Long before American Airlines announced that it was suspending direct flights from Tucson to New York, Pima County Administrator Chuck Huckelberry had been advised that investment in those flights was a risky deal that could violate Arizona laws. Documents show that Huckelberry failed to share that vital information with all members of the Board of Supervisors.
Huckelberry submitted the request to the Board of Supervisors with the following material for consideration to approve the $100K bailout.
- Memorandum from Chuck Huckelberry indicating he had earmarked $100K in the Board Contingency fund for this bailout in the county budget.
- Agreement between Tucson Metro Chamber and American Airlines.
- Memorandum dated Dec. 22, 2016 from David Hatfield, Senior Director of Business Development and Marketing for the Tucson Airport Authority to Bill Assenmacher, identified as the Chair for the Air Service Task Force for the Tucson Metro Chamber.
The Board of Supervisors obediently approved a $100,000 payment to American Airlines on April 18, 2017.
It is unclear whether the expenditure was made as bailout for Huckelberry’s cronies from the Tucson Metro Chamber, who had struck a bad deal with American Airlines, or whether it was part of Huckelberry’s use of County resources to re-elect his friendlies to the Board. It might have been both.
Whatever the case may be, it was not is a safe or even popular use taxpayer’s dollars. So in August, immediately after American announced it would be suspending the flight, Huckelberry offered the supervisors talking points to be used to justify the bad investment and deflect blame for its failure.
In the memo dated August 1, 2017 Huckelberry wrote:
Please see the attached Louisville Insider article regarding a number of communities providing airline incentive funds – including the experience in Indianapolis Indiana – where then Governor now Vice President Mike Pence supported airline incentive funding. The article also identifies public funding from local and state governments for airline incentive funding and concludes it is an appropriate expenditure of public funds for economic development.
The article indicates the incentive funding has failed is (sic) Tucson. This may be related more to the actual contract between the airline, and the Tucson Airport Authority (TAA) and the Metro Tucson Chamber, which relied on the expertise of the TAA in the development of the con tract
The Louisville Insider article may have offered an argument that incentives are “appropriate expenditure of public funds for economic development,” but made no mention of the laws which prescribe what is and is not appropriate in any of the states mentioned. Huckelberry ignored that small point in his August memo too.
Backroom dealing
Supervisor Ally Miller recently obtained 2 documents dated June 22, 2015 from Huckelberry addressed to Michael Varney, President and CEO of the Tucson Metro Chamber. The documents were not included in the background material Board members received in anticipation of the April 18 vote.
In fact, records indicate that Board Chair Sharon Bronson and Huckelberry were actively involved in the incentive deal crafted in backroom maneuvers out of sight of other Board members.
In June 2015, Pima County Administrator Chuck Huckelberry informed Mike Varney from the Tucson Metro Chamber of Commerce that a financial guarantee to a for-profit airline “appears dangerously close to a gift.” Huckelberry was referring to Arizona’s Gift Clause and advice he had received from Regina Nassen with the County Attorney’s office.
Huckelberry had asked the County Attorney’s Office for an opinion as whether participation in a bail out scheme for the Tucson Metro Chamber would violate Arizona’s Gift Clause which is spelled out in Article 9 Section 7 of the Arizona constitution. The Gift Clause clearly states : “the state, county, city, town, municipality or other subdivision of the state may not give or loan it’s credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual association or corporation…”
The Arizona Supreme Court held in Turken v. Gordon that in order to comply with the Gift Clause, “an expenditure of public funds must be made (1) for a public purpose and (2) in exchange for reasonable consideration.”
Miller believes this bailout is a violation of the state gift clause. “Based upon the list of assumptions from Deputy County attorney Regina Nassen, the agreement appears to be in clear violation” stated Miller. “There was no competitive process between the airlines to determine which airline would be subsidized. There is clearly a large amount of money involved in this agreement; up to $2.9 million dollars to be exact. Attempting to disguise this bailout as an “economic development” activity is laughable.”
In drawing her conclusions, Nassen makes two assumptions: 1) there was a competitive process to determine which airline was awarded this guarantee, and 2) assumes the agreement limits the amount of money the county will be providing. There is no evidence that the County had participated in a competitive bidding process.
Nassen also reminds Huckelberry that the “positive economic impact of the availability of the direct flight must be “substantial and that the County funding therefore serves a legitimate public purpose.” Given the fact that Varney admitted in the Lousiville Insider article that his organization had not conducted consumer surveys to assess the desirability of route, any claim that the economic benefit would be substantial was more than speculative in nature.
What to do
Miller also contacted the Board Attorney Andrew Flagg to ask how Huckeberry is able to release attorney client privileged documents without coming to the Board of Supervisors for approval. In an email to a member of Miller’s staff, Flagg states that Huckelberry has “implied authority” to release. “I am not allowed to release an attorney /client privileged memo without bringing it before the Board as a whole” and this is another example of the power Chuck Huckelberry wields over this board” stated Miller.
She went on to say, “It bothers me greatly that Chuck Huckelberry is able to request and conceal attorney /client privileged communications from the Board of Supervisors. The County attorney should have a responsibility to ensure any privileged communications related to board decisions are provided to the board. This is an extremely serious problem if board members aren’t given county attorney opinions related to board decisions.”
After hearing Miller’s account of this story on the James T. Harris show, ADI requested all public records associated with these communications.
The email exchange between Miller’s office and County Board attorney Andrew Flagg referred Miller to County policy C6.1 and claims it “implies” that Huckelberry has authority to release attorney/client privileged emails.
There is clearly no such authority for Chuck Huckelberry to release opinions without going to the Board for approval. As a matter of fact, the memo he released clearly states in the header : “The privilege is held by Pima County and can be waived only by an official action of the Board of Supervisors.”
The question now becomes what official action will the Board or the public take now that this information has come to light.