The Arizona Daily Sun, a Flagstaff newspaper, reported that the pro-incorporation United for Tusayan campaign committee had unexpectedly filed amended financial disclosure reports with the Coconino County Recorder's Office.

United for Tusayan's revised report revealed that back in March 2010, it distributed $29,500 in "win bonuses" to 10 people who had supported incorporation in the election that month. At least eight work for companies owned by Halvorson, and two were candidates who won council seats in the August 2010 election: Montoya received an $8,500 bonus and Rueter received $2,000. They did not report the bonuses on the personal financial disclosure statements they filed prior to the August election. Montoya has since amended his personal financial disclosure to show he received the bonus. Montoya declined an interview request and Rueter did not return calls and emails seeking comment.

United for Tusayan's chairwoman, Vice Mayor Maniaci, said in an interview she couldn't explain why the bonus payments were made and who ordered them. "I don't know the answer to that," she said. "It's probably a very relevant question, but I did not (participate in granting or receiving the bonuses)."

Halvorson, in a phone interview, also denied any connection to the bonuses, saying he "didn't know anything about it," despite the fact that eight of the 10 people receiving bonuses, including the two who later won council seats, were his employees.

Meanwhile, there were other revelations: Gruppo Stilo paid for other council members to travel to Italy to see some of the company's developments the year before they were elected. Bryan said that he and Maniaci visited Italy in the spring of 2009; he said that Blasi went to Italy, too, but wasn't sure when. Blasi did not respond to emails and phone messages seeking comment. In his talk with me, Bryan estimated that the value of the trip he took was between $3,000 and $4,000.

"They wanted to show us who the Stilo group was and have us take a look at the kinds of development and quality and commitment to their projects," Bryan said. Both he and Maniaci said they're not biased in favor of the developers as they weigh the decision before them -- whether to transform Tusayan into a place where tourists might spend more time and money than they do in seeing the Grand Canyon itself. "The money didn't buy my vote," Bryan said. But, he added, he and his campaign contributors "agreed in some philosophies" and have "like goals in mind."

Halvorson also dismisses suggestions that he and his partners have seized control of Tusayan's town council through their employment ties and campaign contributions. "I didn't buy anyone. I gave each candidate $400," he said, referring to Tusayan's first town council election. "This is grassroots rule as far as I'm concerned."

Maniaci said that "everything is inflamed." The Thurstons' camp has a "plantation-style mentality that has existed for decades. There is nothing for the community. There is not a church, not a community center, not a park (to encourage) a sense of community," she said. "They have had years to develop these things. They are not really into progress -- they're very much into the status quo."

Others see it differently. When the developers unveil the details of their proposal later this summer, the fledgling town council will be faced with its first major conflict of interest, on perhaps the most important decision the town will make for decades to come. Gruppo Stilo not only wants the council to allow the development on its 160-acre Kotzin Ranch property, it also wants it to annex another of its properties, the 190-acre Ten-X Ranch. And Gruppo Stilo and Halvorson want the council to change the zoning on their RV park so it can become a centerpiece of the mega mixed-use development. The council's decisions could affect the thinking of the Forest Service, which would have to decide whether to allow road improvements across forest land, said Gruppo Stilo attorney Grady Gammage. The decisions would not only affect the nature of the national park's main gateway, they would also ripple into the park itself in many ways.

It's "obvious ... that a majority of the city council through their employment or affiliation with landowners are set up to have a conflict of interest on zoning cases that involve their employers," said County Supervisor Taylor. "I think it's their intention to recuse themselves from that, but it is going to be difficult for them because they will have to operate with a quorum (which requires three of the five council members to participate). It's a unique situation."

"It's like the old-time coal-mining company town, but now it's based on industrial tourism," Roger Clark told me in a phone interview. He's with the Grand Canyon Trust, a Flagstaff-based environmental group, and works on protecting the park's natural quiet.

Clarinda Vail told me, "This makes me crazy."

After our first meeting in the heliport lobby, Tusayan Town Manager Enrique Ochoa moved his "office" to the restaurant of Halvorson's motel, where he sipped coffee at a table by the window while working on his laptop. (The motel's WiFi connection is relatively accessible but painfully slow.) Friendly and unflappable, he waved me over to join him. He's not concerned about the political firestorm he's walked into, he said. One of his biggest worries, he explained, was just finding a place to live. He'd been commuting from Flagstaff every day -- 140 miles roundtrip. He was considering bringing an RV to Tusayan to live in the forest for while.

He acknowledged that he was in a rare position: He's the town manager, and yet he was entirely in the dark about the secret development negotiations between the town's private consultant and the Halvorson/Gruppo Stilo team.

None of this discouraged him. In fact, he appeared to relish the challenge. "As you go through life, you have to learn not to concentrate too much energy on the negative," he said. "You just have to forge ahead, and you have to do it in the right way."

John Dougherty is a Phoenix-based freelance investigative journalist, online at InvestigativeMedia.com. His work has appeared in a range of publications including The New York Times, the Washington Post and Phoenix New Times. His last HCN story, which ran in our Oct. 25, 2010, issue, was an essay headlined: "How I ran for a U.S. Senate seat, and what I learned."

The editor's note introducing this story is headlined "The Las Vegas Effect."

For more information, check the National Park Service's latest effort to regulate Grand Canyon air tourism.

This coverage is supported by contributors to the High Country News Enterprise Journalism Fund.