The most recent meeting between the Sedona Chamber of Commerce and the Sedona City Council over how to handle their mutual contract next year for chamber services suggests that the best course of action for the two organizations might actually be a separation or a near-complete divorce.

The sole exception to the divorce should be a condition that the Sedona City Council will fund the chamber’s Uptown Visitor Center’s operations as it had in decades past, before previous City Councils crossed the line into trying to manage a third-party private nonprofit organization as though it were a full-fledged municipal department.

Over the last decade, repeated councils have treated the chamber less like a client vendor with whom they can contract very specific operations related to destination marketing and tourism management and more like as a quasi-governmental municipal branch whose books they can delve into and whose business operations they want to dictate.

If council tried to do the same with contractors, stores, restaurants or construction companies, they’d be told to take a hike. But wanting to be a good partner, the chamber’s board and members, who have Sedona’s best interests at heart, kowtow to the whims of council members who use the annual budget negotiations as a tool to achieve pet projects or experi­mental enterprises. Council members treat the chamber like a guinea pig because they can’t, won’t or are legally incapable of asking the same from their own city staff, whether it’s installing trash receptacles at U.S. Forest Service trailheads or promoting the trailhead shuttle, which should be the purview of the city’s transit and communications departments.

Council gives direction, and so the chamber professionals produce videos, flyers, promotional materials and advertising, only to be nitpicked and micromanaged once council sees the final product, which costs thousands of dollars.

This entitlement to manage the chamber comes from the fact that the city is mandated by Arizona State law to spend its bed tax funds on “tourism promotion.” [see Arizona Revised Statute §9-500.06 below]

Council owns no theme parks, recreation centers, tourism facilities, theaters, concert halls nor sports stadiums, and the Sedona Posse Grounds Hub and Barbara Antonsen Memorial Park simply aren’t tourism draws, so the city has hundreds of thousands of bed tax dollars it simply can’t spend anywhere else.

Three years ago, council decided to stop funding destina­tion marketing, which had become a place to dump these funds, letting the chamber manage it as best they saw fit to attract low-impact, high-spending tourists who would spend several days and hotels, restaurants, art galleries, spas, hotels and resorts and leave businesses and workers a bit richer.

Instead, without such destination marketing, Sedona has been beset by day travelers from Phoenix, Tucson and Las Vegas, and Californian overnighters who roll into town with little guidance on where to stay, eat, shop or explore other than what they saw on Instagram. These wayward and lost tourists wander State Routes 179 and 89A aimlessly clogging our roads and causing headaches.

So with all these unspent funds, and a chamber thinking it’s obligated to obey council to best help their member busi­nesses and the workers they employ, the chamber bows to whatever inane, illogical and obtuse pet project or whim local lawmakers decided to throw at them at annual meetings.

The goal of any chamber of commerce is to promote its businesses and, in doing so, support workers they employ, boost the economy and generate revenues local govern­ments can tax. If the city actively and intentionally wants to hamstring that, and hinder the chamber’s mission, then ethically, the chamber should just walk away.

If the chamber walked away from the city, many of these orga­nizations might band together and support tourism marketing collectively. That was how things were before 2014 anyway.

Chamber members and businesses have complained for years that the city uses bed tax funds on side quests involving chamber staff that don’t really promote their businesses, the economy of the city or help workers. Seeing that the chamber can’t do destination marketing — at the city’s behest — other businesses that can spend their own money on marketing themselves in print, on social media, with signs, billboards or ads to attract customers that the chamber can’t because the city won’t let it.

If the city or chamber nixed the contract and the city formed its own tourism department, there’s no evidence businesses would suddenly flock to it in lieu of the chamber.

The city is very good at “city things”: Running parks, building roads, enforcing ordinances, police protection, managing sewer lines [occasional spills into Oak Creek and backups into locals’ homes and businesses notwithstanding], issuing grants and negotiating with other governments, but managing tourists simply isn’t in the city’s wheelhouse. The city could hire a whole department to do so, but that’s more of our tax dollars spent on salaries to double efforts the chamber is already doing cheaper, better and with scores of unpaid volunteers.

The city would have to decide what to do with those bed tax funds. A public recreation center would be ideal, or investing funds in the performing or visual arts to draw tourists. The city could simply repeal the bed tax and give hotels, resorts and motels a competitive edge against the short-term rentals that have devastated our housing industry.

None of that is the chamber’s problem. It must do what’s best for its members, which may be a divorce.

Christopher Fox Graham

Managing Editor

The Bed Tax Statute

Arizona Revised Statute §9-500.06

Hospitality industry; discrimination prohibited; use of tax proceeds; exemption; definitions

A. A city or town shall not discriminate against hospitality industry businesses in the collection of fees. For the purposes of this subsection:

1. “Discriminate” means any increase of fees on hospitality industry businesses by any dollar amount without a corresponding equal dollar amount of increase in the privilege license fees or other fees imposed on all other businesses in the city or town or increasing or imposing the fees on hospitality industry businesses where no similar fees are established and imposed on other businesses.
2. “Fees on hospitality industry businesses” means annual liquor license taxes or fees or annual renewal or reissuance fees for municipal business privilege licenses, however denominated.

B. A city or town shall not increase the fees on hospitality businesses in any year by an amount that exceeds the amount of any increase in the consumer price index compared to the average of the last five years of consumer price indexes.

C. On or after the effective date of this amendment to this section, if a city or town, by passing an ordinance or charter amendment by its governing council or by a public vote, establishes a discriminatory transaction privilege tax or increases its existing discriminatory transaction privilege tax on hospitality industry businesses greater than any increase imposed on other types of businesses in the city or town, the proceeds of the established discriminatory transaction privilege tax, except as provided in subsection D, and the proceeds of any increase above the existing discriminatory transaction privilege tax shall be used exclusively by the city or town for the promotion of tourism. For the purposes of this section a tax which is in effect on April 1, 1990 and is subsequently renewed by a majority of qualified electors voting at an election to approve the renewal is not considered a tax increase.

D. For the purposes of subsection C, expenditures by a city or town for the promotion of tourism include:

1. Direct expenditures by the city or town to promote tourism, including but not limited to sporting events or cultural exhibits.
2. Contracts between the city or town and nonprofit organizations or associations for the promotion of tourism by the nonprofit organization or association.
3. Expenditures by the city or town to develop, improve or operate tourism related attractions or facilities or to assist in the planning and promotion of such attractions and facilities.

E. If a city or town has not imposed a discriminatory transaction privilege tax up to a two per cent tax level on hospitality industry businesses as of April 1, 1990 and thereafter imposes or increases such a discriminatory transaction privilege tax, the first two percentage rate portion of the discriminatory transaction privilege tax is not subject to the provisions of subsection C.

F. The collection by a city or town of a fee or tax prohibited by this section shall be void and unlawful. For a five year period following the unlawful collection of the fee, the city or town shall reimburse the hospitality business for any reasonable expense incurred in collecting from the city or town any fees or tax unlawfully collected.

G. For the purposes of this section:

1. “Discriminatory transaction privilege tax” means any transaction privilege tax rate imposed by a city or town on hospitality industry businesses that is above the transaction privilege tax rate imposed by a city or town equally on all businesses subject to a transaction privilege tax.
2. “Hospitality industry businesses” means:

(a) A restaurant, bar, hotel, motel, liquor store, grocery store, convenience store or recreational vehicle park.

(b) A motor vehicle rental agency in a county stadium district which has imposed the car rental surcharge pursuant to section 48-4234.