By Corinne Murdock |
On Tuesday, Attorney General Kris Mayes announced that the Arizona Commerce Authority (ACA) violated the Arizona Constitution’s Gift Clause.
Mayes determined that the ACA’s high-dollar “CEO Forums” — in which ACA would court CEOs with accommodations, experiences, and refreshments — were unconstitutional, namely noting the massive expenditures without returns last year under Hobbs. In a letter to ACA general counsel, Mayes explained that the gifts corporate executives were impermissible because they didn’t create concomitant public value.
“The current structure of the CEO Forums confers significant value on invited private executives and their guests without obtaining any identifiable value for the state,” said Mayes.
ACA is a state agency dedicated to growing and diversifying the state economy by attracting, expanding, and retaining businesses. ACA is managed as a public-private partnership.
Mayes’ findings confirmed a report from the auditor general last September which determined that the ACA may have misspent about $2.4 million to court private CEOs between 2018 and 2023. A majority of that — over $2 million — occurred last year alone under Hobbs’ first year as governor.
From 2018 to 2022, ACA spent about $356,000 in total on forums for corporate executives: an average of $89,000 per year, about 4.5 percent of what ACA spent on last year’s forum.
Last year marked the most expensive CEO Forum under investigation. The forum was planned around the Super Bowl and Waste Management Phoenix Open; ACA spent over $2 million on corporate executives, and Gov. Katie Hobbs was one of the recurring featured experiences.
In Mayes’ decision on Tuesday, she pointed out last year’s forum specifically.
“While the ACA may hold forums that confer a nominal value on attendees, its past forums, including last year’s $2 million Super Bowl forum and its planned 2024 Forums, do not come close to meeting that requirement,” said Mayes.
As part of last year’s forum, ACA gifted corporate executives and their guests rooms; in-state transportation; event tickets to the Waste Management Phoenix Open VIP Skybox, an NFL Owners Party, a Super Bowl VIP Tailgate Party, the Super Bowl Experience, private viewing suite for the Super Bowl, and concerts associated with the Phoenix Open and Super Bowl; theater tickets; regular season football game tickets and parking passes; lunch invitations with NFL leadership; and Super Bowl Host Committee VIP Golf Tournament tickets.
ACA admitted in a December response to the attorney general that they couldn’t attribute direct causation between CEO Forum attendance and a decision to locate a project in Arizona. Mayes declared that the inability to show cognizable economic value received for their expenditures constituted a violation of the Gift Clause.
“ACA’s responses to our office’s inquiries demonstrate that it expends considerable funds on simply achieving attendance at the CEO Forums even though there is no public benefit from an executive’s private ‘changing perception and increasing sentiment’ about Arizona,” wrote Mayes. “ACA counts non-binding commitments to locate a project in Arizona as ‘project wins.’”
Up until the Tuesday determination by Mayes, ACA was planning on spending another million on corporate executives this year.
ACA planned to spend over $1 million on two forums this year for the NCAA Final Four Basketball tournament and the Waste Management Phoenix Open. If the costs were split evenly, each forum would cost around $400,000 more than the individual 2018-2022 forums held under former Gov. Doug Ducey.
Mayes pledged to prevent the ACA from issuing future gifts to private entities.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
