We commend the Sedona Chamber of Commerce for finally cutting ties with the city of Sedona.

The relationship between the well-meaning chamber offi­cials and certain city council members who misunderstood that relationship, how tourism works, the purpose of a chamber of commerce and the needs of Sedona’s business community grew toxic over the years, and it’s clearly time for them to sever ties and begin anew.

Following the Great Recession, Sedona businesses and the lodging industry were hurting due to low numbers and low tax revenue generated for the city.

In response, Sedona hoteliers proposed raising the bed tax on themselves by 0.5%. Under Arizona state law, any bed taxes imposed after 1990 must be spent on promoting tourism.

Hoteliers volunteered to tax their own customers to raise the bed tax, with the understanding that the city would serve as a steward for these revenues and then reinvest them in destina­tion marketing to bring tourists to the Sedona area. Essentially, tourists would be paying to market Sedona to themselves.

The Sedona Chamber of Commerce is one of the top desti­nation marketing organizations in the state of Arizona and of course they have an excellent product — Sedona itself. The chamber used these bed tax dollars to craft messages to entice potential visitors to spend two or three days in the Sedona area, going to spas, restaurants and retail shops while staying in hotels. The chamber made sure that every dollar spent on destination marketing translated into $3 to $4 for the commu­nity. From that, the city collected sales tax on every purchase and service.

The proposal was clearly a win-win for everyone. Even Sedona residents who hate tourists benefit because of the substantial tax revenue generated by tourists, who fund 77% of city services. Because of that, Sedona homeowners and renters pay no city property tax.

As time passed and the city’s goals evolved further and further away from the initial agreement, successive council members began seeing the Chamber of Commerce not as a vendor like a construction company, consultant, pool cleaner or nonprofit, but rather as a quasi-autonomous branch of city government. Council members with dollars in their eyes thought they had a third-party vendor under their thumb that they could abuse into doing anything they asked for.

As a result of their demands, the chamber would have to cave in and work on inexplicably obscure pet projects beyond its contract, yet chamber staff agreed to do so, knowing that if they didn’t, they would lose that council member’s vote.

These pet projects snowballed to the point at which the most recent council directed the chamber to market the Sedona shuttle rather than relying on its own communications or transit departments.

Arizona bed tax law requires that bed tax dollars be spent “for the promotion of tourism.” No one visits cities to check out the buses.

During the annual negotiations for the chamber’s program of work for the following year, chamber officials would spend days and weeks of staff hours preparing detailed presentations filled with metrics and numbers to explain how one project here or one campaign there brought in tourism dollars bene­fiting businesses and raising sales tax revenues.

Council used to listen, but year after year council has ignored these detailed presentations to ask inane questions, float irrel­evant proposals and suggest products or projects or activities beyond the scope of the contract, which led to a three-ring circus of wants, whims and whining.

We trust in government to serve our needs and interests, but the ignorance, self-serving politicking and misunderstanding on the part of council was embarrassing and often laughable.

Council members would ask questions that no person in their right mind would believe anyone would be able to answer, then hem and haw when chamber officials failed to provide answers to such questions posed on the spot.

The chamber was a victim in an abusive relationship. It was clear to us several months ago that the chamber needed to sever ties with the city. This week, the chamber board agreed wholeheartedly and voted unanimously to end the relationship. Getting 16 people to agree also demonstrates that the chamber was uniformly tired of council’s clown show.

Without any spending on destination marketing for two years, we have the kind of tourists council wants: Day trippers who see a photo on Instagram and come during spring break to tear up our trails, clog our roads, dump trash roadside and jaywalk at Tlaquepaque. Our current mess is what the Sedona City Council wants. Applaud them when you read this while waiting in traffic.

With severance, now the chamber can move forward with destination marketing to advertise the city and its businesses and get back to the business of promoting Sedona as a destina­tion for high-quality tourists: Visitors who will stay for several days, respect our trails and treat our community with the rever­ence one would expect of people spending thousands on a vacation.

Four our part, we won’t have to explain how complicated bed taxes work in future stories. Whew!

We trust that council will place on its agenda for next week the repeal of the 0.5% bed tax, as it no longer serves a purpose. Our hoteliers need to be competitive with the hotels outside city limits and with the thousands of short-term rentals in our area. The city can’t or won’t use the bed tax dollars anyway, so there’s no point in collecting a tax that will go unused.

Christopher Fox Graham

Managing Editor

Arizona’s 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.