Huntington Beach business district cleared, but calls for outside financial review persist
Huntington Beach’s Finance Commission has found no evidence that the Downtown Business Improvement district mishandled its funds or hid assets.
But that assessment hasn’t satisfied everyone.
After the commission presented its findings to the City Council during a study session Monday, several council members said they supported the commission’s review.
Councilwoman Lyn Semeta said she was pleased to see that the commission found no evidence of wrongdoing, and Mayor Barbara Delgleize said she felt it was a thorough investigation.
But Councilman Mike Posey said the Downtown BID should undergo a financial review by an outside agency.
“This does require a deeper dive,” Posey said.
City Manager Fred Wilson said the city is considering hiring the International Downtown Assn., a Washington, D.C.-based group that promotes livable urban centers by providing support to business improvement districts, according to the company website.
A Business Improvement District is a public-private partnership that aims to revitalize a commercial neighborhood. Huntington Beach has three, including the Auto Dealers BID and the Hotel/Motel BID. The Downtown BID puts on popular events like the Miracle on Main Street holiday celebration, Halloween Fest and Surf City Nights, a free street fair held Tuesdays.
Wilson said the International Downtown Assn. could perform an assessment of the BID by comparing its practices to standards within the industry. He said such a study would cost about $15,000.
Councilman Erik Peterson said he was in favor of bringing in a consultant, which he called standard procedure, but doesn’t want the council to start micromanaging the downtown group. He said BIDs are made up of business owners who know best what their area needs.
“We don’t bring anything to the car dealer to try to tell them how to sell more cars,” Peterson said, referencing the city’s auto BID. “They know their industry.”
Posey said he supported Peterson’s assessment, saying that once the consultant’s review is finished, then council liaisons could probably stop attending BID board meetings.
BID president Steve Daniel said after the meeting that he was receptive to an outside review and would like it launched as soon as possible so that the BID can start to improve its practices based on the feedback.
Daniel said he would bring the subject to the BID board during its meeting April 13.
A finance subcommittee formed by Finance Commission Chairwoman Carol Woodworth and commissioners Ken Small and Ron Sterud reached the conclusion that the BID’s practices were aboveboard after reviewing six years worth of its financial records.
The BID review was authorized in late February by the council after Peterson called for an investigation.
A petition signed by business downtown owners alleged that the BID has had two sets of books since 2011 and that one of the accounts, totaling $271,000 as of September, was kept secret from the council. The viability of that petition was called into question in early March after a few signatories said they were misled by the organizers and didn’t support it.
Daniel also has maintained throughout that there is no secret account and that the one referred to by the petitioners contains revenue from Surf City Nights. He said the money would eventually be spent on a large project like improved lighting downtown.
In addition, city officials have said that they were well aware of the fund. Peterson said Friday that subcommittee members who conducted the review told him the Surf City Nights account was never intentionally concealed.
The council also considered a series of recommendations provided by the subcommittee, which concluded that the BID had reached a level of sophistication that requires new business practices.
These include more detailed financial statements from all bank accounts and hiring a BID director who would serve as a permanent board member and act as a cohesive link to the BID, the document says.
The subcommittee also recommends periodic auditing of all the city’s BIDs.
Posey said he agreed with the subcommittee’s assessment that the bid had outgrown its current structure and called the list of recommendations “comprehensive.”
However, Peterson took umbrage at the notion of hiring a BID director, preferring that the group contract the position and that of BID manager to reduce employee costs.
Daniel said Friday that he supports the recommendations of the subcommittee.
Twitter: @benbrazilpilot
