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Joyce Clark Unfiltered

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May 14

30

City of Glendale April 2014 Monthly Arena Report

Posted by Joyce Clark on May 30, 2014
Posted in City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , , | 5 Comments

This is always a difficult subject because of all of the facts and figures that are presented. The numbers can be confusing to those readers who have not followed my other blogs on the monthly reports. Here is a link to the report:http://www.glendaleaz.com/finance/documents/FY14MonthlyArenaReport-20140430.pdf . Here is the report itself:

April 2014 MonthlyArenaReport 

This monthly report publicly released by Glendale will reflect the last of the hockey games for this season but does not capture the supplemental ticket surcharge which is due and payable 60 days after each fiscal year. The new fiscal year begins July 1, 2014 so this line item would not be paid to the city or reflected in this report until September 1, 2014.

The Interest Income-Escrow Account still sits at $4,620 and has not been updated since the first monthly report.

The agreement revenues to the city to date total $4,686,412 and reflect a prorated 11 month fiscal year begun on August 5, 2013. The total city expenditures to date are $10,252,055. In this first year all figures are prorated. The total management fee the city will pay is $13,750,000 and total capital improvement expenditures are $450,685.   The report reflects a loss to the city, to date, of $5,565,643.

For purposes of discussion let’s include as revenue the supplemental ticket surcharge. It comes in at $774,452. Let’s add that amount to the total qualified ticket revenue received by the city; and new ticket revenue figure is $2,323,357. The total management fee of $13,750,000 and capital expenditure requirement of $450,685 paid by the city this fiscal year is a total of $14,200,685. Subtract revenues received from fees paid and the loss to the City of Glendale in this fiscal year is the grand total of $11,877,328.

Consider this. Next fiscal year even if all 17,700 tickets per hockey game were qualified tickets the maximum amount the city would receive is $2,537,000 in qualified ticket revenue. For this exercise, let’s add to that figure another $1,268,500 in supplemental ticket surcharge. Add an additional million dollars more in parking revenues to the nearly $1 million generated this year and the maximum revenue 42/43 hockey games per season can generate is approximately $6 million.  

Global Spectrum and IceArizona would have to have approximately 100 revenue generating non-hockey events in order to earn an additional $9 million annually to be paid to the city to offset the $15,000,000 the city must pay as an annual management fee to IceArizona. They will be fortunate to host 25 non-hockey revenue generating events next year.

Some folks dismiss the $6 million portion of the annual management fee because it was already budgeted. It’s not to be dismissed because it’s in the budget. The money still comes from General Fund sales tax revenue. It still counts. It is still money the city has to receive from sales tax revenue to pay all required arena expenditures. 

I added the Supplemental Ticket surcharge to the total revenues to be received by the city. Even with that “enhanced revenue,” the fact remains that this year the city’s loss is $11.8 million dollars. There is no more money forthcoming to the city from any magical or secret source.

For purposes of this exercise, here is how this year and the next 4 fiscal years worth of loss to the city may very well pencil out. For this exercise I reduce the annual loss by an estimated $2 million a year by increasing revenue to the city by an equal amount annually:

  • This year, FY 13-14           loss of $11.8 million
  • Next year, FY 14-15          loss of $  9.8 million
  • Year 3, FY 15-16               loss of $  7.8 million
  • Year 4, FY 16-17               loss of $  5.8 million
  • Year 5, FY 17-18               loss of $  3.8 million
  • 5 Fiscal Years                   Total loss of $39 million

Add to the $39 million deficit in earned revenues approximately $12 million a year in construction bond debt for a total of $60 million. In five years I estimate the city will pay $99 million dollars between paying annual construction debt and covering annual revenue losses generated by the management fee.

My disclaimer is that these estimates are my best, educated guess based upon the numbers that are publicly available. The actual loss number for five years could be higher or lower than estimated.

What is ironic about this IceArizona contract is that the “enhanced revenues” (with the exception of naming rights and the supplemental ticket surcharge) are not really new revenue. Before IceArizona and the NHL’s two years of management, the city paid no annual management fee…none…nada. Yet it collected the very same revenues — a ticket surcharge and a parking surcharge. They were included in the price of every ticket. Those revenues: sales tax earned inside the arena and the ticket/parking surcharges were used to pay down the construction bond debt because the city didn’t have to also pay a management fee.

With this new deal the management fee consumes all of ticket/parking surcharge revenues (in addition to the other revenues like naming rights) the city was already getting and leaves the city struggling to cover some portion of the $15 million deficit every year. Oh, and don’t forget, IceArizona takes $20,000 off the top of parking fees for every game. That comes to $860,000 this year.

Another irony is that when IceArizona took over, it didn’t subtract the existent ticket and parking surcharges that were historically already included in the price of the ticket. Those charges were absorbed and became part of the base price of the new IceArizona tickets to which they added the new, qualified ticket surcharge. In essence, every fan’s ticket now includes the old ticket and parking surcharges within the base price and the new IceArizona ticket surcharge is then added.

The management agreement was and is good for IceArizona but it’s not so good for Glendale. Earned revenues once applied to the construction bond debt are now used to cover the $15 million annual management fee. Those earned revenues simply are not adequate to cover the management fee.

The argument for keeping the Coyotes as an anchor tenant was to benefit all of the surrounding businesses in Westgate. With the totality of Glendale’s excessive debt burden the question must be, is it worth it to keep the team and struggle to pay the annual management fee? Or is Glendale better off going back to accepting one of the Beacon bids solicited last year? You decide.

© 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.

Apr 14

30

Former Glendale City Attorney Craig Tindall…Act 2

Posted by Joyce Clark on April 30, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances  | Tagged With: , , , , | 4 Comments

 

When I retired from Glendale City Council in January of 2013, Horatio Skeete was Interim City Manager and Craig Tindall was City Attorney. A new mayor and several new councilmembers were enough of a majority to shake things up. While a new search for a city manager took place Dick Bowers was appointed as Acting City Manager and Craig Tindall was asked to resign. Nick DiPiazza became Acting City Attorney. Tindall’s Severance Agreement was executed on April 1, 2013. Here is the link: http://www.glendaleaz.com/clerk/Contracts/8419.pdf .

In exchange for his immediate resignation, he continued to be employed by the City for six months. Council offered six month’s pay plus benefits totaling $186,378.14 which included pay, benefits, CLE, bar dues, IMLE conference, deferred compensation, and additionally, a joint press release. Mr. Tindall could approach Councilmembers and city officials for recommendations (references).  He was entitled to keep the city phone and phone number and he remained in the system an additional six months and did not exhaust his vacation or sick time. For whatever reasons other than the publicly offered “time for change,” they wanted him gone immediately and were willing to pay nearly $200,000 to have it happen. It’s a sweet deal. For up to 5 hours of work in a 2 week period over 6 months he received over $186,000. I bet you wouldn’t turn it down.

As part of his severance package he would stay on board in a limited capacity as a Special Counsel. The agreement called for him to be available to respond to factual questions he had previously handled for the city. There was a requirement for a separate agreement to allow him to provide legal advice. Here is the exact stipulation: “Employee will be available for up to five hours per two-week period from the date of this Agreement to the Separation Date to respond to factual questions regarding matters Employee previously handled for the City; provided however, Employee will not provide legal advice to the City unless by separate agreement.”

The Severance Agreement was approved by city council on a 5 to 2 vote with Mayor Weiers and Councilmember Alvarez voting “Nay.” Mayor Weiers turned out to be correct in viewing Tindall’s stay for an additional 6 months as problematical.

Can we assume all of council read the agreement? Yes, as there was a great deal of discussion about its terms prior to the vote. They knew that he could respond to factual questions but not offer legal advice. So why did Councilmembers Knaack, Martinez and Sherwood, three of the four votes needed to approve the IceArizona Agreement, ask him for legal advice regarding the IceArizona Agreement? And why did Tindall respond by offering legal advice?

Did Mr. Tindall breach his Severance Agreement by offering councilmembers legal advice regarding the IceArizona Agreement without fulfilling a separate agreement allowing him to provide legal advice?

I received, anonymously, a copy of an email dated Friday, June 20, 2013 sent at 8:04 AM. Here is a copy of that email:

Tindall email 3 corrected

 

 

In Item 1 of his email, Tindall says, “First, in § 8.3.1 the exception for the 2013-2014 season should be removed. That was in the Jamison agreement for last season when the League faced issue sight he (sic) collective bargaining agreement. The year was changed, but it is not needed any longer.” The only recipients are Councilmembers Knaack, Martinez and Sherwood as they apparently asked Tindall for legal advice.  The email is not copied to the Acting City Manager or the Acting City Attorney. Copying others is a usual and typical practice. I always copied my Council Assistant and on city matters copied the City Manager, Assistant City Manager and relevant department heads. It informs others and prevents blind-siding on an issue. It’s also a matter of professional courtesy. Since Tindall referred to the Acting City Manager in his email, he should have copied him as well.

It appears that the councilmembers were the only ones to ever see this email. Was the email offered with the “understanding of the City Manager” as Tindall stated?  If that were the case it would be expected that he Cc the acting city manager and/or the acting city attorney formally for informational purposes at the very least.

Less than 2 months later, August 20, 2013, Mr. Tindall is hired as IceArizona’s (successful bidder for Jobing.com arena Management Agreement) General Counsel. His Severance Agreement retains him as Special Counsel to the city until October 1, 2013. For 6 weeks he continues to work for both the city and IceArizona. He could legally and he did despite appearances. I guess he forgot the old adage, “Perception is reality.”

Former Councilmember Phil Lieberman filed a complaint with the Arizona State Bar Association alleging among other things, that Tindall may have breached his Severance Agreement. Does this issue have the potential to become part of the Bar’s investigation? Despite many who view Lieberman as an old curmudgeon, you have to wonder what else he knows…and in this instance he appears to be right.

© 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.

Mar 14

24

Not a pretty picture

Posted by Joyce Clark on March 24, 2014
Posted in City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , | 7 Comments

The Glendale Monthly Arena Report for February, 2014 is now available. The $3 qualified ticket surcharge for hockey events is reported by IceArizona at $163,082. Divide that number by the $3 ticket surcharge and the qualified ticket attendance for the month is 54,360. The number of hockey events for the month was 4. Divide the 54,360 by 4 and the average qualified ticket attendance per game is 13,590. The publicly announced attendance figures are higher. If a game was sold out at 17,750 that means that approximately 4,000 tickets would be non-qualified, either comped or sold at a discounted price and the city does not receive the surcharge.

IceArizona, by comping and selling discounted tickets, is not generating the revenue it needs. Publicly they have announced that some of the games are the highest revenue generators to date. True enough but if they had sold more qualified tickets their bottom line would be stronger. How long before its losses reach the $50 million figure? Five years? Three years?

Let’s look at the non-hockey events. There were two in the month of February. The qualified ticket surcharge reported by IceArizona to the city is $59,884. Divide that figure by $5 per qualified ticket for a qualified ticket attendance of 11,976. Divide that figure by the 2 non-hockey events and there was an average of 5,988 of qualified ticket attendance per event. Again, the publicly announced attendance figures were higher but again, the balance of the tickets were either comped or sold at a discount, making them non-qualified ticket sales.

Parking figures are only reported by quarters of the year so the next parking revenue statement will be available at the end of April, 2014. The city continues to show a total loss of slightly over $3 million to date.

As has been reported, council budgeted $6 million in this Fiscal Year toward the payment of the $15 million annual management fee. The council meeting of March 25, 2014 will have council voting to transfer $6,680,160 from its Contingency account to cover the balance of the arena management fee due this year. The total management fee for this year is $13,551,370. It is not the full $15 million because the management deal did not become effective until August, 2013. The lower management fee for this year reflects the proration starting date in August. The city pays out $13.5 million and receives $3.2 million in “enhanced revenues” (that includes sales tax inside the arena) to date.  It looks like the city’s arena loss to date is about $10 million. This figure will drop with the reporting of revenues from the games played in March and April. Hopefully there will be some playoff game revenue as well. It is estimated that the city’s loss for the year will be in the $7 million range. Couple that with the $12 million annual arena construction debt payment. It isn’t a pretty picture, is it?

© 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.

Mar 14

10

Monthly arena revenues to date

Posted by Joyce Clark on March 10, 2014
Posted in City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , | 15 Comments

There are figures available for the first six months of the Jobing.Com management agreement covering from August, 2014 through January, 2014. No figures are available for February, 2014 even though we are in March of 2014. We can expect them at the end of March. Why it takes a full month to publish the figures is a mystery. After all, the city is directly reporting the figures supplied to it by IceArizona. The agreement took effect in August of 2014 and there were no ticket sales that month.

The monthly arena report reflects numbers supplied by IceArizona, manager of the arena. It reflects ticket revenues to the city on qualified ticket sales only. Non-qualified tickets could be anything from discounted to comped tickets. The qualified tickets per game do not reflect total per game attendance as reported publicly by IceArizona. The arena has a seating capacity of approximately 17,700. Some of the games were reported as sold out – standing room only. A portion of the ticket sales for those sold out games must have been discounted or comped and therefore not counted as qualified tickets requiring the surcharge of $3 per ticket.  It appears as if the city is not earning the revenue it could. Perhaps more of these tickets should be considered as qualified. Here is a summary of the qualified tickets that actually earned the city revenue month by month:

               # of hockey           Ticket Surcharge divided            Average number

                          events                  by $3 per game                        of Qualified tickets/game

August, 2013                0                             0                                                 0

September, 2013         1                       $16,413 ÷ $3                             5,471      (1 game)

October, 2013              7                     $203,289 ÷ $3                            9,680      (7 games)

November, 2013          6                     $193,517  ÷ $3                          10,751      (6 games)

December, 2013          4                      $153,975  ÷ $3                         12,831      (4 games)

January, 2014              10                    $355,135  ÷ $3                        11,837     (10 games)

A question that has never been answered satisfactorily is how come the Interest Income on the Escrow Account was posted at $4,620 as of September 30, 2013 and that number has not changed to this day? There is no posting of any accrual to that account in Oct.- Nov.- Dec. or Jan.

As of January 31, 2014 the city has spent $6,502,055 toward the $15,500,000 owed this year per the arena agreement. Offsetting revenues earned of $2.7 million have not covered the $6.5 million spent and to date the city has a loss of $3,705,324.

If there are no playoff games the total revenues for the city for FY 2013-14 which ends June 30, 2014 can be estimated at $6 to $7 million dollars. Add another approximate $1 million in Supplemental Ticket Surcharges ($1.50 per qualified ticket) for a total revenue estimate of $7 to $8 million dollars. The city will pay out $15.5 million this year. It is estimated that the loss will be somewhere in the neighborhood of $7.5 million dollars on the arena this year.

Then there is the annual arena construction debt payment at an estimated $12 million a year. It is offset by the sales taxes earned at Northern Crossing, Cabela’s, Tanger Outlets and the businesses in surrounding Westgate. It does not include sales tax earned inside the arena as that is counted as part of the arena revenue of $2.7 million to date. The estimate of the amount of annual sales tax earned from these sources is approximately $4million. That means the city will have to find an estimated additional $8 million to cover the shortfall on the arena construction debt.

The underperformance of both revenue sources: arena revenues and Westgate/Northern Crossing/Cabelas sales tax revenues will fall short and cause the city to pay an estimated $15 million this year over and above all revenues earned. The only ways the city can continue to subsidize arena expenses is to: raise the temporary sales tax and make it permanent; increase property taxes and reduce city services by eliminating some or privatizing. The question for every Glendale resident is, is it wise to continue to subsidize arena losses by raising taxes and reducing/eliminating city services?

© 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.

Jan 14

31

Friday is supposed to be a slow news day…not this time!

Posted by Joyce Clark on January 31, 2014
Posted in City issue and actions • City of Glendale • Jobing.com arena  | Tagged With: , , , , , , , , , | 3 Comments

When a politician or someone of note has a story about him or her on a Friday, he or she should thank the news media profusely. The general thinking is that a story run on a Friday before a weekend when readers are preoccupied by weekend fun will be rapidly forgotten. It’s a ploy that has been used for years. This time it may not work as well as expected. This story will not fade away and will continue to smolder much like a hay fire burning itself out.

Paul Giblin and Craig Harris wrote a piece in the Friday, January 31, 2014 edition of the Arizona Republic relating possible ethics violations by former Glendale City Attorney Craig Tindall entitled “Ethics questions hit ex-Glendale city attorney.” It relates that Tindall attempted to solicit a state income tax credit for his son’s tuition at a private school. He used a city computer to do so. Reportedly he sent his solicitation to at least 40 people. They included:

  • Former City Manager Ed Beasley
  • Former Deputy City Manager Art Lynch
  • Fire Chief Mark Burdick
  • Current Interim Assistant City Manager Julie Frisoni
  • Lobbyist Gary Husk (who recently received probation and community service from the court)
  • Chip Scutari, public relations
  • Lynne Greene, Renaissance Hotel General Manager
  • Peter Sullivan, University of Phoenix executive
  • Jim Foss, Jobing.com  executive
  • Attorney Aaron Cain, Fennemore Craig
  • Attorney Andrew Federhar, Fennemore Craig
  • Attorney Sharon Oscar, Fennemore Craig
  • Attorney Cathy Reece, Fennemore Craig
  • Attorney Sarah Strunk, Fennemore Craig
  • Attorney Christian Beams, Ryley Carlock & Applewhite
  • Attorney Michael Moberly, Ryley Carlock & Applewhite
  • Attorney William Wilder, Ryley Carlock & Applewhite
  • Attorney Former U.S. Rep. John Shadegg, Steptoe & Johnson
  • Attorney Jordan Rose, Rose Law Group
  • Attorney Nicholas Wood, Snell & Wilmer
  • Former Coyotes owner, Steve Ellman
  • Coyotes President Mike Nealy
  • John MacDonald and his wife, Dana Paschke, lobbyists for Glendale
  • Former U.S. Attorney for Arizona Jose de Jesus Rivera, Haralson, Miller, Pitt, Feldman & McAnally

Obviously this is not a complete list. Tindall contends that he was doing a public service by providing information about the state income tax credit for school tuition yet reportedly he happened to mention his son as a possible recipient several times in his “informational emailing.”

You should have problems with his actions if for no other reason than he used a city computer to send what was essentially a personal message/solicitation. One of the first “no-nos” that every city employee learns is that the city equipment, including use of a city computer is for city business only. Tindall and members of his staff taught city ethics to various employee groups and would be very conversant with this restriction.

Hackles should go up at the thought that his very selective recipient list included a lot of people with which Glendale did business. They were put in an awkward position. Would their non-responsiveness hurt them in securing further business from the city? Would their support garner them further business with the city?

Jose de Jesus Rivera, one of Tindall’s email recipients, just happened to secure the contract to conduct the external audit at a cost of over half a million dollars and in one Rivera email response even asked if the RFP for the contract had been released.  Hmmm.

Tindall’s questionable action serves to highlight the web of relationships within the City of Glendale before Ed Beasley’s retirement. Lynch, Burdick and Frisoni were all confidants of former City Manager Ed Beasley. Some of these people had no problem supporting Tindall in his quest to become Interim City Manager by trashing former Assistant City Manager Horatio Skeete who prevailed in securing the job.

It leads to another troubling issue regarding Tindall’s employment. From 2009 until IceArizona’s successful bid to secure the Jobing.com arena management contract Tindall was the city’s attorney. He was privy to the nuances of EVERY deal that came before the city. When he left city employ he spent a brief month at a private law firm before being hired as General Counsel for none other than…can you guess? IceArizona! Several people, including former Councilmember Phil Lieberman, have questioned whether his extensive insider knowledge led to the demise of the Greg Jamison bid and the success of IceArizona. Who knows? We may find out someday…but that “someday” could be just a smidge closer. Lieberman filed a complaint with the Attorney General’s office about the propriety of Tindall’s dual employment for several months continuing to advise the city while being employed by IceArizona. We will have to wait and see if it comes of anything but I’m not holding my breath on this one.

The media’s reporting of Tindall’s problematic judgment and self-serving actions brings into question everything he did, every decision that he made during his years as City Attorney. One that comes to mind is his decision to reject just enough voter ballots in the Goulette-Bohart contest for the Ocotillo council district seat resulting in Goulette’s victory. Or his decision to release the audit information about the city’s trust funds at the very same time he was vying to become Interim City Manager should give you pause. Or the extent of his involvement with pro-sales tax increase groups working to defeat the citizen initiative driven election to kill the temporary sales tax increase?

Tindall was viewed as smart, pleasant and competent by some but as the layers begin to fall away we may begin to see a different view…one not so smart, pleasant and competent.

I will be releasing another blog later today with some other interesting tidbits that have been passed on to me as well as the latest Bidwill blast.

I have posted a new, informal poll about Tindall to the left of this column and as usual, if you would like to know when my next blog is posted you can sign up via an email alert to the right of this column. 65% of the responses to my last poll regarding the health of Glendale’s finances said they did not believe that Glendale could straighten out its financial mess.

© 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.

Jan 14

25

Take a deep breath and wait

Posted by Joyce Clark on January 25, 2014
Posted in City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , | 3 Comments

Caitlin McGlade has an article in the January 25, 2014 edition of the Arizona Republic. The information she provided is old news – stale. Must be a slow news day and therefore a good day to bash Glendale again. I would imagine Coyotes fans are in a dither while Glendale’s citizens are just shaking their heads. There is no need to become hysterical – just yet.

The information used has been up on the Glendale website for quite some time and the numbers have not changed. Do not expect to see any new numbers until after January 31, 2014 when the December 2013 Arena Monthly Report and the first quarterly (Oct-Nov-Dec 2013) parking revenue numbers will be posted. Here are the numbers as they are presented on the city’s website today:   

  Fund ID     Amount  
Arena Event Operations

$247,457.06
Arena Special Revenue

$1,947,103.03
   
Account

Amount
Arena Annual   Rent

$326,712.33
Arena Base Team   Fees

$48,681.51
Arena Naming   Right Revenue

$60,000.00
Arena Parking   Fees

$18,835.49
Arena Parking   Rev-Hockey Games

$309,898.94
Arena Parking   Rev-NonHockey

$91,719.49
Arena Ticket   Surchg-Hockey

$896,393.39
Arena Ticket   Surchg-NonHockey

$194,861.88

No where could I find what the city has spent to date in capital improvements to the arena. I am sure the numbers are there — somewhere. It may be labeled as Arena Event Operations although that may be the costs of providing public safety or it could be the first quarterly payment of the capital improvement bill. It’s hard to tell.

The picture as it stands today is incomplete and no one will have a good idea of revenues and expenses until after the end of the current Fiscal Year, June 30, 2014. If the current trend holds it will not be a pretty picture for Glendale’s financial health.

Glendale must pay IceArizona $15 million dollars a year for arena management. It is smoke and mirrors. IceArizona has assigned its entire rights over to Fortress Lending and the National Hockey League and that $15M is the payment on the interest on the loans it has with both entities. IceArizona has become a “pass through” for the $15M. In this current Fiscal Year the council budgeted $6 million toward the arena management fee. The remaining $9 million to cover the management fee is to come from “enhanced revenues” produced by IceArizona. As you can see it doesn’t appear that IceArizona will produce the much needed $9 million. What about the supplemental ticket surcharge of $1.50? It appears that it will come in under $1 million for the Fiscal Year.

Under a generous scenario it looks like this:

  •      $15 million to be paid each year to IceArizona for management of arena
  •    -$  6 million in city budget to pay management fee  
  •      $ 9 million not in city budget to pay management fee
  •     -$ 4 million received from IceArizona as “enhanced revenue” (approx. estimate)
  •     -$ 1 million received from IceArizona from supplemental ticket surcharge (approx. estimate)
  •     $  4 million shortage of revenues not covered by city budget or receipt of revenues from IceArizona (approx. estimate)

These figures are estimates and we will have to wait until the final numbers are available. The estimated $4M shortage could end up being lower or higher. Where will the payment of the shortage come from? There is only one place – the city’s Contingency Fund (rainy day fund). No wonder there will be little to no money in Contingency this Fiscal Year (the year end estimate is approx. $800,000).

Two other financial debts associated with the arena are the construction bond payments of approx. $12 million a year and the obligation of the city to pay for capital improvements to the arena. This year it is a million dollars and in the next few following years it is half a million. Then it cycles up to a million followed by another couple of years at half a million. 

Immediately some will point to Camelback Ranch as the 800lb. gorilla and it is. Keep in mind that the city does not have to pay annual operating and maintenance costs for the facility. They are paid by the two teams: the Dodgers and White Sox. What the city does pay in the construction bond debt annually and that too, is a substantial payment of approximately $13 million. The sales tax generated which is very small in the scheme of things does go toward the bond debt. The only light at the end of this tunnel is that in the future, way in the future, the Arizona Sports and Tourism Authority (AZSTA) has an obligation to reimburse Glendale for approximately 70% of the cost of constructing the facility.  In the meantime, it is another debt that Glendale can ill afford right now.

So, everyone take a deep breath, relax and wait until we have a complete picture of the numbers at the end of the Fiscal Year. 

There is a new poll to the left of this column asking if you believe that Glendale can straighten out its fiscal mess. To the upper right of this column you can sign up with your email address to subscribe to notifications of my upcoming blog post. Check them out!

© 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.

Jan 14

16

Only the Shadow knows…errr, make that IceArizona

Posted by Joyce Clark on January 16, 2014
Posted in City of Glendale • Glendale finances  | Tagged With: , , , , , | 7 Comments

The other night I was surfing, trying to find the Coyotes/Blues game. I’m sure it was there but I simply couldn’t find it. The backup plan had me watching the Glendale City Council meeting. Now that council is allowing citizen comments at the beginning of the meeting we are seeing the usual citizen suspects resurfacing at the podium. Andy and Darcy Marwick, residents of Phoenix and dyed-in-the-wool Coyotes haters, opined on their usual complaints. Not to be missed was Glendale resident Bill Dempsky, a former City of Glendale employee, with his usual lament. Ken Sturgis, a Glendale resident, has also started to use this bully pulpit on a regular basis lately. Later in the council meeting Vice Mayor Knaack commented about these usual suspects and their constant references to past history. She felt it was time to stop referring to the past and she urged these citizens to look to Glendale’s future. She suggested that it was time to go back to the old agenda order and place citizen comments at the end of the meeting. We’ll see if that comes to pass.

Citizen Ken Sturgis offered some rather interesting comments. He referred to a “contract” between the city and IceArizona. He claimed that the city’s payment of $15 million dollars a year for arena management was going directly to Fortress and the NHL with IceArizona as merely a pass-through.. Those are the two groups who lent IceArizona the money to buy the team.

I decided to do some checking. Sure enough, I found the “contract.” Actually it’s a notification letter dated September 4, 2013 from IceArizona to the city declaring that as arena manager it had assigned its rights to Fortress and the NHL. Here is the link: http://www.glendaleaz.com/Clerk/Contracts.cfm  . It is C-8584. The letter is signed by Daryl Jones, Chief Operating Officer for the team.

In it IceArizona acknowledges that an assignment of the arena manager notice must be given within 30 days. The sale of the team was recorded on August 5, 2013 and we can assume the assignment of rights was executed the same day. IceArizona notified the city one day before the 30 notification period ended requiring Ice Arizona to formally do so.

What does it all mean? Well, Mr. Sturgis was correct. The assignment of rights, including the $15 million a year for arena management, goes to Fortress and the NHL. That raises other questions. If the $15 million a year is going to their lenders and not IceArizona, how is IceArizona earning enough revenue to cover the arena operations and maintenance costs? The money they borrowed from these two entities went to pay the purchase price of the team. That means IceArizona must rely on revenue sources of ticket sales, suite sales, a percentage of the concessions, the first $20K in every event’s parking revenues, NHL revenue sharing (which are rumored to be as much as $20M a year for the team) and media contracts. It will be difficult to plug in the numbers for these revenue streams as some of it is proprietary. We will not get a full picture until after the end of the Fiscal Year, June 30, 2014.  It is generally assumed that annual O&M costs are in the range of $20 million a year. Don’t forget that IceArizona also must come up with $9 million a year to be paid to the city. The city budgeted $6 million a year for arena management, not $15 million and IceArizona has pledged to cover the difference — $9 million a year. That $9M comes from the ticket surcharge, parking revenues after the first $20K per event and if necessary, the supplemental ticket surcharge. Are these revenue sources enough to cover IceArizona’s expenses? We, the public, don’t know. I suspect IceArizona knows.

© 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.

Jan 14

11

Say what??

Posted by Joyce Clark on January 11, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale and the Super Bowl • Glendale elected officials • Glendale finances  | Tagged With: , , , , , , , | No Comments yet, please leave one

The Glendale City Council meeting of January 14, 2014 has 19 items. A majority of the items are on the Consent Agenda and are ratifications by council of action items such as approval of an action with APS to relocate an overhead line. There are 3 items of special interest: council approval of final dollar amount to Beacon Sports Capital Partners, Inc.; council approval of position reclassifications; and council approval to rent parking spaces from Westgate, LLC.

If you remember, Beacon Sports was hired to prepare an RFP and seek bids for the management of Jobing.com arena. Council originally authorized an unbudgeted amount of $100,000. The final bill came in at $125,425.43. The cost was $25,425.43 over the stated figure. Well, that’s $125,425.43 down the toilet as the responses to the Beacon RFP were ignored as council pursued and accepted the IceArizona bid of $15 million a year to manage the arena. A management amount that is a far cry from the bids proffered to Beacon and ignored.

The Position Reclassification includes council’s acceptance of all of Management Partner’s recommendations most of which will become effective July 1, 2014. Two reclassifications that are effective as of January 15, 2014 (the day after this meeting) are reclassifying a Secretary’s position in Field Operations to Assistant City Manager as well as reclassifying a Senior Budget Analyst in Finance to a Purchasing & Materials Manager. If you recall, council approval of reclassification allows the Human Resources Director to reclassify nearly every position in the organization. The Director’s decisions are final and not appealable or grievable.

Did you know that the city will be renting parking spaces at Westgate for the Super Bowl? Well, we are this time around. This is to fulfill the city’s obligation to provide 6,000 parking spaces within the Westgate area. Spaces east of 93rd Avenue and west of 95th Avenue go for $20 a pop. Prime parking spaces between 93rd and 95th Avenues go for $30 each. Total cost for parking spaces for the Super Bowl will be between $34,721.72 and $52,082.58. The rental tax is 3.4% and it is unclear whether it is included in the figures presented.

Not bad for a night’s work. Council paid over $125,000 for nothing, took away some employee’s appeal and grievance rights and will spend between $35,000 and $55,000 to fulfill its contractual parking for the Super Bowl. It’s enough to make you scratch your head and say, “Say what??”

© 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.

Dec 13

30

Happy 2014, Glendale!

Posted by Joyce Clark on December 30, 2013
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale and the Super Bowl • Glendale elected officials • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , , , , , , , , , | 1 Comment

As we prepare to enter 2014 it’s a good time to look at the major issues Glendale will face. Here is Glendale’s Top Ten for 2014:

  1. The winner for the coming year is Glendale’s financial future. The City Manager and Executive Finance Director will offer a series of options, some critical, some not, to right the situation. Will the city council grow a backbone and adopt some stringent measures that are sure to be unpopular with the general public?
  2. Will IceArizona be able to deliver on its promise of enhanced arena revenues to recompense Glendale for its annual $15 million dollar management fee? The $15 million annual fee coupled with another $12 million in arena construction debt repayment contributes to Glendale’s heavy financial burden.
  3. The Camelback Ranch area has never delivered on its promise to perform. When the recession hit all development came to a screeching halt. Will the city create n incentive strategy for development of the surrounding area? Its annual $13 million dollar debt construction repayment is yet another major financial burden.
  4. Will the Attorney General’s office investigation into former City Manager Ed Beasley and deals cut with former financial consultant Art Lynch and former HR Director Alma Carmicle result in charges being filed?
  5. What impacts will the arrival of the first of 144 F-35 aircraft have on Luke Air Force Base, Glendale and the surrounding West Valley area?
  6. Will the Arizona Cardinals continue to seek its dream of a bubble tent practice facility on Glendale’s Youth Sports fields? What about their desire for Glendale’s long-promised parking garage as a means of fulfilling its parking requirements as vacant land diminishes at Westgate?
  7. Will the new City Manager Brenda Fischer continue to fire employees as her solution to any future irregularities? Will a new round of internal warfare erupt between police and fire over the severely constrained city revenue pot of money as her empathy toward fire (her husband is/was a firefighter in Henderson, Nevada) becomes more evident?
  8. With November, 2014 city election for councilmembers in the Cholla, Barrel and Ocotillo districts bring new faces and new agendas and another shake up in the fragile council coalitions?
  9. Will the temporary city sales tax increase become permanent as a solution to Glendale’s financial mess? How will citizens react to the broken promise of its sunset in 2017? Will citizens see increases in all kinds of local taxes while experiencing a decrease in the level of services provided?
  10. How will the city find the money to pay for its hosting of the Super Bowl in 2015? A figure of $1.7 million dollars is unrealistic and doesn’t equal the amount spent by Glendale on its last Super Bowl hosting gig.

Lastly there is the unknown. There is always a new, unforeseen crisis. What will it/they be for Glendale in 2014? Councilmembers will continue to combat and to abuse one another and all of us. The City Manager will continue to offer policies to strengthen her power and there is no one on council to guard against it. Departments such as police and fire will vie for shrinking resources. New players and power brokers will emerge. All that can be said with any degree of certainty is that it won’t be a dull year. Thank goodness there will be plenty of fodder for upcoming blogs!

© 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.

Dec 13

16

Arena numbers confusion

Posted by Joyce Clark on December 16, 2013
Posted in City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , | 5 Comments

My blog produced a raft of emails indicating that I wasn’t very clear in my recitation of arena numbers. Here’s an attempt to clarify:

We will not know about parking revenues until January 31, 2014 because that number is due quarterly per the arena management agreement and will reflect October-November-December (4th quarter of Fiscal Year 2013-14) parking surcharges.

However, there is a line item on these monthly reports that troubles me. In none of the monthly reports does it indicate that IceArizona is depositing Supplemental Ticket surcharge revenue ($1.50 per ticket) into an escrow account.  It is an escrow account designed to supplement revenues to the city (If needed) to try to make the city whole for $9 million dollars. You see, this Fiscal Year 2013-14, the city council budgeted $6 million for arena management (keep in mind nothing is budgeted for FY 2014-15 because the budget has not been set or approved  by council and will not be until June 2014). Since the city only budgeted $6 million dollars of the $15 million dollars needed to pay IceArizona the arena management fee, the idea behind the surcharges and fees was to earn an additional $9 million dollars for the city. That would hopefully make the city whole for the $15 million dollars a year to IceArizona. If the $9 million wasn’t generated the Supplemental Ticket surcharge of $1.50 per ticket was to be given to the city to cover the short fall.  Here is the exact verbage:

Supplemental Surcharge

“9.1.3 Supplemental Surcharge. In addition, throughout the Term, a Supplemental Surcharge of $1.50 per Qualified Ticket (“Supplemental Surcharge”) shall be imposed by the Arena Manager for all Hockey and non-Hockey Events. The Supplemental Surcharge shall be deposited by Arena Manager into one or more an escrow accounts in the name of Arena Manager and the City, and shall be the property of each Party to the extent each is entitled to such monies under this Agreement as determined by Arena Manager and the City jointly (the Supplemental Surcharge Escrow Account”): provided that such deposits shall be held in accordance with and subject to audit pursuant to the procedures described on Exhibit “N” attached hereto (the “Supplemental Surcharge Procedures”). City shall have the right to draw upon the Supplemental Escrow Account within 60 days following the last day of each Fiscal Year, to the extent City received less than $9,000,000 in total revenue from operations at the Arena pursuant to this Agreement during the immediately preceding Fiscal Year (the “Deficit Amount”), as further described in the Supplemental Surcharge Procedures and in an amount not to exceed the total funds available in the Supplemental Surcharge Escrow Account at the end of such Fiscal Year. The funds remaining in the Supplemental Surcharge Escrow Account following payment of the Deficit Amount, if any, to City shall belong to Arena Manager free and clear of all claims of City and shall be disbursed to Arena Manager such that said escrow account is reset to a zero balance following the reconciliation pursuant to the Supplemental Surcharge Procedures at the beginning of each Fiscal Year. The Supplemental Surcharge amounts imposed by the Arena Manager which are the property of Arena Manager pursuant to this Section 9.1.3 are pledged to the City, as more fully described in the Supplemental Surcharge Procedures, to the extent of the City’s interest, with the City claiming no interest in the balance of such account. The Supplemental Surcharge Escrow Account shall be held in one or more (FDIC insured) accounts of the Arena Manager and the City jointly, at one or more Third Party financial institutions agreed to by the City and the Arena Manager. To the extent of any inconsistency between this Section 9.1.3 and the terms of the Supplemental Surcharge Procedures, the terms of this Section 9.1.3 shall control.”

Where are the Supplemental Ticket Surcharge numbers per month? There should be $8,206 for October; $101,644 for November; and $96,758 for December for a total of $206, 608 to date. So, where’s the money? Why no accounting in the monthly report? Why is there no indication that these funds have been deposited in an interest bearing escrow account? Could this be considered a breach of contract?

According to the Monthly Arena Revenues & Expenditures, Arena Lease and Safety & Security Agreements, a public document that will be used by staff in its presentation at the December 17, 2013 city council workshop on this issue, here are the monthly ticket surcharge revenues that are to be paid to the city. These are public figures provided by the city based on figures  provided by IceArizona. Here is the link: http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/121713-W05.pdf .

Month ending Sept 30, 2013:

Ticket surcharge Hockey ($3 per ticket)     $16,413 total revenue surcharge for 1 hockey game.

Divide $16,413 by $3 and attendance for this one game was 5,471.

Month ending October 31, 2013:

Ticket surcharge Hockey ($3 per ticket)    $203,289 total revenue surcharge for 7 hockey games.

Divide $203,289 by $3 and attendance total for all 7 games was 67,756.

Divide 67,756 by 7 games and average attendance per game was 9,679.

Month ending November 30, 2013:

Ticket surcharge Hockey ($3 per ticket)    $193,517 total revenue surcharge for 5 hockey games.

Divide $193,517 by $3 and attendance total for all 5 games was  64,505.

Divide 64,505 by 5 games and average attendance per game was 12,901.

Oops. I just checked the Coyotes website and it lists SIX games in November. Whose mistake is it? If it’s the city’s incompetence perhaps City Manager Fischer should fire someone else in the Finance Department. If it’s IceArizona’s mistake was it deliberate?

We’ve all heard the rumors about Anthony LeBlanc handing out 2,000 complementary tickets per game. Whether it’s true or not has no bearing on ticket revenues because they would be free tickets there would be no ticket surcharge. You attendance gurus out there better check your attendance figures because these are the numbers that come from IceArizona. After all, IceArizona wouldn’t low ball the numbers to the city only to exaggerate them for the media, would they? Nah-h-h-h-h.

By the way I ran into Mr. LeBlanc at a Coyotes game and had a few minute to quiz him on the numbers of the Coyotes deal. Mr. LeBlanc quite clearly stated to me that they needed attendance of 15,500 per game to “make it.” His number, not mine.

© 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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