California state auditor to examine Huntington Beach’s $7M air show settlement

The California Joint Legislative Audit Committee voted Tuesday in Sacramento to examine Huntington Beach’s multimillion-dollar settlement with Pacific Airshow operator Code Four.

The joint committee voted 10-2, with one abstention, to review the settlement that was agreed to last year.

Among the yes votes were state Sen. Dave Min (D-Irvine), who requested the audit. Min represents a portion of Huntington Beach and has often been critical of its current conservative City Council majority.

Code Four sued for breach of contract after the final day of the 2021 Pacific Airshow was canceled due to an oil spill off the coast. Huntington Beach ended up settling with the air show operator for about $5 million, plus $2 million more if Huntington Beach recovers money in its own oil spill lawsuit.

“Like hundreds of businesses along the Huntington Beach coastline, there is no doubt that the Pacific Airshow lost revenue during the beach closures that followed the 2021 oil spill,” Min said in a statement following the vote. “But it is unclear that they were owed any damages from the city for its decision, made in conjunction with the state and the County of Orange, to shut down its beach. It is also unclear whether their lost revenues were anywhere close to the amount provided by the city’s settlement.

“At a time when public trust in the integrity of our governments is at an all time low, it is more critical than ever that we provide transparency and assure the public that their tax dollars were not used in inappropriate or illegal ways,” Min continued. “I’m grateful to my Democratic and Republican colleagues for voting to authorize this audit, which will hopefully get to the bottom of this.”

The committee vote happened a day after arguments were heard in Orange County Superior Court in Gina Clayton-Tarvin’s lawsuit against the city, and City Atty. Michael Gates, relating to the denial of her California Public Records Act request to release the full air show settlement to the public. A decision is expected soon from Judge Jonathan Fish.

Gates, as well as interim City Manager Eric Parra, represented Huntington Beach at Tuesday’s hearing in Sacramento.

Air Force Thunderbirds pilots step into their aircraft for a test flight during last year’s Pacific Airshow preview event at the Joint Forces Training Base in Los Alamitos.

(James Carbone)

Parra said during his hearing comments that the air show was “vitally important” to the city but that Pacific Airshow operators had made it clear there would be no show in 2023 unless a settlement was reached, which the City Council voted to pursue.

“The city’s contention is that it was an appropriate settlement,” Parra said.

Gates said that negotiations spanned five months before the city settled in May 2023. He added that the California Supreme Court has repeatedly upheld that charter cities like Huntington Beach have the autonomy to spend their resources as they deem fit, when it comes to their own municipal affairs.

“We believe that as a matter of law, the requested audit is not justified or proper,” Gates said. “As a matter of fact, the record shows that the 2023 settlement with Pacific Airshow was justified, at least in public comments by the City Council, as a prudent decision to ensure future air shows and the related vast economic benefits to the city. And, as importantly, to avoid any risk associated with proceeding to trial.”

Min said during the hearing the audit request was simply about looking for information and transparency.

“I’m not making any determination as to whether this was a public gift,” he said. “We would just like information to start making that determination ourselves.”

State auditor Grant Parks said during the hearing that Clayton-Tarvin’s lawsuit shouldn’t impact the state’s ability to obtain the records it needs, but it could impact the level of specificity that a public audit report could get into.

He estimated the audit would take about 2,300 hours to complete.

There is no established timeline for the audit.