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Chamber Cornered by Costs

| News | April 27, 2017

Late last year, The Gazette asked the question, “Is the Santa Clarita Valley Chamber of Commerce in trouble?” There had been some layoffs, membership was down, and the city was holding fast to its annual financial commitment.

Now, the question can be asked again. The chamber is out of its offices on Tournament Road, the result of a lease it couldn’t afford, and has taken up temporary digs in City Hall. Additionally, the chamber board eliminated its president/CEO position in March, widely believed to be another cost-cutting move. Lois Bauccio, who was interviewed for this story before being let go, had held the position since September.

Is the chamber in trouble? Depends on whom you ask.

Reached after her position’s elimination, Bauccio stood by her original statements.

“We are challenged, but it’s not a lack of wellness,” she said in early March. “We’re not an organization that will ever have large amounts of money.”

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However, Councilmember Bill Miranda, who was on the board of directors until he had to resign in January to take his council seat, has a different view.

“The chamber is not financially well yet,” he said. “We need to find a place better suited to running a chamber.”

One of the biggest problems was the lease. Unlike many agreements that call for a fixed monthly amount, the chamber and building owner entered into a 10-year agreement in 2010 that saw the rent increase over time.

According to former chamber President and CEO Terri Crain, the chamber paid a security deposit of between $10,000 and $15,000 and then for the first six months enjoyed a rent abatement, which called for deferred rent for the first six months and half rent the second six months. But after a year, the abatement ended and the back rent came due. Crain said the rent jumped to $8,800 a month in 2011, when she became president.

“When I walked in and realized what the rent was escalating to, I started campaigning the first three or four months, either move or renegotiate the lease because the rent wasn’t sustainable,” she said. She criticized the board as being “apathetic. Basically, they nodded their heads and said yeah.”

The rent increased to $9,000 a month in 2012, then $10,000 in 2013, then $10,500 in 2014. Crain estimated that by the end of the 10 years, the rent would have reached $15,000 a month. And that didn’t include maintenance fees and taxes.

One problem was that the membership numbers were down from the late 1990s-early 2000s high of about 1,800 members. Bauccio said that basic dues are $360, and she put the current membership at about 1,100. Using those numbers, it would lead to $396,000, or $252,000 less than some 17 years ago (although Bauccio said there are other membership levels, which would offset some of that difference).

But the rent would have gone as high as $180,000 a year. Assuming everybody pays the minimum dues, it leaves the chamber with $216,000 to operate, hardly enough. It should make sense that the chamber had to lay off employees, most notably Bauccio (they currently have two; at their peak, they had seven).

They thought they were going to get a membership and financial boost in 2015 when the Latino Chamber of Commerce merged into the SCV chamber. But Crain said only about $2,000 came into the chamber coffers, and the 100 new members she thought she was getting was really more like 30.

“The rest hadn’t paid or were just listed,” she said. “There was always a story.”

Crain also said the chambers believed the merger would lead to more revenue for a single entity. Instead, she said, “That was not how it worked. It was people saying, ‘Yahoo! One less thing to give money to.’ ”

Meanwhile, the lease still had to be paid. Bauccio said the chamber attempted to sublet some of the space, but a deal between the landlord and two private parties fell through. Bauccio saying the chamber had nothing to do with it, and she was looking to sublease the space when she was let go.

“Anybody you know who needs 3,000 square feet?” Bauccio asked. “It’s a constant effort to be the most fiscally responsible chamber.”

The city got involved and gave it free space for one year; personnel moved in Jan. 1, city Economic Development Manager Jason Crawford said. He also said that the city would continue to honor its $40,000 annual commitment to the chamber.

“They have not asked for more, and we don’t intend to provide them more or less,” Crawford said.

Councilmember Bob Kellar, a big fan of chambers of commerce going back to the days of the Canyon Country chamber, said he would like to see the chamber enter into discussions with the Valley Industry Association (VIA) and see “if there is any opportunity to come together. Both are struggling,” he said.
VIA and the chamber share some goals, specifically helping various businesses and business interests connect and collaborate. Both are partners with the city, which gives VIA $8,000 a year.

However, Kellar said, the two groups have not met. “It’s their decision,” he said, “but I would do anything to facilitate.”

VIA CEO/President Kathy Norris declined comment other than to say, “We think the chamber’s wonderful.”

This is far from the first time a local chamber of commerce has been in financial trouble. In the 1990s, the Canyon Country chamber couldn’t pay its bills and became part of the SCV chamber after its executive director was found to have stolen tens of thousands of dollars (see Chamber Chronicles on page 11). And the Latino Chamber of Commerce also merged into the SCV chamber in 2015 amid financial woes.

The current health of the Santa Clarita Chamber of Commerce also pales when compared to the city’s Economic Development Corporation, which receives $200,000 each from the city and county. Many large businesses have fled the chamber for the EDC, although many on the EDC executive committee are also chamber members. But many EDC directors are not, and there are no immediate plans for the EDC to rescue the chamber in any meaningful way, although EDC President/CEO Holly Schroeder didn’t rule it out.

Miranda said the first step toward financial stability is to collect dues and to remind those who resist paying of all the benefits they get with membership. Bauccio said a leadership void (Jim Bizzelle served for three months as interim president between Crain’s April 2016 resignation and Bauccio taking over in September) led to delinquency. Now that Bauccio has been let go, the board’s executive committee, led by Chairman John Musella, is in charge, but whether that contributes to a void remains unknown (Musella did not respond to an email request for comment).

Another potential problem: Crain said that times have changed and chambers face competition from various other networking groups, as well as from people who choose to give their money to their own personal causes rather than to a chamber.

“They don’t care if you go to Sacramento to fight for you,” Crain said of one service a chamber provides. “They need customers in their stores. The rest of what a chamber does is irrelevant to them.”

Miranda said he hopes that isn’t the case.

“What I hope will happen with our chamber is that it would start looking at the other networking groups, find out what they offer and start offering that,” Miranda said. “The chamber’s a networking organization, and if you yield the networking responsibilities, then Terri’s right and there’s no reason for the chamber.”

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About Lee Barnathan

Lee Barnathan has been a writer and editor since 1990. His articles have been published in newspapers, magazines and online. His new book "If You Experience Death, Please Call and Other Fatal Mistakes We Make With Language," a humorous look at the ways people misuse English, is available on Amazon or at his website, www.leebarnathan.com. He is hired by people all over the country to help them refine the message or story they wish to share with their target audience or demographic.

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