Commerce Authority shields activity from public

Alyson Zepeda and Jeremy Duda//May 10, 2012

The Arizona Commerce Authority came into existence nearly a year ago with a vow to be open and transparent, but the economic development agency has not followed through on all of those commitments.

The Commerce Authority has refused to disclose the list of finalists for its CEO position, refused to release information about who vets applicants for a $1.5 million grant program and makes little effort to inform the public of meetings of its numerous subcommittees.

In 1991, the Arizona Supreme Court ruled in Arizona Board of Regents v. Phoenix Newspapers that the names of candidates who are being “seriously considered” for a position are public records that must be disclosed.

But the authority did not disclose the names of the finalists for the CEO position following a May 3 records request or an earlier informal request by the Arizona Capitol Times.

A new CEO who will oversee the authority’s $6.5 million operating budget, $25 million deal-closing fund and tens of millions in federal pass-through money will be selected May 18, yet the public has no idea who has applied or is being seriously considered for the position.

The day after the records request was submitted, ACA spokeswoman Kristen Hellmer said she didn’t have any details to share on the CEO search. Nearly a week later, she said the authority’s attorneys were reviewing the request.

“It’s not being denied. Legal counsel is reviewing it,” Hellmer said.

Hellmer said she did not know how long it would take ACA attorneys to review the request.

Dan Barr, an attorney who successfully argued the Board of Regents case, said the finalists for outgoing CEO Don Cardon’s position meet the definition of “candidates” set by the Supreme Court in 1991.

“Those are candidates … under the Supreme Court’s test in the Arizona Board of Regents case in 1991. The resumes of those people and any list with their names on it should be made public,” said Barr, who represents the First Amendment Coalition of Arizona. “Sounds like the Commerce Authority has some issues under the public-access laws.”

The Supreme Court’s 1991 ruling stated that candidates who actively seek a job — in that case, the position was president of Arizona State University — run the risk of their desires becoming public.

“The public’s legitimate interest in knowing which candidates are being considered for the job therefore outweighs the ‘countervailing interests of confidentiality, privacy (and) the best interests of the state,’” the opinion read.

At a March 2011 meeting, Cardon said “there should be no secrecy” in regards to the way the ACA operates.

But the ACA has also closely guarded the details of a competitive program that will award a total of $1.5 million in grants to winning companies.

The Commerce Authority has refused to disclose the members of a 24-person panel that evaluates applications for its Innovation Challenge, an annual grant competition for technology companies.

The ACA announced the 10 finalists for the competition on May 2, but denied a records request for the names of the investors and entrepreneurs who are on the panel. The ACA also would not disclose all the criteria used to judge the applicants.

“If there’s a list of who those people are, and there surely is, that’s a public record,” Barr said. “The criteria should be publicly available as well.”

Hellmer said the ACA would not disclose the names of the panelists until the final grant winners have been announced “to maintain the integrity of the evaluation process.”

“They’re still judging these categories right now, and we don’t want to have third parties or consultants or even the companies themselves be able to contact the evaluators and try to sway the process either way,” Hellmer said.

The ACA’s panelists, however, met with all finalists prior to Hellmer’s statement to the Arizona Capitol Times.

Hellmer provided a copy of a detailed list of criteria used this year to evaluate the companies, but it only applies to the selection of the semifinalists and finalists, not to selection of the ultimate grant winners to be announced May 15.

The Innovation Challenge raised eyebrows when Cardon made a surprise announcement May 2 that the 15 companies that did not make the final cut would each receive a “stipend” of $5,000, a decision that appeared to surprise even other ACA board members. Hellmer would not say who, if anyone, was involved in the decision besides Cardon, or where the money would come from.

Even in situations where the ACA is complying with public record and open meeting laws, the authority hasn’t been completely transparent.

In August, the ACA board held a teleconference meeting, in which board members phoned in rather than attended in person, to discuss and award Cardon’s controversial $300,000-a-year contract. The media and members of public were able to listen via speakerphone.

And while the authority posts meeting dates on its website in compliance with open meeting laws, unlike many government agencies it does not send out notifications of meetings, or changes in meeting dates. The authority frequently sends out email notifications of other announcements, however.

Arizona Public Interest Research Group plans to release a report soon on the ACA’s openness and transparency.

Arizona PIRG’s Serena Unrein said the authority has been pretty responsive to her group’s requests for information and has been good about releasing details of Arizona Competes, the $25 million deal-closing fund it controls.

But Unrein said PIRG has problems with the lack of information about the many other incentive programs the authority controls. The ACA is prohibited by state law in many cases from releasing information about who is receiving various tax incentives.

“So far, the Commerce Authority has been a mixed bag,” she said.

Unrein said the ACA does not disclose all available information about who is receiving taxpayer-funded incentives. And while taxpayer confidentiality laws prohibit the release of much of that information, Unrein said PIRG would like to see the authority push for changes to those laws.

Hellmer said the ACA has lived up its commitments to openness and transparency. She said the authority has been “100 percent transparent” about who receives incentives and contracts, noted that all meetings are public and include calls for public comment, and that all ACA expenditures are posted online. ACA expenditures are included on the website openbooks.az.gov.

“The ACA is extraordinarily transparent,” Hellmer said.

Hellmer also emphasized that meeting information is posted on the website in full compliance with the law, which only requires 24-hour notice.

Matthew Benson, a spokesman for Gov. Jan Brewer, who championed the creation of the Commerce Authority, said he didn’t have any details of the CEO search of Innovation Challenge finalists. But he said he was unaware of any transparency problems at the ACA.

“I know that they have in every instance strived to be as transparent as possible and to be accountable for the public money they have received,” Benson said.