By [Concerned Sedona Resident]
(March 30, 2015)
This is the first in a series of five parts examining the marketing of Sedona to the world and City of Sedona funding for various operations of the Sedona Chamber of Commerce. This first part looks at the history and background of how that relationship began and the growing amounts of public tax money flowing to the Chamber.
Part 1 • Part 2 • Part 3 • Part 4 • Part 5 • Epilogue
The Sedona Chamber of Commerce & Tourism Bureau is a 501(c) (6) non-profit organization made up of four major divisions: the Chamber of Commerce; the Tourism Bureau; the Film Office; and the Events Division. For purposes of this article, it will simply be referred to as the Chamber since all divisions are part of the same organization with one board and one CEO governing it. While efforts are often made by the Chamber to suggest the Tourism Bureau is somehow separate from the rest of the organization, it is not. Even as this is written, the Chamber board and CEO are working to remake fee structures which will further blur distinctions between and among the four Chamber divisions.
It began innocently enough in the mid-90s. The young city was recognizing its dependence on tourist sales tax dollars and facing major debt to install state-required sewers. Giving money to the Chamber of Commerce to sell Sedona to the world seemed like the easy way to go. This was in lieu of creating a city-run visitor center and marketing program – like all other Arizona cities were doing.
However, over the next two decades, that decision morphed into an entitlement monster, consuming millions of dollars of public tax money and losing up to 80% or more of every dollar given to the Chamber for that purpose.
In the first years, the giving was easy and mostly built on trust. The city provided an average of just over $220,000 annually. The money was generally to support the Chamber’s visitor center. There was little direction regarding it’s use and even less evaluation or accountability for what was accomplished. That laxity of city oversight set the stage for a Chamber entitlement attitude that began to grip the process and the greed that followed. The money was, after all, generated mostly by the spending of visiting tourists, not by the residents who lived here. Never mind that it was the city’s public tax money and was needed for city programs and services for city residents.
Years went by. A bed tax was added. Revenues grew steadily as Sedona developed more tourist-oriented businesses and became better known as an attractive destination. The Chamber took credit for much of the business and tax growth, even without any real data to back it up. It was logical; promote tourism and help visitors when they get here and more tax money ends up in city coffers. No one really asked if the sales tax revenue increases were actually generated by the Chamber’s advertising or if the increases equaled or exceeded the amount of city tax money being spent. It was a comfortable arrangement. No one wanted to rock the boat.
Over the years came Chamber requests for more and more money. These sometimes including requests for additional supplements to what had already been budgeted. The assumption was it would be “good for business” even when what was actually to be achieved was never documented. After all, “good for business” meant more sales and bed tax. No one really pressed the issue of whether the city was getting back at least as much as it was giving out.
In 2002, the ante to the Chamber jumped from $230,000 to $340,000. The extra money was to be spent for a visitor profile survey ($25,000) and the remaining $75,000 was to go to a new direct category of “destination marketing.” The latter was the opening of a Pandora’s Box for that kind of spending.
That too seemed innocent enough; just $75,000 extra to market Sedona as a destination to potential tourists. Again, there was nothing that spelled out what the money would specifically be used for nor any evaluation or accountability for what was to actually be accomplished in the way of increased tourism tax dollars in city coffers. That it somehow would happen was taken for granted.
In 2003, the Chamber asked for and was given $364,000. $120,000 went to the newly established “destination marketing” category, up from the $75,000 provided the year before. There were no measurements of what had been achieved with the previous year’s funds so, not surprisingly, an agreement about what outcomes the new money was to accomplish was not even considered.
In 2004, total city funding for the Chamber jumped again to $437,887, including money for another visitor survey, new money for a “film office” and over $30,000 in “incentive” money from a new agreement to give the Chamber a portion of any increases in bed tax income. No attempt was made to determine if that increase was actually the result of Chamber marketing efforts or merely due to factors like an increase in room rates, a growing national economy, or even short-term variables like favorable weather conditions or major events in Phoenix.
The new film office was a passion of one Council member. Its purpose was to promote Sedona as a movie and photo shoot location. It was an attempt to turn back the clock and recapture the glory days when Sedona was a significant movie-making location. No one analyzed why our movie-location role had dried up and what changes had taken place in the movie business, viewer preferences or technology. No one considered the creep of subdivisions into former movie locations.
Film office funding went on through 2008, reaching a high of $145,000 per year. In all, nearly a half million dollars were spent on the “film office” before city funding was dropped in 2009. By that time, it had become overwhelmingly clear that the office was not attracting any major films nor bringing in anything close to its operational cost in additional sales and bed tax revenues. It simply was not viable, even with the exaggerated ways the Chamber calculated its contributions to the local economy.
The city/Chamber funding dance went on each year with the Chamber putting on an annual show of unsubstantiated reports touting benefits to the local economy. There were few demands for documentation or quantification of such benefits nor questioning of the annual pitch for more money. Public tax funding for the Chamber climbed from over $563,000 in 2005 to a high of over $835,000 by 2008. City tax funds for “destination marketing” grew to almost half of that total.
And then the recession hit. Across-the-board cutbacks reduced Chamber funding back to just under $500,000 in 2009 and 2010. Cries about being “cut” financially grew and Chamber political push escalated to get it back. The City Council bent and added an additional $100,000 to the Chamber’s city tax funding. Entitlement had become entrenched.
Mutterings among residents, city staff and a few City Council members about the lack of accountability for tax money given to the Chamber and a number of other non-profit organizations were growing as tax dollars for city use fell in the recession. “Accountability” finally became a City Council issue. A task force was created to address it for all city-funded non-profit organizations, the Chamber included. Task Force recommendations for funding non-profit organizations were adopted by the Council in 2011. The Chamber now had to at least complete an application process and provide basic information on where it spent the public’s tax money.
The Task Force established a separate category of “Service Contracts” for organizations like the Chamber, the Library, Humane Society, Community Center and Sedona Recycles. These groups were considered to provide services that the city would otherwise have to offer using city staff. It was an “outsourcing” concept where each group got it’s own line item in the city budget – a no cut, no compete, guaranteed funding. The only thing ever in question was the amount of city tax money to be handed over. AT least there was some basic information available about where the Chamber intended to spend the city’s money each year. But there was never any accountability for what would be accomplished as a result of that spending!
Nothing much changed with the new “accountability” process. The upward march of Chamber funding continued with $600,000 in 2011 and 2012. That grew to $625,000 in 2013. “Accountability” still didn’t include an assessment of what the city was getting back in the way of additional sales and bed taxes that would not have been received otherwise.
And then came the Chamber’s big coup in 2014. Chamber political pressure pushed the City Council to double their funding to almost $1.3 million for the 2014/15 fiscal year and guaranteed by city ordinance, a set 55 percent of the amount of bed tax collected.
Since city funding of the Chamber began twenty years ago, nearly $10 million of Sedona public tax money has been handed over to the Chamber of Commerce with no documentation of any return ever being achieved. Under the new ordinance, that total will double in just the next seven years.
Selling Sedona is not dependent on public tax money. Chamber funding by the city is only a small part of what is spent annually selling Sedona. It is estimated that another $4 million to $6 million is spent each year by local hotels, galleries, tour businesses, restaurants, major events and others to lure visitors to Sedona. Meanwhile, the Chamber’s own surveys have consistently documented that the primary way people hear about Sedona is not the Chamber’s marketing efforts. It’s simple word of mouth 75 percent of the time or more. That is followed by information from the internet. All of the expensive advertising funded by public tax money is eclipsed by the oldest and cheapest advertising approach of all – simply people telling other people!
Next week: Part 2: Measuring outcomes and the return on and of the City’s Investment
(Over) Selling Sedona: Decision Points
How Do They Measure Up? Part 1 • Part 2
The Fallacy of Transit
Selling Sedona – One Year Later: Part 1 • Part 2 • Part 3
Selling Sedona, 2015: Part 1 • Part 2 • Part 3 • Part 4 • Part 5 • Epilogue
I have always found this issue very intriguing, not only for the obvious ROI concerns, and how to measure that, but also for purposes that may not be obvious at all.
Here are some questions, ideas and thoughts…
1) As a tourism-centric economy, should we not be looking at “diversifying” Sedona’s economic portfolio so that it is not so dependent on factors beyond it’s control — for which there are many, i.e., weather, macro-economic gyrations, terrorism threats…remember 911 and what that did the to economy as a whole?, etc? Can we at least be honest about this, that current “me too” commerce initiatives are gravely offset by greater market forces for which Sedona is at their mercy?
2) Can we at least have a debate whether throwing more money at tourism is the most productive means to achieve greater autonomy and insulation from said market forces that are clearly beyond Sedona’s control? Or in other words, can we become more realistic about what can be achieved in a “me too” commerce initiative?
3) Are we open to diversification so that Sedona can weather the storms (literally and figuratively) beyond it’s control. If the answer is YES, and I would hope that rational minds would prevail here, The city/chamber should consider courting Silicon Valley companies to invest in Sedona with satellite offices for special “skunkworks-like” initiatives. Also, beyond setting up satellite offices, Sedona could be a destination for company retreats. What’s more, said initiatives would be easy to measure since any agreements would bear implicit ROI plus provide PR fodder to drive even more economic growth to Sedona.
4) Is there any “real” strategy to resurrect the Cultural Center? Again, corporate sponsorship, whether originating from Silicon Valley or somewhere else, could turn a wasteland into “cash cow” just like that. To me, this is low hanging fruit, and is based on my Chicago experience whereby tens of thousands of Chicagoans would drive 2 hours to Alpine Valley, Wisconsin to see the same major bands that they could see the next day in Chicago. Why would they do that? Because, just like people in Phoenix, they want to get away from the city and are just looking for a good reason to do so.
Is it time to take all the proverbial eggs out of a single basket and not only diversify but show real ROI, whether done by the Chamber or some other party? Seems like a “no brainer” to me.
All the best,
It continue to amaze me that our City Council keeps throwing money at the Chamber for destination marketing that supposedly will increase the number of tourists in a small town with an infrastructure that can’t handle the current traffic or waste water created by said tourists. When is enough tourists enough: total gridlock?? Once we hit the total gridlock, will the City stop funding the Chamber to the tune of $1.6 million a year?
Yet the City keeps asking it residents to pony up larger and larger sewer fees. What about the million plus tourists that are merrily flushing away? Shouldn’t they pay their “fair share.”? It’s no wonder that the CEO of the Chamber spoke in favor of residential sewer fee increases…
When the economy is good and bed taxes are increasing the Chamber takes credit for bringing in new tourists. When the economy is bad and the tourists aren’t coming the Chamber asks for more money and blames the economy for the lack of tourists. They want it both ways. The Chamber has way too much say in our City government. Way to cozy a relationship.
Although Cliff Hamilton did not win the mayoral election, one of his stated goals regarding the Chamber was accountability for the money being spent. There are multiple ways to track effectiveness other than a presentation to the city council by Chamber staff.
This is typical crony government, on a local scale. Cliff also was researching the RFQ (request for quote) process for professional organizations that do this for a living, where their management and overhead are covered by multiple contracts so the city can get more bang for the buck…or spend less bucks. Also mandatory was an ACCOUNTABILITY process which our Chamber refuses to provide.
I encourage Mayor Moriority and staff to launch a similar investigative program.
Regarding tourists and the comments about Silicon Valley younger folks working in Sedona; that is never going to happen with the spotty internet hodge podge of connectivity that we have in this town. If you want young influential people to breathe a little local life into the city/economy you have to provide a work environment that is conducive to the times. This is a terrific place to work, and there are a multitude of jobs where the employees do NOT have to go to an office, creative high paying jobs. You can’t promote that and then tell people what street they have to live on to get high a capacity data feed.
How about this: instead of dumping millions into the Chamber with no accountability, put it out for bid, then cut THAT budget in half and work with the local internet providers and give them incentives to drop a MINIMUM of a 50 megabit connection at every residence in the city limits, wired OR wireless. Other small towns do it, and they have NOTHING to offer like what we have here.
Sedona gained ZERO population in the last census. Our population is ageing – going the wrong way. We have a terrific asset, our environment, and we continue to go down paths that are not sustainable by thinking we can load more tourists in here to solve our problem.
I for one am really disappointed that Sedona.Biz policy allows publishing of this or any commentary without identifying the the author. At the very least, such anonymity diminishes the credibility of the author.
Also, in the interest of a fair and balanced reporting,I hope that Sedona Biz will seek out and publish a response from the Chamber to this commentary.
Having said that, I do believe that accountability for the results of city funding for the Chamber of Commerce appears to be sorely lacking!
I also strongly contend that the city’s efforts to date to diversify our economic base have been futile at best.
The reason opinion authors remain anonymous is due to the fact that this is a small town and a megalomaniac like Jennifer Wesselhoff can use her power to ruin those that speak truth. When someone writes the well documented truth, it doesn’t diminish the credibility one bit.
You must have missed some of the tragic things that were done to those with opposing views during the most recent city elections.
I wouldn’t hold your breath for a response from the Chamber; they don’t see what they’re doing as wrong and justify their existence at every turn.
I am sure that people who read the Chamber article will want to know who the author is and why they do not want to reveal their name.
Where the money should go is a matter of personal opinion. As the article mentions, the bylaws determine where a portion of the money goes.
Sedona politics bring out more passion and heated arguments than any other place I have lived. There is no middle ground or compromise. One example is the streetlights. People were ready to go to war over their dark sky as opposed to those who wanted light.
Whatever the case, I am sure that the Chamber article will raise anger and passion on both sides.
I am concerned about the success the Chamber will generate in tourist business, because I worry that our town can’t absorb more tourists with our infrastructure, as an earlier respondent mentioned. Everything is based on attracting tourists. We could be creating a monster. Maybe I would like to pay city taxes and cut back on tourist marketing. But we will lose the ability to make that choice soon and some of the charm this town has for residents.
RE. Article, By [Concerned Sedona Resident]
(March 30, 2015)
This is the first in a series of five parts examining the marketing of Sedona to the world and City of Sedona funding for various operations of the Sedona Chamber of Commerce.
Sedona biz ,This Post, on your new front page, written by someone that will not use her name, Looks like news, when in fact it is one person’s opinion.
The statement, “This is the first in a series of five parts,”
sure makes it look like news, not one persons comment.(rant)
My name is
While we did classify the article as “Editorial and Opinion,” that classification is not readily apparent as it appears at the end of the article. We have added “Opinion:” to the title.
Steve Segner: Perhaps Part One seems to have way too much creditability and makes you feel uncomfortable?
What most people seem to forget, with great ease, is that the chamber never existed before our Sedona did!
Now they want to take Full credit of all the moneys from the city without any open bookkeeping as to ROI on any level and in any account.
Call me crazy but I seriously doubt you would or do run your business that way?
thank you, Sedona Biz, Opinion it is, and a five part Opinion at that.
It is about time someone brought this important subject out into open air. Opinion or not, anyone can verify the stated facts and I am sure some reader or the Chamber itself will dispute any errors of fact. I have been fortunate enough to have lived in some spectacular places, most of which were also tourist towns …Sedona for 14 years; Telluride, Colorado for 12 years; Whitefish, Montana for 12 years; Waitsfield, Vermont for 5 years. They all grappled with the same issues of limited economic diversity, dependence on tourism, difficulty in making a small business survive; impacts of visitors and who should pays to mitigate them. Telluride, like Sedona, was probably the most dependent upon tourism for an infusion of new money to town. Unlike Sedona, however, Telluride was realistic about the impacts of tourism and second homes on the residents’ quality of life, on the environment, and on the City’s budget. A significant priority was an attempt to assess the costs of impacts from tourism on the tourists and on those who most benefited. Here in Sedona, we collect sales and bed taxes but give that money right back to the Chamber to attract more people into town and create further impacts that go unmitigated. One has to ask who benefits from this extravagant and selfish cycle? For starters government gets more revenue to spend and can therefore justify more departments and employees. We all know it is a rare government entity that shrinks its size or budget. Another group who really benefit are commercial property landlords who can continue to escalate rents for the small businesses who serve the growing number of tourists. As rents rise, so do commercial property values. As a retired Realtor, I can say that the residential real estate industry also flourishes as the demand for local real estate increases and sales prices (and therefore commissions) rise with demand. Owners of well run businesses that serve the tourists will also benefit. On the other side of the coin, let’s look at who looses. The environment definitely looses with more cars, aircraft and people crowding into a small space. This is true both in town and in our treasured surrounding public lands that now risk being loved to death. I would opine that the quality of life in Sedona diminishes, not from a “reasonable” level of tourism which brings desirable amenities to the community, but from the “excessive” level of promotion and tourism that I have seen over the past five or so years. Another big looser is the resident taxpayer who does not own a tee shirt shop or rent ATV’s. All these tourists that come to town clog our streets and trail heads, increase the need for a larger sewer plant, require more police, more fire fighters, more emergency medical staff, more search and rescue capacity, etc. The additional traffic also further degrades our already terrible streets which the City seems to ignore. In my view, tourist businesses should raise their own marketing funds (which they already do). Limited public funds might reasonably be used to help worthwhile local events get established …like the Sedona Marathon, Film Festival, or periodic arts or other festival events that would benefit the community and its residents. The majority of tourist based tax revenues ( like the $1 million plus now going to the Chamber to clog our streets) should be used to offset the impacts of existing tourism on the community and its residents. Funding should be provided to cover the additional public services including police, fire, ambulance, search and rescue, street maintenance, sewer system improvements, trail maintenance, trailhead construction, etc. As it now stands most residents indirectly foot the bill for tourism’s heavy impacts so that a few business and commercial property owners can prosper. It is a well accepted fact that tourism brings low paying jobs. Many of the good people who fill those jobs cannot afford to live in Sedona. Since they are commuting to Sedona every day, they wisely choose to enroll their children in Sedona schools, which are paid for by Sedona property owners through property taxes, as is our necessarily large fire department. This is just one example of how the impacts of a burgeoning tourist economy fall on local residents. Try to drive down the canyon some Sunday afternoon, and then recall how it has been proposed that Sedona needs to build an uptown bypass and parking garages for the tourists. Who will pay for this? Would these “improvements” make Sedona a better place to live than it was ten years ago? A better solution is to back off on selling our home town as a commodity. One has to ask oneself, how many beautiful and special places have you visited during your live that were better the next time you returned years later? My experience has been that most of these special places had been over sold and over loved. Let’s not do this to Sedona.
I appreciate the research that went into this. Very well written and informative.
Really looking forward to “Part 2: Measuring outcomes and the return on and of the City’s Investment”
I did not notice that this was written anonymously. Agreed. Anyone who pens an OpEd should be identified. As for comments about how Sedona could not attract some high tech satellite offices from Silicon Valley because our Internet is so crappy, seems rather lame and defeatist. I can’t believe such a “can’t do” attitude is widely held. I certainly hope not.
Correct Information should be the catalyst.
City of Sedona
Transaction Privilege Tax Sales by Business Classes
For Month Collected
Annual Totals July 1, 2013 to June 30, 2014
Annual Local Amount
Percent of Local Amount
Use Tax Purchases
Use Tax Utilities
Total Annual Sales for FY 13-14
36.4% tax paid by locals Visitors pay 63.6 last year this year will be much higher
the numbers are from the city Tax dept.
Thank you Bob Bonner for your phenomenal comments. Gifting taxpayer funds to the regional Chamber of Commerce or any other local business entity is a travesty in my opinion.
Before the Budget Oversight Commission was disbanded, Chair Peter Fagan stated residents were paying more of the City’s bills than tourists, indicating sewer taxes were the determining factor. Sewer tax data is missing from the barrage of numbers posted by the ‘Sedona’ Lodging Council president.
The Budget Oversight Commission produced a “Sedona Tax Origins” document proving residents provided 54.2% of City tax revenue in FY 2012 and 55.7% in 2011. In addition to sales, bed and sewer taxes, shared revenue in the form of state income taxes, state sales taxes, vehicle license fees and gas taxes were included in the calculations.
Most Council Members and City ‘management’ staff are in bed with the greedheads and out of touch with reality.
That number was for 2011/2012 and the Budget oversight commission did not look at the numbers by account and by tax payer.I was commission member at the time.
The new numbers show an up turn on visitor spending for 2013 /2014 and the city looked at each tax account long costly process.
The numbers are correct.
I remember you were on the Commission, Steve. You were saying the residents weren’t paying enough. Even brought up Food Taxes.
The numbers are incorrect. Sewer taxes are missing. Also missing are the costs of excessive tourism on Sedona’s livability, quality of life and property values. Sedona has gone to the dogs (figuratively) over the last decade or so.
That is correct, the city has a lot on it’s plate and the last council did not leave it a lot of $$ I still think when the state sales tax dropped the city should have upped sales tax .5% no brainer… and today there would be some money to fix the streets ect.
Sewer taxes are missing. service not a tax Fee.
Who ever is writing the tell all about the city and chamber surly needs to be applauded —- I do applaud you! I agree with most of what you have written yet there are a few holes (not earth shattering) that need to be filled in.
I was there – back in the 90’s and made no friends each time (budget times) when I would continue to ask for financial accounting from the Chamber…chamber didn’t like the concept and skip danced every which way around it —- and Council thought I was a negative player.
I’ve just caught up with you Chapter 1 and will now read #2…. I would really like to talk to you, if you are willing. My # is 282-5418…..just a private conversation.