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Joyce Clark Unfiltered

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Sherwood signatureVery recently I received this email over the Glendale city hall transom. It was produced as a result of a Freedom of Information Request. It is an email sent by Councilmember Gary Sherwood to Councilmember Manny Martinez and Jeff Teetsel (IStar manager of Westgate). It was sent on June 29, 2013 approximately one week before a majority of the Glendale City Council voted to accept the $15 million a year management agreement with IceArizona.

The main figures in the Glendale cast of characters at that time were: Mayor Jerry Weiers, Vice Mayor Yvonne Knaack, Councilmembers Martinez, Hugh, Alvarez, Chavira and Sherwood. The Acting City Manager was Dick Bowers and the Acting City Attorney was Nick DiPiazza. Nick Woods represented IceArizona in contract negotiations for management of the city’s arena.

SherwoodtoMartinezJune292013_Page_1 Blog

Sherwood email to Martinez

 

 

 

 

The actual email is pictured to the left but the text reads as follows:                                                                                       To: Martinez, Manny; Jeff Teetsel                                                     From: Sherwood, Gary                                                                                                                                                    RE: Out Clause and Risk Topics

“Yvonne and I spend over an hour with Nick Woods last night and out of the three concerns from what I shared with Nick after our e-session yesterday (as of 7:45p, Nick has not seen the city’s revised draft which was promised right after we got of e-session nor had it been posted to our website – consequently both happened by 8:45p) two were okay with the city and had to deal with the errors the city made — #1, we don’t own the 5500 parking spots we’re proposing to charge for therefore it must be a license agreement and not a license agreement  (sic) #2) since the bonds that are held against the arena are tax exempt – only a governmental agency can hold those bonds so some different language has to be brought in – city agreed with that. The third item is problematic in that it is against the NHL for cities to hold out-clause and none of the other 29 cities have one. That would allow the city to just kick the team out, where would they play, what if in the middle of the season.

“I don’t have the time to get into all the details but I’ve known Nick Woods for a long time and know him to be a trusted friend and right now I can’t turn my back away from anyone in the city manager’s office or out (sic) acting city attorney.

“Manny, I’ve got a booked day with two Habitat for Humanity events, three radio interviews and two TV spots so contact Yvonne for details of our conversation. Sammy is already on board as he was with us last night.

“Thanks for hanging in there!

“Manny – please delete this email after you’ve read it.”

Thanks,

Gary D. Sherwood

There are several issues of grave concern with this email. The most serious is a possible violation of the State’s Open Meeting Law.  The following is taken from the AG’s office explanation of one section of the Open Meeting Law:

 “7.5.2 Circumvention of the Open Meeting Law.Discussions and deliberations between less than a majority of the members of a governing body, or other devices, when used to circumvent the purposes of the Open Meeting Law violate that law. See Ariz. Att’y Gen. Op. 75-8; Town of Palm Beach v. Gradison, 296 So. 2d 473 (Fla. 1974). Public officials may not circumvent public discussion by splintering the quorum and having separate or serial discussions with a majority of the public body members. Splintering the quorum can be done by meeting in person, by telephone, electronically, or through other means to discuss a topic that is or may be presented to the public body for a decision. Public officials should refrain from any activities that may undermine public confidence in the public decision making process established in the Open Meeting Law, including actions that may appear to remove discussions and decisions from public view.”

What the explanation above means is that there are to be no private discussions by a majority (4 councilmembers or more) of the governing body if the topic of the discussion is about a matter to be voted upon by the city council. The IceArizona contract was voted upon one month later. The law also prohibits an elected official (councilmember) from acting as a “go-between,” relaying a position on an issue to be voted upon from one councilmember to another.  Sherwood’s email shows him relaying information to Martinez he had discussed the previous night with Nick Woods, Knaack and Chavira. That action is known as “daisy-chaining.”

Sherwood, Knaack, Martinez and Chavira were the 4 affirmative votes for the IceArizona contract. All four could be considered equally culpable of a possible violation of the Open Meeting law by discussing/negotiating elements of the Coyotes contract amongst themselves, privately, when it was soon to come before them for a public vote… all the while excluding the remaining 3 councilmember: Weiers, Hugh and Alvarez.  

Another alarming admission by Sherwood in this email is that he shared Executive session material with Nick Woods. The city was negotiating with IceArizona. The ad hoc discussion between Sherwood, Knaack and Chavira and Woods may have harmed or weakened the city’s position. City contract negotiations are a direct managerial responsibility of the City Manager and City Attorney. Could this action be a violation of the city’s charter? We’ll explore this topic in the next blog.

Every councilmember knows of the prohibition about not sharing E session material. Doing so is a very serious violation of the Open Meeting Law. Sherwood says quite clearly in his email that is exactly what he did with Nick Woods and then attempts to minimize the violation by characterizing Woods as a friend. It makes no difference. E session material is not to be shared with anyone…even friends or family.

It seems that Sherwood was putting pressure on Acting City Manager Dick Bowers and Acting City Attorney Nick DiPiazza to get the IceArizona deal done…quickly. We know that Mr. Bowers publicly addressed the $15 million a year IceArizona (at that time IceArizona was called Renaissance) contract and voiced concerns about Glendale’s fiscal health if it were approved at that figure. In a June 23, 2013 Dick Bowers memo to city council he said, “Contrary to what might appear in the papers I don’t see this as a ‘done deal’. Far from it.” He went on to say, “I cannot shake the concern for the level of risk expected to be borne by the city…I keep coming back to that same level of discomfort of Glendale having all of the risk in this deal.” Clearly Bowers had substantial concerns and it is not unreasonable to think that Sherwood was advising Bowers that he had the four votes needed to approve the deal.

From this email we can see who was talking to who privately about this issue. Sherwood seems to have taken the lead and all 4 councilmembers may have been negotiating collectively yet privately with IceArizona’s attorney. He acknowledges Knaack and Chavira as participants in his meeting with Nick Woods. He then sent his summary email to Martinez.

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Why did Sherwood ask Martinez to delete his email after reading? It appears to be tantamount to an admission that its contents should not have been memorialized.  There are so many questions and so few answers. Is it possible that Sherwood asked Martinez to delete his email because he realized he was “daisy-chaining?” Did Martinez delete this email as requested? Maybe…maybe  not, leading to its discovery now, over a year later.

Sherwood’s email and his comments within it warrant an investigation by the Attorney General’s Office to determine the validity of Open Meeting law violation allegations sure to arise as his email becomes more and more public. At this point, Sherwood’s email raises a lot of questions. I suspect that it may generate many citizen complaints to the AG’s Office. From my years of experience on council, it looks like a “smoking gun,” written by Sherwood himself that implicates him and 3 other councilmembers in possible Open Meeting Law violations.

So, for all those citizens who spoke in favor of or against the Coyotes deal the night council voted on the matter, it was in vain. It appears that 4 councilmembers, Sherwood, Knaack , Martinez and Chavira, had already made their minds up and shared their positions with one another at the end of June, 2013.

Update 1:00 PM. I am pleased to report that I have scooped the Arizona Republic. At 11:16 AM I published my blog on the Sherwood email. At 12:30 PM Peter Corbett, a reporter for the Arizona Republic released his story on the same Sherwood email. Here is the link:

http://www.azcentral.com/story/news/local/glendale/2014/07/21/glendale-mayor-council-members-violated-open-meeting-law/12956523/ . I knew Corbett had made the FOIA request for said email but I was perplexed because there was no Arizona Republic story. I was beginning to think someone had quashed it.

Mayor Jerry Weiers is considering filing a complaint with the AG’s office. If after reading this blog and Corbett’s article, you think Mayor Weiers should file a complaint, please send him an email at: jweiers@glendaleaz.com and let him know you support such an action.

© Joyce Clark, 2014

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

 

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This will be my last posting until after Christmas Day. With less than a week before Christmas family and friends, last minute shopping and baking consume my time. Here goes. This council is often disappointing because of their lack of substantive engagement. Their December 17, 2013 council workshop had a myriad of issues, some of them quite important.

When it came to the presentation on the Monthly Arena Reports we learned some new or corroborating information. The figures that are used by the city are figures provided by IceArizona.  Mr. Duensing, Executive Director of Financial Services, stated that the expected annual arena revenue for this fiscal year will be $6,791,540 and the expected deficiency will be $7.1M. He indicated that as of November 30, 2013 (covers period from Aug. 5 to Nov. 30, 2013) the amount of revenue accruing to the city is $1,168,880. This means the enhanced IceArizona revenues to cover the $9M unbudgeted will be short by approximately $2M by June 30, 2014 (end of current Fiscal Year). I find it amazing that his forecasted estimate of annual revenue is so precise, down to the penny. Nevertheless, it portends that the city will be short a boat load of arena revenue this year.

The city budgeted $6 million dollars for arena management of the $15 million dollar total fee and expected IceArizona’s enhanced revenues to cover the $9 million dollars unbudgeted. Looks like that ain’t gonna happen.  Mr. Duensing also answered a question posed in one of my latest blogs regarding the Supplemental Ticket surcharge of $1.50 per qualified ticket. He said we won’t see this total until the end of this fiscal year per the agreement. Fine but why isn’t a monthly amount being offered to the city in the monthly reports? After all, it’s their specific line item. I’ve been told that an escrow account has been established. It would be nice if the city received confirmation that X amount of dollars is being deposited monthly into that account. After all, it is an interest bearing account and the entire amount, including interest, could very well end up going to the city.

It also raises the question of the definition of what is a qualified ticket. Here is the agreement’s definition: “Qualified Ticket” means a Ticket to a Fee Activity for which (i) the Team Owner, with respect to Hockey Events; (ii) The Arena Manager or sponsor or promoter, with respect to Team Revenue Events, City Revenue Events and other Fee Activities that are not Events; or (iii) the City, with respect to City Sponsored Events, receives valuable consideration (whether in money, services, foods or other value). Any Ticket for which (i) the Team Owner, with respect to Hockey Events; (ii) the Arena Manager or the sponsor or promoter with respect to Team Revenue Events, City Revenue Events and other Fee Activities that are not Events; or (iii) the City with respect to city Sponsored Events, (a) receives no value, or (b) receives money (but not any other services, goods or other value) for such Ticket in an amount less than 25% of the retail priced stated on the face of such Ticket, shall not be a “Qualified Ticket”; provided, however, that, if the aggregate number of Tickets described in the immediately preceding clauses (a) and (b) that are distributed by the Team Owner for a given Hockey Event (other than a Hockey-Related Event) exceeds 1,750 then the Tickets described in the immediately preceding clauses (a) and (b) distributed by the Team Owner for such Hockey Event that exceed 1,750 shall be deemed “Qualified Tickets” for such Hockey Event, unless the City and the Team Owner mutually agree otherwise.”

I suspect the city has one interpretation of this paragraph in mind and IceArizona has another. I’ve learned that arena employee tickets purchased at a discount were counted as qualified tickets in previous years. Apparently now they are not by IceArizona.  Is it because the discount is greater than 25%? What other categories of purchased tickets are no longer considered as qualified by IceArizona? Is IceArizona discounting a large number of tickets? If so, as a result, how much surcharge money is the city not receiving?

Apparently there is some sort of agreement that the number of complimentary tickets to be given away would average no more than 1,000 per game. It appears that IceArizona has far surpassed that average and in one case gave out 3,500 complimentary tickets for one game. The rationale for capping the number of complimentary tickets per game is that it frees up a greater number of qualified tickets to earn the city surcharge. I am hopeful that a Fiscal Year- end audit commissioned by the city will clear up many of these questions.

What was council’s reaction to the dismaying news that arena revenues will experience an approximate $7M deficit? Not a word. Not one single question asking how the projected deficit would be covered. Instead there was a chorus of “thank yous” to staff for bringing this information forward and making it publicly available.

The other substantive issue on council agenda was the Five Year Forecast. As presented by Mr. Duensing the bottom line is that the city faces everything from a minimal deficit of approximately $250,000 next Fiscal Year up to a substantial deficit of $30 million dollars within 5 years. He asked council to approve staff’s development of a short term plan and a long term plan to deal with these expected deficits.  He received council approval to do so along with a chorus of confidence from councilmembers that the deficit can be overcome. Mayor Weiers said it best by asking everything be placed on the table and he hopes council has the courage to make some very difficult decisions. Every citizen of Glendale hopes council has that courage. What better Christmas present could there be?

© Joyce Clark, 2013

FAIR USE NOTICE
This site contains copyrighted material the use of which has. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to :http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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