Home » City Council, Community » Arizona AG finds city of Sedona and its Sedona Chamber reworked Agreement and clawbacked funds now meets requirements of Constitution

Arizona AG finds city of Sedona and its Sedona Chamber reworked Agreement and clawbacked funds now meets requirements of Constitution

Article submitted by the city of Sedona.

Sedona AZIn a report issued August 15, 2019, the Office of the Arizona Attorney General finds that the city of Sedona contract with the Sedona Chamber of Commerce and Tourism Bureau, and the city’s administration of that contract, are consistent with the requirements of the Arizona Constitution.

From the report:

The Office concludes that although the payment structure established by the Agreement twice caused the City to pay more to the Chamber than was due to be paid under the Chamber’s City-approved budget, an illegal payment of public money did not occur because the City ultimately accounted for the overpayment through additional appropriations.

City of Sedona City Attorney Robert Pickels Jr.

Sedona City Attorney Robert Pickels says he is not surprised. “The final report from the Attorney General’s Office confirmed what the city has always believed, which is that the agreement with the chamber is both well-designed and legally sound,” he says.

The attorney general’s report closes an investigation requested in July 2018 by then-Sen. Judy Burges, who represented cities in the Phoenix metro area. Burges asked for a state investigation into whether the city violated “gift clause” prohibitions in the Arizona Constitution by allocating a percentage of bed tax revenues for tourism marketing under its contract with the chamber. Shortly before the August 2018 mayor and council election, during which the contract was a hot topic, Burges withdrew her request.

Nonetheless, the Office of the Attorney General followed through with the investigation, with which the city cooperated fully.

The report states:

The Office asked the City to provide a voluntary response, and the City fully cooperated with the Office’s review, including by providing a voluntary response and supporting materials. Those materials included quarterly and annual reports the Chamber submitted to the City, the City’s Comprehensive Annual Financial Report for fiscal year 2018, City meeting agendas and minutes related to approving the Chamber’s annual budget proposals, records of payments made to the Chamber by the City, the City’s bed tax accounting for fiscal years 2015-2019, and the Agreement itself. In addition, the Office conducted multiple phone calls with City personnel regarding the materials provided.

The key question of the inquiry was whether the city violated the “gift clause,” which prohibits government entities from gifting funds to private entities.

From the report:

Here, the Agreement appears to deal with a valid public purpose; the City’s payments to the Chamber are being made consistent with and pursuant to a valid state law. Accordingly, whether the payments provide an unlawful subsidy ultimately depends on whether the payments are grossly disproportionate. To that end, the key question is whether the payments to the Chamber are ultimately accounted for by the City, either through specific City appropriations or by contracted-for services provided by the Chamber.

The report concludes that the city of Sedona has lawfully entered into, and administered, its contract for tourism promotion and visitor services with the Sedona Chamber of Commerce and Tourism Bureau: In each fiscal year since the Ordinance’s adoption, the City has paid the Chamber at least the total estimated amount of bed tax revenue at or below the Chamber’s submitted annual budget. However, in the situations where the City generated more-than-projected revenue, and thereby had a larger than expected “true-up” payment, overpayments were made to the Chamber above the approved line item budget.

In both instances, the City took steps to manage the excess funds: In FY16, the excess funds of $180,009 were restricted for use and only released for the Chamber to purchase the Jordan Road property in FY18 on the City’s behalf. In FY18, the City exercised its contractual “hold-back” from the FY19 budget to reserve $268,900 of the estimated bed tax collection, thereby accounting for the $116,150 overpayment made for FY18.

The Office concludes that the Agreement between the City and the Chamber is not itself illegal or necessarily causes illegal payments of public monies under A.R.S. § 35-212.

Although the pattern of overpayments resulting from greater-than-anticipated bed tax revenues created significant potential for a Gift Clause violation, the City appears to have mitigated that potential by reworking the Agreement to eliminate the automatic remittance of 55% of bed tax revenues to the Chamber.

And because the City also took steps to effectively claw back funds that were overpaid, no basis currently exists for further action by the Office on this matter.

Read the full report from the Office of the Arizona Attorney General here:

Sedona City Hall is open for business Monday through Thursday from 7:00 a.m. to 6:00 p.m. and closed on Fridays. The Wastewater system maintenance remain on a Monday through Friday, 8:00 a.m. to 5:00 p.m. schedule. Police and maintenance services are not impacted.


  1. They stole too much says:

    Whoops, we accidentally gave the chamber more money than we initially intended them to take, so we reworked the agreement so the theft fit. Then the State of Arizona sanctioned the theft to be procedurally correct. So it’s all good now, all the tax thieves agree that is the way things should be stolen. All legal like.

  2. John Daniels W Sedona says:

    To They stole…..

    So let me get this straight, you think that an ultra-conservative like republican Mark Brnovich is going to sanction even the slightest “wrongdoing” of a democratic town like Sedona when there was nothing to be had?

    I think that you are one of those tea-party people, the ones who keep loosing every election on any little campaign and are now licking your wounds, AGAIN!!!!!

  3. Shell Game says:

    shell game
    /ˈSHel ˌɡām/

    A deceptive and evasive action or ploy, especially a political one.

  4. They think they got away with it. says:

    Nationalism: “A malignant ideology that causes the ignorant masses to believe that political kingpins who are deceiving, manipulating, and leading them to destruction are their friends, protectors, and benefactors.” – Robert Higgs

    The socialists and thieves will meet the same end they always do.

    Even now they ask for residents to patronize the shops uptown during construction. But only during off peak. Have those currently in power noticed that the schools are becoming empty? Have they noticed that that most remaining Sedona residents are in their 70’s or older? The only reason they do not leave is they have so little time left it is not worth the trouble. Have they noticed how few of even the highly paid city employees are willing to make Sedona home? Why is that? It’s not because of Air B&B.

    They don’t remember the tourist business is cyclical. Retired residents kept the town going during slow times. Wealthy retired residents ate in your restaurants regularly. If you don’t replace the dying well to do residents you are left with only tourists and poorly paid service workers. Good luck with that. Have you noticed all the vacant retail storefronts in West Sedona? Is that the sign of a booming town?

    Remember the story of the ant and the grasshopper?

    You won temporarily, grasshoppers.

    Sedona lost.

    For those that want to celebrate their temporary victory by attacking others , I already moved, save your attacks for your conscience.

    Karma awaits.

  5. Reworked agreement says:

    Sedona Chamber reworked Agreement and clawbacked funds now meets requirements of Constitution.

    Reworked agreement.
    Government directed city. Government is for government.

  6. Dan says:

    @reworked agreement I get where you’re coming from but you and the city can look at it this way.

    In the near future will be an election. Remove all council and staff that designed and implemented the contract which needed to be reworked. They are paid to know the law, implement all Sedona policy based on knowing the law. Clearly there is a failure at city hall. I might suggest that the good people of Sedona should be concerned and angry that it took an AZ Attorney General investigation to fix the known issue and to claw it back to earth. Thank you former Senator Burges whoever you are for having the guts no other politician has ever shown to help Sedona citizens uphold the law.

  7. Steve Segner says:

    A tourist town with a 40,000,000+ budget that is 75% + paid for by visitors need a marketing plan and budget.
    That is why the state of Arizona allows cities to use some bed tax monies for marketing and tourism support. Just look at Sedona In Motion it will be paid for by visitors.
    Any business need to look at supporting it’s income.

    They think they got away with it. Says:
    Retired residents kept the town going during slow times. Wealthy retired residents ate in your restaurants regularly.

    No so, we did very well because the city council let us up the bed tax and use the money for marketing Sedona was one of the few cities in America to grow tax income during the great recession., and marketing and a strong visitor base in Phoenix will get us through Trumps coming recession.

  8. Paul C. says:

    Were you living here full time during Obama’s Great Recession? Or still in California?

    Businesses folded up about every month and many left town never to return. We even had a suicide because business was so bad. People scaled inventory back to bare bones and fought hard to keep from going under. Galleries closed because art was a luxury. Name landlords lost tenants and more than one in the middle of the night took inventory and fled it was rumored. The city was so desperate for revenue it sold its soul to the few quick cash cows. Corporations were allowed in without regard for existing businesses and community vision statements because city hall had to let people go. It was a ghost town and we residents were forced to deal and we did. Tourists were scarcer than rabbits from 08-14. It took the election of Trump to put the economy on its feet and you would tear out this recovery down because you hate? Go back to where you came from and remember your lessons.

  9. Amazing Segner says:

    Isn’t it amazing how Segner keeps repeating that tourists pay 75% of the budget when that has been debunked almost every time he says it?

  10. Steve segner says:

    Paul c, December 2007
    Was the Great Recession/Start dates. The inauguration of Barack Obama as the 44th President took place on January 20, 2009.
    I have lived full time in Sedona from 1998:hope that helps and do a little history reading if you do you’ll also find that the stock market went up as a percentage more during Obama‘s administration then trumps and we all know now where it’s heading and it’s nobody’s fault but his own he said yesterday he said that if he gets reelected he wants to go after Social Security and Medicare you can’t make this stuff up. You’re just upset that Sedona is a vibrant city , must be hard to get up every morning And be so negative. Over 10,000 people make a living and pay their bills because of tourism and in your mind they all sold their soul to feed their kids

  11. John Daniels W Sedona says:

    To “Amazing Segner”:

    That was debunked only by the bunch of misfits from SedonaEye so I don’t believe that it was debunked at all. Besides, even if it was70%, 65% or even 60% that still makes the case that tourists pay way more than you.

  12. The lies keep getting bigger ! says:

    Now segner says tourists pay 75% plus of the city budget. TOURISTS PAY 38% OF THE SALES TAX ONLY. They don’t pay, way underpay, their share of the sewer or Fire District calls. The 10,000 people making a living by Sedona Tourism is about 400% of reality.

    Maybe segner is referring to all the people supported by the Sedona Chamber of Commerce trying to spend Sedona tax receipts all over the world. From what I understand, since the city has been gifting the chamber millions, chamber staff has gone from 1 person to near 100. Maybe the Sedona Chamber is actually a Sedona City supported jobs program? Socialists like that kind of stuff, pretend work.

  13. Get Real says:

    According to the City’s SEDONA COMMUNITY REPORT SPRING 2018, “FY 2017 city revenues generated by sales & bed taxes . . . .57%, two thirds of which is paid by visitors.”

    Two-thirds of 57% is 38%, not 70% or 65%.

    The FY 2018 percentages, if we ever get them from the City, will include a City sales tax that went up by one half a cent effective March 1, 2018.

  14. Betsy says:

    Those people don’t have the capacity @real to understand math facts, being told the truth, and they’ll choose to remain indoctrinated by political beliefs. It suits agendas better, you think?

  15. The Murphs says:

    Sedona be beautiful inside and outside!

  16. Ray says:

    council lost my vote last year

  17. Andy says:

    Shouldn’t we be satisfied that the AG office CORRECTED the city and chamber misuse of funds? What’s the purpose of asking for help if it’s not appreciated and implemented with oversight. They will now be on notice. We should thank the people with the guts to call in the AG and respect the AG for it’s findings and fixes. It’s called justice. It’s like the people who feel cheated because Epstein killed himself, WTF, it’s medieval. Epstein paid the ultimate price and you get on TV and moan that you can’t extract another pound of flesh from his hands, lips and nuts because it’s dust, Be effing happy that you killed the MTRFKR and move on. It’s called justice.

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