A battle royale is raging in Beverly Hills between the Chamber of Commerce there and City Hall. But this is no tussle over policy ?at stake may be the future of the chamber itself.

The fight began last summer, when the City Council voted to take control of the Conference and Visitors Bureau away from the chamber, along with $2.2 million that the city gave the chamber each year to run the CVB.

Now, the 750-member Beverly Hills Chamber of Commerce faces a huge hole in its budget as its next fiscal year starts in six weeks. Chamber leaders feel they lost more money than they should have when the city pulled the CVB away, so they are mounting a desperate bid to convince a skeptical council to restore $457,000 in funding.

This unusual battle has pitted the chamber? chief executive, Dan Walsh, against a council majority that includes the current mayor and her predecessor. Another former mayor, Mark Egerman, sits on the chamber board and has sided with the organization? management.

Egerman said city support for the chamber is crucial.

?he chamber helps businesses get off the ground and helps existing businesses stay in Beverly Hills,?said Egerman, an attorney who served two terms on the council and was mayor in 2004-05.

But Councilman Barry Brucker told the Business Journal last week that the chamber should not be relying on city funds to sustain operations.

?t strikes me as very troubling that they can? make ends meet on their own, so they were using the CVB to subsidize their operations,?he said. ?t doesn? make good business sense.?p>One chamber board member is threatening to leave the organization if the funding is denied. Bruce Schulman, general manger of Mercedes-Benz of Beverly Hills, claimed he wants ?o part of a downsized organization that would become just another small-town chamber.?p>At a sometimes contentious council hearing last week, Walsh warned that if the city did not provide the funding, the chamber might have to consider shutting down.

But that did not convince a majority of council members. The council did keep the door open to some sort of arrangement ?possibly a city loan ?to help ease the chamber out of its fiscal jam. Toward that end, the city will begin discussions with the chamber to look for ?reative ways?to close the gap.

But Walsh said that won? be enough and that a radical downsizing of chamber operations lies ahead.

?his was pretty much the worst-case scenario for us and it? very disappointing,?he said.

Without the CVB, the chamber will need about $2.2 million in the upcoming fiscal year. But that? where it comes up $457,000 short.

Several chamber board members said that the loss of city funding could hurt the chamber? ability to retain and attract businesses to the city and advocate on behalf of its business members.

Jay Newman, a chamber board member and chief operating officer of the Athens Group, the developer of the Montage Hotel that opened last fall, said that without the chamber? support, the hotel project would likely not have withstood the numerous court and ballot box challenges it faced.

?he chamber was absolutely crucial in helping us make our case to the community,?Newman said. ?f the chamber is gutted like the council wants to do, it will be a less forceful voice for the business community and for future projects like ours.?p>

Chamber controversy

The chamber and its chief executive have faced criticism, much of it from a local publication, the Beverly Hills Courier, and its publisher, Clifton Smith. The Courier has repeatedly engaged the issue of Walsh? salary and led calls for an audit of chamber operations to see if city funds were being misspent.

That audit, conducted by KH Consulting Group and released last summer, did not find evidence of major misspending. But it recommended that the CVB become an independent organization. The audit said such a move could boost the city? efforts to market itself.

The council voted 4-1 in August to split the CVB from the chamber and speed up the timetable from two years to one year. As a result, chamber leaders said they didn? have enough time to prepare. The split is expected to be completed later this year, as soon as the CVB board finds a suitable location for the bureau? offices and moves its staff out of the chamber? building on South Beverly Drive.

Walsh said that much of the chamber? $457,000 deficit results from the CVB split. Of the $2.2 million the chamber received from the city for the CVB, about 80 percent went to the bureau? dedicated staff. The remaining 20 percent funded chamber workers who spent some of their time on CVB projects. The $457,000 is roughly equivalent to the 20 percent, along with some office costs.

At last week? meeting, Brucker and several other council members repeatedly questioned Walsh about steps the chamber was taking to wean itself off of city funding. Walsh said that there already had been some layoffs (the chamber staff now stands at 12) and salary reductions, including his own, though he declined to say how much his pay had been cut.

Walsh added that since the council decision in August, ?he whole world has changed,?and because of the economic climate it is now very difficult to recruit new members.

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