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For the first time in several years Santa Monica will be without a City Hall-affiliated surf camp. (photo by Fabian Lewkowicz)

CITY HALL — City Hall will have no part in surf instruction on Santa Monica’s beaches this year after city officials recommended against contracting with a local firm that came in second in a formal bidding process, despite the fact that the first-place candidate dropped out.

Officials in the Community and Cultural Services Department told the City Council Tuesday that Surf Academy Collective, which has operated on the beach since 2006, had been denied the spot because of federal tax problems.

“Staff does not feel that the city is in a position to enter into a contract with Surf Academy Collective for the summer without justification from the IRS that these tax issues have been worked out,” said Karen Ginsberg, director of Community and Cultural Services for City Hall.

Marion Clark, co-owner of Surf Star International, which uses the name Surf Academy Collective, called the statement “outrageous.”

Clark maintains that those tax issues — which she says amount to $13,000 — have nothing to do with her business.

Instead, the problem rests with Surf Academy, a company with a similar name that her mother started 11 years ago, and which has held the city provider contract since City Hall first began restricting surf instruction on public beaches in 2008.

When her mother, Mary Setterholm, retired to pursue her education, Clark built her own company from the ground up and called it Surf Academy Collective in order to maintain the brand name that so many Santa Monicans had come to trust.

This is the first year that Clark, under the auspices of Surf Academy Collective, applied for the city contract, only to first see it given to a San Diego-based company, Surf Divas, and then be denied the opportunity again when that group declined the offer.

She even applied to the Secretary of State to change the name of the umbrella business to Surf Star International LLC., reserving to operate under the brand Surf Academy Collective. The goal was to distance herself further from the financially-troubled Surf Academy LLC.

In the city staff report, that translated to a sentence claiming that Surf Academy Collective had been dissolved.

“I only did that because Santa Monica was having such a problem, and then they took what I did and twisted it around to make it seem like we’re not a smart business owner,” Clark said.

Surf Academy Collective proponents stacked the speakers list for the item at the council meeting, many giving personal stories of what Clark had done for them first working for her mother’s company and later after she struck off on her own.

That outpouring of support was part of the reason that Surf Divas didn’t want to step into the other company’s territory, said Izzy Tihanyi, co-owner of Surf Divas.

“We didn’t feel welcome by the community, who felt loyal,” Tihanyi said. “I was under the impression that she was retiring, which is why we put in an application.”

Surf Diva’s exit did nothing for Surf Academy Collective, however.

Rather than give the contract to the local company, which placed second in a formal bidding process moderated by outside panelists, staff recommended to scrap the whole thing and offer a second independent contractor permit to Perfect Day Surf Camp.

Those permits are for independent providers, which collect their registration fees and then pay a percentage back to City Hall for the right to operate on the beaches.

City Hall actually manages the registration fees for the contracted provider, which is why the potential tax problems caused such a stir.

The IRS could technically take money from City Hall to make up for the taxes that the company allegedly had not paid.

Santa Monica may not want to work with Surf Academy Collective, but Huntington Beach doesn’t mind.

The company will soon be under contract with that city for summer camps, lessons that Clark predicts will be packed with kids from Santa Monica.

Huntington Beach had heard about the supposed tax problems, but it didn’t stop them from going ahead with their plans, said Laurie Frymire, community relations officer with Huntington Beach.

ashley@smdp.com