By Corinne Murdock |
The Arizona Commerce Authority (ACA) may have misspent $2.4 million to court private CEOs, according to a new report from the Arizona Auditor General (AG). The ACA is a state agency managed as a public-private partnership.
The report found that the ACA spent more than $2.4 million to court private CEOs with accommodations, experiences, and refreshments between 2018 and 2023. These gifts spread across five private CEO Forums were intended to entice private CEOs to bring their business to the state; none did. Only 23 of 118 companies courted proposed “potential non-binding investment and job commitments.”
The ACA courted the CEOs in “marketing campaigns” around the Waste Management Phoenix Open (WMPO) golf tournament and the 2023 Super Bowl. At these events, the ACA paid for hotel rooms; transportation; suites at the WMPO; Super Bowl sponsorship that came with access to Super Bowl LVII and related VIP events; gifts like events tickets, hats, sunglasses, tumblers, and tote bags; VIP nightclubs and concerts at the WMPO; and the Super Bowl Music Festival.
The ACA told the AG that their CEO courting didn’t violate the Arizona Constitution’s Gift Clause because the CEOs’ projected, but non-binding, promise of tens of thousands of jobs and billions in investments would far outweigh the $2.4 million.
Below is the cumulative cost breakdown of all six years of CEO Forums:
- Super Bowl sponsorship package: $1.85 million
- WMPO Suite: $288,600
- Transportation and lodging: $193,200
- Educational events (speakers, panels): $65,000
- Birds Nest VIP and other concert or theater tickets: $42,000
- Small gifts (sunglasses, sunscreen, water, hats, tumblers, red wine, desserts): $7,600
The Super Bowl sponsorship package included 140 game tickets, 140 tickets to the Super Bowl VIP Tailgate Party, 140 tickets to the Super Bowl Experience, a party loft at the Super Bowl (with food and drinks), gift packages for event attendees (four tickets and two premium parking passes for one Arizona Cardinals regular season football game), 70 hotel rooms at the Arizona Biltmore (all event attendees), and Arizona Biltmore Resort events (hospitality lounge, planned dinner events, welcome event with Gov. Katie Hobbs, and panel discussions).
The WMPO Suite was for 17th hole suites, which include daily complimentary alcohol and other beverages, and breakfast and lunch buffets; suite tickets for up to 34 people daily; an additional 20 general admission tickets daily; and 15 parking passes for each day of the WMPO.
The ACA plans to host another two private CEO Forums in February and April 2024, in conjunction with the WMPO and the NCAA Men’s Final Four basketball tournament.
READ THE AUDITOR GENERAL REPORT
The AG also found at least two instances in which the ACA had invited company executives after awarding them a grant or approved tax incentive.
The over-$2.4 million was the smallest amount of expenditures that earned concern from the AG. Over $111 million may have been misspent on business incentives and broadband grants as well.
The report found that the ACA failed to provide documentation proving that $11 million in incentives were given to businesses that met required targets on job creation and/or capital investment. ACA staff also disclosed to the AG that they frequently didn’t conduct wage verifications for tax credits.
In all, the ACA lacked documentation showing it verified job creation requirements prior to approving 21 tax credits totaling $7.5 million. Those 21 tax credits were a sample out of 99. The AG also discovered that the ACA couldn’t provide documentation demonstrating that it investigated discrepancies in business applications for tax credits.
The AG declared that the lack of oversight created an increased risk of fraud and waste of taxpayer funding.
The ACA also failed to provide required documentation, guidance, or policies and procedures for $100 million in Arizona Broadband Development Grant Program for similar targets.
The ACA had an end-of-year fund balance of $202 million last year.
The ACA has 91 full-time employees, with nine vacancies. A board of directors governs the ACA. Voting members consist of the governor, the ACA CEO, and 17 private sector business leaders. The ACA CEO is Sandra Watson, who also oversees the Workforce Arizona Council and the Arizona Office of Economic Opportunity.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
