time and material basis; provide that BHA must provide its own administrative functions including legal through its own staff or contracting with another private entity; require BHA to have its own office address and not use City facilities for Board meetings.

In the report made up by City Manager Ron Davis and City Attorney Amy Albano also states “The donation of the $50,000 to Yes on B was not an appropriate expenditure by BHA.

Although there appears to be no intent to violate the law by BHA, there is a clear perception of impropriety, as you heard from members of the public”

The report also states that the TBID is subject to the Brown Act, and says, “The Board’s September 14, 2016 agenda is attached as Exhibit B. The agenda did not list donation to Yes on B. The Board recognized that the item was not on the agenda, but considered it under the agenda item “Ongoing Operational Issues.”

Clearly, the vote taken by the BHA on the donation, at its best, is a violation of the spirit of the Brown Act and at its worst is an actual violation of the Act. This Board does not have legal counsel at its meeting and it is my (City Attorney Albano) understanding that the Board and staff have not gone through current Brown Act training.”

Emails sent to both Davis and Burbank Mayor Jess Talamantes for comment went unanswered. One of the questions asked is why any expenditures over a certain amount are not approved by the City Manager or the Burbank City Council before they are issued. We also asked when they found out about the donation.

“If the FPPC decides a violation of the law has occurred I would like to see the city take appropriate action on the matter. I’m not sure in this case what that would mean.” said Spell.  “However, I do know there are possible fines at the least. In our investigation, we found additional violations that have much stiffer financial implications.”

Measure B was passed by Burbank voters in the past Presidential Election by 69 to 31 percent. There were mebers of the community deeply divided by the issue including the City Council itself with four Councilmembers for the passage and one (Dr. David Gordon) against it.

Even the Staff Report is divided:

One could argue both sides of the issue. On one hand, the argument is that TBID assessments are not assets owned by the City since the funds are held in trust for the TBID. And under BID Law, upon expiration of a district remaining revenues may go back to the assessed businesses; and not to the City (Streets and Highways Code §36671). Therefore, the argument concludes that use of the assessment funds is not subject to this Government Code prohibition (although the donation, as explained above, was not in conformance with the Plan). The opposite argument is that since the assessments are levied by the City, the City through the BID Law dictates use of the funds by approval of a management district plan, and thus City controls the funds. Therefore, the funds are owned by the City and are a public resource. Ultimately, either the courts or legislature will settle this question. The legislature in a recent amendment to this section, added to the definition of public resources funds received from activities related to conduit bond financing.

The Council will take up this issue Tuesday night.

“I love this town and I do not delight in this.  However, I feel this is a just cause that deserves to be exposed to voters, no matter how they voted on Measure B.” said Spell.