The Decline and Fall of the Scottsdale Area Chamber of Commerce

The Scottsdale Area Chamber of Commerce is unlikely to exist in a year.

The Chamber long ago switched from pushing for a healthy business climate--lower taxes, less regulation--to advocating for a "healthy" government environment--subsidies for favored industries, higher taxes, more spending, light rail.

Naturally this transition led the Chamber to support Democratic Incumbent Mary Manross over GOP challenger Jim Lane in the Mayor's race.  Unfortunately for the Chamber, it decided to ACTIVELY support Manross...as in spend its members dues money to CAMPAIGN for Manross. Since the Chamber is a corporation and takes corporate money, campaigning for candidates is illegal. 

After a Lane supporter filed a complaint, the City of Scottsdale declared a conflict and sent the case to Pima County.  The Pima County Attorney recomended against criminal prosecution, however the Tucson Attorney's office opined that the Chamber violated civil campaign laws.   Here's how the Republic covered the story. 

The Scottsdale Area Chamber of Commerce will meet with its attorney to determine its next actions after a legal opinion stated the chamber violated state campaign finance laws.

Then just yesterday, an administrative law judge agreed that the Chamber did indeed violate the law.

A state administrative law judge has upheld Scottsdale's assertion that the Scottsdale Area Chamber of Commerce should pay penalties for illegally attempting to influence city elections through a series of ads it financed last year.

The ruling is devastating for the Chamber.  First, it makes it clear that the Chamber's current leadership team of Rick Kidder and Karen Wittmer-Jekel* have their heads...well...in the sand.

Next, the Chamber is throwing good money after bad in legal fees in an effort to clear its name and at every stage is getting worse press, inspiring less confidence and spending more money--not to mention losing.

Then the Chamber is likely to end up paying treble damages.  That means that in addition to the initial campaign expenses then the  legal fees, the Chamber is likely to pay a penalty in the neighborhood of $450,000.

Finally, while the Chamber could probably take the financial hit, it's unlikely to survive the loss of confidence among the Chamber members who realize that their dues were spent on illegal contributions to a failed campaign followed by an expensive legal battle leading to a hefty penalty. 

And it's not like the members are going to be able to lick their wounds privately.  Not only will the Chamber have to pay a large fine, but it will also have to disclose the source of the donations.  That means that all those Scottsdale corporations that chipped in for a failed and illegal attempt to defeat Jim Lane will have their names in the paper...and that doesn't look good on a resume.

The smart Scottsdale businesses will begin to distance themselves from a loser and the Chamber has the smell of a loser.  There are plenty of alternatives.  Lane may establish some sort of "Mayor's Business Council" and seek membership.  Some of the smaller  members may join the Scottsdale Airpark Chamber. Meanwhile the other members would be wise to join the well run and less controversial Arizona Chamber and Greater Phoenix Chamber. 

Could the Scottsdale Area Chamber survive?  Possibly.  If the board were to clean house completely and quickly--new Director, new Board Chairman and new attorney-- they might inspire enough confidence to turn things around then perhaps settle the case and move one.  If not, the collapse will be quick and catastrophic.

Footnote*

I love irony.  The Chamber Board is fighting to keep the contributions secret and they are mischaracterizing the Pima County ruling as an "exoneration."  Notice that the Board Chairman is Karen Wittmer--as in former publisher of the Tribune Karen Wittmer. 

Another Board member who has been part of this fiasco of obfuscation is Arizona Republic Scottsdale Editor Michael Ryan.  I can just picture Ryan sitting in on the meetings in which the Chamber illegally campaigns for Mary Manross and then going back to his office at the Republic and blasting Jim Lane.

The biggest scandal to hit Scottsdale in a few decades and the major players of the two newspapers are actively involved and fighting to keep the names of the contributors secret. 

Seriously, I couldn't make this stuff up.

Comments

[Jim Torgeson]

Not only are you spot on, it brings to light that Manross and Company subsidized the Chamber also! Talk about a conflict of interest.

[Anthony Johanssen]

Greg,

Do you really think this is the "biggest scandal to hit Scottsdale in a few decades?" Really? Illegal campaign ads are a bigger scandal than Sam Campana's 911 calls for directions? Really? The fact that the council either can't hire a competent manager and attorney, or can't get along once they're hired, is less of a scandal? Really?

C'mon Greg, you'd call out the Republic in a heartbeat for a ridiculous hyperbolic statement like that. Now hold yourself to the same standard.

[Conway]

Bravo, Greg! Keep up the good work.

[Tod]

Yes, this is a bigger scandal than Campana's 911 calls.

Yes, this is a bigger scandal than the Council's inability to hire competent employees.

Yes, 'illegal' is bigger than 'incompetent' ... even in scandals.

[RonB]

More evidence as to why the financially-troubled Republic and almost-out-of-business Tribune are in such a mess. With folks like Ryan and Wittmer in upper management at the papers, well, their work at the Scottsdale Chamber says it all. And they ought to be held personally responsible for the Chamber's financial problems.

[Special Agent Johnny Utah]

"That's not spin; that's lying."

You sure? The Republic story you linked to says that it was the Tucson City Attorney (called in by Scottsdale to avoid any conflict-of-interest issues) who found the violation of the law, not Pima County.

Here's what the story says about Pima County: "The Pima County Attorney's Office declined to prosecute a criminal complaint against the chamber on similar allegations of campaign finance violations, saying the laws in question were 'fatally vague' and may violate First Amendment rights to free speech when applied to non-profit entities."

I don't know if you want to call that "vindication," but it's also not the case that Pima County found the chamber in violation of the law. Ergo, the chamber isn't lying about Pima County. (It would be a lie if the chamber had said that the Tucson City Attorney didn't find a violation of the law, but that's not what happened.)

[Struggling In Scottsdale]

Just when we most need effective leadership for all of the small and medium sized businesses in Scottsdale, we find out that our Chamber has lost their way -- big time.

In the midst of the prior recessions, responsible members of the business community came together with city leaders and outlined a path to bring needed jobs and new businesses to Scottsdale. They did so on a platform of reducing costs and government regulation, speeding up processes and ensuring consistency. Both agreed to work together for the common good of the community. We need that to happen again right now or Scottsdale will see an unavoidable and unwelcome decline. The cost structure to do business here is ridiculous. Just look at where businesses choose to locate along Scottsdale Road (on the lower cost Phoenix side).

Let's see some real leadership and an end to the acrimony between the city and the business community! I agree, the current Chamber leadership should step down and start in a fresh direction or it will be history. City leadership also needs to extend a hand to local businesses. How many jobs have we already lost in Scottsdale? It will just get worse until we start working together.

[Jim Torgeson]

I think it would be interesting if an entity competing against the chamber would open like in Gilbert.

The Gilbetr Chamber seems to be under the Town thumb, but The Gilbert Small Business Alliance (www.GilbertSBA.com) actually does the role you'd hope a Chamber would without the conflict of interest.