The Check Republic

City officials sidestep rules to avert New Year's Eve entertainer boycott

Phoenix city officials appear to have improperly spent $527,000 in mid-December to pay vendors and entertainers threatening to cancel their appearances at a downtown New Year's Eve celebration, records obtained by New Times show.

On December 17, Phoenix finance director Kevin Keogh ordered his staff to deposit a half-million-dollar check into a special City of Phoenix parks and recreation fund to cover expenses associated with the Celebration 2000 party. Records and interviews with city officials reveal the expenditure was made without city council authorization and that it surprised several parks and recreation department officials.

The city was not financially responsible for the event and never entered into contracts with the performers or vendors threatening to walk out. A nonprofit corporation called Citizens for a Community Celebration Incorporated (CCC) signed the contracts and was responsible for raising private funds and paying the bills, says city attorney Philip Haggerty.

"We [Phoenix] didn't sign the contract. We are not liable on it," Haggerty says. "The contracts were signed only by the committee [CCC]."

But the nonprofit -- headed by former state attorney general Grant Woods -- was facing more than $1 million in losses by early December. Rather than cancel the event, city parks and finance department officials elected to cover the shortfall without first receiving city council approval.

City funds cannot be expended without council authorization, Haggerty says.

After spending the money, city parks officials are now asking the council to allow an expenditure of $617,964. The proposed expenditure, which was set to be discussed at a council meeting on January 19, would be used to reimburse city accounts including the $527,000 already spent.

Neither Phoenix Mayor Skip Rimsza nor city council members returned phone calls for this story.

The short-circuiting of city regulations by Phoenix officials culminates a chaotic and costly series of events related to Celebration 2000 -- an event that was supposed to raise more than $2 million in corporate contributions and attract more than 200,000 people. Instead, officials sold only 13,000 tickets and racked up taxpayer losses of more than $1 million ("Snafu 2000," John Dougherty, December 2, 1999).

Mayor Rimsza was the major force behind the New Year's Eve event. In September 1997, Rimsza appointed a volunteer city committee, also headed by Woods, called Celebration 2000 to oversee the event. The committee accomplished little over the ensuing 15 months. In December 1998, the city gave the committee $25,000 in seed money to cover fund-raising expenses and to secure entertainment.

The Celebration 2000 committee -- which was subject to city procurement regulations -- soon entered into a series of no-bid, sole-source contracts with entertainment production companies including a $170,000 contract with On Cue Productions for staging and lighting. The committee also began negotiations with entertainers, inking a $115,000 deal with the Tempe band the Gin Blossoms -- which had not made a public appearance since New Year's Eve 1996.

At the same time the committee was spending lavishly, it was failing to attract any corporate contributions. Last July, the committee was disbanded and replaced by the nonprofit Citizens for a Community Celebration.

Since the CCC was a private organization, it no longer had to follow city procurement regulations. The city council then approved a $500,000 loanto the CCC and entered into a contract with the CCC to organize the New Year's Eve celebration.

The July 7 contract calls for the CCC to "negotiate and enter into all contracts and agreements with vendors and providers for Celebration events and services." Nowhere in the contract does it state that the city is financially responsible for any shortfall. In fact, the contract stipulates that the CCC is to begin repaying the $500,000 loan by December 30, 1999.

"The only role the city has is to watch that the 500K is spent wisely and is paid back," city parks central district director Michael Whiting stated in a July 7 e-mail, obtained by New Timesunder the state public records law.

The CCC wasted no time in spending the $500,000 loan. By late August, the CCC had negotiated more than $620,000 in entertainment contracts. The contracts were negotiated by Scottsdale promoter Charles Johnston. A few days after Grant Woods signed the contracts and Johnston mailed them to entertainers, the city had a panic attack.

In reviewing the CCC budget, parks officials became concerned that the lack of corporate sponsorships would result in a huge shortfall. City officials ordered Woods to cancel about half the entertainment contracts. Lawyers for the entertainers immediately threatened to sue the CCC for breach of contract.

Rather than cancel the show, the city parks department stepped up its involvement in the celebration, devoting several staff members to try to salvage the event. By early December, CCC bills were mounting. City records show $157,000 was past due as of November 15 and another $35,000 was coming due on December 15. In addition, the CCC was to pay entertainers $484,110 by December 29.

The city parks department was still optimistic that the downtown event would attract more than 100,000 people. In early December, officials were predicting that more than 20,000 tickets would be sold in advance. On December 8, the parks department asked for a $150,000 appropriation from the city council to help cover the CCC's expenses. Instead of a loan, as was done in July, the parks department decided to give the money to the CCC to sponsor one of the entertainment stages.

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