The Sedona Area Homeless Alliances has lost a city grant due to administrative irregularities and a two-year loss of its corporate status. While a city of Sedona audit found SAHA’s funds were spent as allocated, the organization faces other administrative issues related to assisting the homeless.

SAHA was administratively dissolved by the Arizona Corporation Commission on Oct. 14, 2021 for failure to file its annual report with the state but continued to operate for nearly two years without being properly registered or informing donors or officials.

State Dissolves Nonprofit

As a result of its administrative dissolution, the organization had to change its registered name after former board members placed a name reservation on the SAHA name.

After conducting an audit of its standing as a nonprofit, the city of Sedona rescinded a major grant offer to SAHA.

The audit found that there was no evidence of malfeasance and that funds previously awarded to SAHA by the city were used appropriately for Operation Code Blue, which provides hotel rooms for the homeless when nighttime temperatures drop below freezing, as was a $5,000 grant to outfit the group’s outreach van.

However, the audit also noted poor bookkeeping practices and concluded that SAHA “does not have effective control of [Operation Code Blue’s] execution,” citing SAHA’s inability to control the behavior of the people it was helping.

“The operation of the programs, administrative management of its government reporting and accounting practices fall outside of what the City Small Grant Committee review considers as acceptable standards,” City Communications Manager Lauren Browne said.

Donors are unlikely to be pursued by the Internal Revenue Service for tax fraud if they made their contributions in good faith but ACC spokesman J.P. Martin suggested that individual donors who contributed to SAHA during the period it operated with an inactive status should “consult a tax professional or attorney.”

SAHA Executive Director Laurie Moore said that she was first informed of her organization’s inactive status in an Aug. 1, 2023, letter from the city of Sedona telling her that she needed to rectify the situation in order to proceed with the distribution of the city funding for Operation Code Blue. ACC rules allow an administratively-dissolved corporation to apply for reinstatement within six years of its dissolution, but its name will only be held for six months.

On Aug. 2, the ACC approved a name reservation for the name “Sedona Area Homeless Alliance” by Portal Gardens LLC. The filing did not list additional information about the filing party other than the address of a rental post box in West Sedona. Portal Garden LLC itself is registered to Angus Gascoigne, who, along with Janine Miller Gascoigne, is a former SAHA board member.

Following the name reservation, the ACC approved a name change for Moore’s organization to the Sedona Area Homeless Alliances — with an “S” — on Aug. 15.

Status Restored

SAHA filed its annual reports for the years 2020 through 2023 on Aug. 23, 2023. The revived corporation is currently in good standing with the ACC and the Internal Revenue Service under the new name and operates under the same employer identification number.

“After receiving complaints by donors for not being given receipts for donations by SAHA, I found Sedona Area Homeless Alliance to be an inactive entity with the Arizona Corporation Commission,” Miller Gascoigne said. “This all came to my attention around the time that there was an article in the Sedona Red Rock News about the SAHA outreach bus and the grant for monies awarded by the city of Sedona.”

Miller Gascoigne noted that the delinquent annual reports were not filed with the ACC by SAHA until the Gascoignes had placed their name reservation in August, and Moore also stated she was grateful that the inactive status was brought to her attention.

“Everybody sees there is a great need for help with the unhoused community in Sedona,” Angus Gascoigne said. “Over the years, SAHA has helped a great number of people, and done a good job at tending to some of those requirements. And has filled a need that the city hasn’t been able or has been unwilling to … But the reality is that there’s a whole lot that goes into running an organization such as SAHA, and they, for whatever reason, seem unable to be able to do that correctly.”

Gascoigne added that administrative shortcomings can end up undoing good work and negatively affect the homeless.

“It doesn’t give financial transparency to the donors, the people who support the organization, and ultimately, those donors will go away, if they don’t have transparency, and they don’t get the receipts that they need for their own purposes,” Gascoigne said. “The second is by not fulfilling the administrative requirements of the state and federal government, whatever is required to run a charitable organization correctly. If that’s not done correctly, then ultimately the organization will fall.”

“We’re very proud of how transparent we are,” Moore said. “As far as funds, our funds go to so few places. And our books are so open, that there should be no question at all as far as our services and our organization.”

After Moore was asked by the Sedona Red Rock News to provide SAHA’s monthly bank statements on Friday, Dec. 15, she subsequently stated that she had experienced a health incident on the day of the information request and did not provide the requested information by press time.

“We can’t answer what the hiccup was,” Moore said of the missed filings. “But, I will repeat, we are so thankful that it came to our attention. We are so disappointed it is affecting our organization the way it is, but we are thankful that it came to our attention.”

SAHA’s website and social media account do not reflect the name change since the loss of the previous name.

Moore stated that SAHA is in the process of updating its website, which is being done by its new treasurer, Valerie Brandt, and that residents can expect that the group’s financials will be posted on its website next month.

Sedona’s Audit

The city of Sedona conducted an audit of SAHA’s operations during September, performed by Small Grant Committee Chairwoman Stephanie Giesbrecht and executive assistant Karen Kwitkin.

“We have withdrawn a commitment of funding to the organization,” Sedona Mayor Scott Jablow said on Friday, Dec. 8. “Because of some issues that came up with their paperwork that they filed there was a lot of questions and they were never clarified.”

SAHA confirmed it is still able to provide the homeless with emergency shelter in Sedona hotels because around 90% of the funding for the Code Blue program has traditionally come from private donors. The city supplied $5,000 last year for the program, whereas SAHA raised $42,000, and the group is still soliciting donations.

“Audit of receipts provided by SAHA do support that total monies awarded for this program were spent with local lodging for housing,” the audit concluded.

The audit also alleged misbehavior by SAHA’s clients, which Moore denied, stating that the people they assist sign an agreement to follow SAHA’s guidelines, including “no drugs, cigarette smoking or alcohol in the room at any time,” “no guests in the room” and “room will be kept and left neat and orderly.”

The agreements also collect the names and contact information of their clients, which were not provided to the city as part of the audit in spite of the city’s request for that information.

Hoteliers Respond

The manager of one of the hotels mentioned in the audit said he had been “an unwitting participant” in the program because Moore had made a reservation under her own name without the program name.

“It was typically multiple individuals in a room, more than what our capacity would allow,” the hotelier said. “It just seemed extremely unorganized and unchaperoned and individuals that were brought in frankly … [did] massive damage to the property to the point where it cost our business money.”

Moore denies the claim, along with another allegation in the audit stating that “on numerous occasions the police were called and guests had to be escorted off the premises due to drug use, smoking, violations of property rules, fighting” at another of the three hotels mentioned in the audit report.

“As a result of those findings, the city will be unable to award the $15,000 SAHA was otherwise slated to receive for FY24,” City Manager Karen Osburn informed Moore in an Oct. 2 email. “We will plan to use those funds to shelter homeless persons this winter through our own housing department, so the intent of allocating those funds for cold weather shelter will still be fulfilled.”

Jablow and Vice Mayor Holli Ploog were asked on Dec. 8 if the funding for cold weather shelter was currently in effect, especially given that the Cottonwood Police Department discovered a presumed unhoused individual who had died in Garrison Park on Nov. 28 from a combination of “potential drug and alcohol use, coupled with cold weather conditions.”

“Yes, it is in effect,” Ploog said. “We had authorized $15,000 for this service directly through the city and so now it will be $30,000. It will be an additional $15,000.”

Browne deferred questions regarding the city’s alternative housing program — including what policies will be in place to ensure good behavior from participants and how many people have signed up — to Housing Manager Shannon Boone, who “is working on the details of how a program like this, led by the city, might run.”

Boone said during the council’s priority retreat on Dec. 13 that the city’s homelessness strategies include hiring a consultant to produce a homelessness analysis and creating a strategic plan to address homelessness as well as developing a hotel voucher program to replace SAHA’s Code Blue program.

“Part of SAHA’s mission is to encourage other organizations and certainly the city to create long-term answers to homelessness,” Moore said. “That is a part of our mission, and so it doesn’t bother us so much that they rescinded that $15,000, because in the letter that they said they were rescinding it, they specifically said the city would use it to put homeless into rooms on cold nights.”