On June 10, the Glendale city council voted 5-2 to cancel the current lease management agreement with Ice Arizona. This was the agenda item:
“DISCUSSION AND POSSIBLE ACTION TO DIRECT THE CITY MANAGER AND CITY ATTORNEY TO CANCEL THE PROFESSIONAL MANAGEMENT SERVICES AND ARENA LEASE AGREEMENT BETWEEN THE CITY OF GLENDALE AND ICEARIZONA MANAGER CO., LLC AND ICEARIZONA HOCKEY CO., LLC, PURSUANT TO ARIZONA REVISED STATUTES § 38-511, AND TO PURSUE ANY AND ALL OTHER LEGAL ACTIONS AND REMEDIES NECESSARY TO EFFECTUATE CANCELLATION OR TERMINATION OF THE AGREEMENT.”
Here is the text of Arizona Revised Statutes §38-511:
38-511. Cancellation of political subdivision and state contracts; definition
- The state, its political subdivisions or any department or agency of either may, within three years after its execution, cancel any contract, without penalty or further obligation, made by the state, its political subdivisions, or any of the departments or agencies of either if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any of the departments or agencies of either is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract.
- Leases of state trust land for terms longer than ten years cancelled under this section shall respect those rights given to mortgagees of the lessee by section 37-289 and other lawful provisions of the lease.
- The cancellation under this section by the state or its political subdivisions shall be effective when written notice from the governor or the chief executive officer or governing body of the political subdivision is received by all other parties to the contract unless the notice specifies a later time.
- The cancellation under this section by any department or agency of the state or its political subdivisions shall be effective when written notice from such party is received by all other parties to the contract unless the notice specifies a later time.
- In addition to the right to cancel a contract as provided in subsection A of this section, the state, its political subdivisions or any department or agency of either may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any department or agency of either from any other party to the contract arising as the result of the contract.
- Notice of this section shall be included in every contract to which the state, its political subdivisions, or any of the departments or agencies of either is a party.
- For purposes of this section, “political subdivisions” do not include entities formed or operating under title 48, chapter 11, 12, 13, 17, 18, 19 or 22.
The special voting meeting was preceded on Tuesday, June 9, 2015 by a special workshop session when council immediately voted to go into executive session and then there was a regular workshop meeting. Did the executive session lead to council’s decision to hold the special June 10, 2015 vote about the IceArizona contract? We will never know for executive session cannot be discussed per state statute.
Interestingly Anthony LeBlanc revealed some executive session information when he was on the radio last week. Gary Hirsch, a Glendale resident, raised a question about LeBlanc’s radio comments during the public comment period of council’s regular meeting on June 9, 2015. He asked if anyone representing the city had filed a complaint. No one on council responded but that is not unusual as a statement is made at the outset that council is there to receive public comment but not to respond.
OK, so there is a state statute that allows a political subdivision to cancel a contract. So what? There is one more piece of information that is essential to this surprising action. Most of you do not have a copy of the IceArizona/Glendale Lease Management Agreement. I do and A.R.S. § 38-511 is cited in that contract on Page 84 (in an old contract, page 96 of newer version). I quote:
“24.13 Conflicts of Interest
24.13.3 (in newer contract this is 23.13.2) The Parties acknowledge that the provisions of A.R.S. §38-511, which are hereby incorporated in this Agreement by this reference, may create a situation in which the City might have a right to cancel this Agreement pursuant to A.R. S. §38-511.”
Who made sure this clause was included the Lease Management Agreement? And why? Was city council aware of this provision when they approved the contract? I doubt it. The Jamison contract written by Tindall is the framework for the Ice Arizona contract. There were modifications to specifically address the IceArizona deal. The first thought when reading 24.13.3 is Craig Tindall. How does Tindall fit into all of this? Here’s a quick timeline:
- April 1, 2013 Tindall resigns as Glendale City Attorney but continues employment with city for 6 months
- June, 2013 Tindall emails prior to approval of agreement demonstrate his extensive involvement in crafting the final language (please refer to my previous blog on Tindall. Here is the link: Former Glendale City Attorney Craig Tindall…Act 2 http://wp.me/p3aHul-xb )
- July 3, 2013 Glendale IceArizona Lease Management Agreement approved by city council
- August 20, 2013 IceArizona hires Tindall as its General Counsel
- October 1, Tindall’s employment with the city officially ends
State statute says quite clearly that a political subdivision within 3 years after a contract’s execution may cancel the contract if any person is significantly involved in negotiating, crafting or drafting the contract on behalf of the political subdivision and is an employee or agent of any other party. Why did IceArizona accept this provision? Did Sherwood read this contract? If so, why did he not object to provision 24.13.3 within the contract? Why did Tindall and Nick Wood (another Coyotes attorney) allow this clause to remain within the contract? Was it deliberately placed within the contract to offer either side a way out without invoking the 5 year out clause? If it was deliberately left in and invoked by the city then the city wears the “black hat” – not IceArizona for invoking the hated 5 year out clause. Hmmm…
Councilmember Sherwood did not attend tonight’s meeting. Apparently he was in Salt Lake City. I don’t know but one would think that such a critical vote would demand that he cancel his trip. He did find time that afternoon to be interviewed on NBC Sports Radio 1060AM by Roc and Manuch.
Why cancel the contract now? The time limitation under state statute is 3 years. This July 3, 2015, 2 years will have passed. If council’s move to cancel the contract did not occur now it would have happened sometime in the next 12 months. Why this exact moment? I don’t know.
Since the approval of the contract City council has changed dramatically with the departure of former Councilmembers Martinez, Knaack and Alvarez. Martinez and Knaack supported the deal while Alvarez did not. The majority that approved the contract at the time of its approval was Martinez, Knaack, Sherwood and Chavira. With new councilmembers taking office in December of 2014 a seismic shift occurred. No longer did the deal appear to enjoy a 4 councilmember majority.
The city issued a press release on the morning of June 10, 2015 stating, “The City Council has scheduled a discussion and possible vote regarding Glendale’s contract with the Arizona Coyotes. Discussions and negotiations regarding the contract have been ongoing for months. Specifically, the City is open to a resolution but it must be one that provides certainty and fairness to both parties, especially the taxpayers. The Council has agreed to stand for transparency and the highest standards of ethics for any future agreement with the Coyotes.” Was the city’s press release forced by IceArizona’s threat to sue the city? Translating the government speak, the city appears to have taken the position that it wants the Coyotes to stay as the anchor tenant in its arena but it can no longer sustain the annual loss of revenue. Clearly it is sending the signal that it wants to renegotiate the annual management fee from $15 million a year to ??? Tom Duensing, Interim Assistant City Manager, has pegged this year’s loss to the city to be in the $8.7 million dollar range. To date IceArizona’s position is that they refuse to renegotiate the contract and they reiterated that statement when Barroway and LeBlanc met with Mayor Weiers and Vice Mayor Hugh. And why would they entertain a renegotiation? They are in the catbird’s seat and they retain that pesky 5 year out clause.
Some of the comments made by various individuals during the course of the meeting:
- City Attorney Bailey – his office sought numerous outside opinions; the contract is the opposite of the goal of public-private partnership; management fee paid by the city not to be used to retire ownership debt; the purpose of the statute is to protect taxpayers from any employee having a dual relationship
- Nick Wood (Attorney for the Coyotes) – city has no claim; said NHL and Coyotes will sue; claimed Tindall was a ‘former employee’; questioned timing of council action; predicted terrible things will happen to Westgate
- Anthony LeBlanc (Coyotes minority owner) – the city’s action has had a significant financial impact on the Coyotes already; called council action ‘political grandstanding’; claims meeting on Monday with Mayor Weiers was the first time city had asked to renegotiate
- Many citizens spoke for over an hour – majority were Coyotes fans; included Jeff Teesel, Manager of Westgate; however there were a few brave Glendale citizens who asked council to weigh the needs of the community vs. the needs of professional sports.
At the start of the meeting Councilmember Aldama made a motion to table for 2 weeks. Chavira seconded. The majority voted no on the motion. The vote on cancelling the contract was 5-2 with Aldama, Tolmachoff, Turner, Hugh and Weiers voting to cancel and Sherwood and Chavira voting to keep the contract. Mayor Weiers commented prior to his vote with the cryptic statement, “if you are breaking the law there is no exception.” He went on to say as time progressed more information would be available so that the public would understand why council voted as it had.
There’s more to say but I will save it for my next blog. I will offer one comment now. The meeting was ugly and the air was filled with threats, intimidation and breathless anger. If there are any typos or poor English please accept my apology. It was due to a rush to get this blog out. My only hope is that LeBlanc and crew reach out immediately to the city, willing to renegotiate the deal and living up to their promise to keep the Coyotes in Glendale.
© Joyce Clark, 2015
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