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Joyce Clark Unfiltered

For "the rest of the story"

It has been 18 years and 110 days since the city’s pledge to build the West Branch Library.

The Glendale city council workshop of April 5, 2016 had 3 major issues up for discussion and direction by city council: the temporary West Branch Library; the pavement management program; and an introduction to the proposed new city owned arena manager.

Since I brought up parking for Heroes Park in my blog of April 5, 2016 entitled Glendale…fix the parking problem you created, it was definitely a topic of discussion. Erik Strunk, Director of Parks and Libraries, stated that they are working on temporary parking. He did not address the issue of Park Rangers sending people to park in adjacent neighborhoods or the safety issue of people crossing Bethany Home Road or 83rd Avenue to get to the park.

The final direction of the city council was to move forward with a temporary, 7500 square foot modular building. This action, of course, removes all impetus to ever build a permanent library structure. So, we in west Glendale, once again, get less — a 7500 SF modular structure half the size of Velma Teague Library in downtown Glendale.

The second item for discussion and direction was the city’s pavement management program. Currently the city spends $10 million annually to repair and maintain the city’s streets. Staff requested an additional $5 million a year. Ms. Vicki Rios, Interim Finance Director, presented a series of slides during the discussion. I bring two of those slides to your attention. This first one shows the city’s current debt service. The red, dotted line is the city’s secondary property tax revenue that is used to pay this form of debt. Please note that as of this year’s (FY 16-17) budget there is new debt capacity available…perhaps to build the west branch library? The new debt capacity is the difference between the red, dotted line and the sold green block depicting debt payments.

Current General Obligation debt

Current General
Obligation debt

Not so fast. Look at this second slide. It depicts current debt plus new, proposed debt.

Current debt plus new debt

Current debt
plus new debt

Note the Series 2016 debt depicted by the brownish square in the legend. That Series 16 debt is the $32 million the city is issuing next week to pay for the land and to construct parking on it to satisfy the city’s obligation to provide adequate parking for Cardinals’ football games. The orange, olive and blue areas above the brownish parking debt represent $5 million dollars a year in new debt for the pavement management plan. Note the red, dotted line which are funds used to pay the debt. Now there is no debt capacity available until Fiscal Year 21-22. With council’s approval of two items: the issuance of $32 million in debt for Cardinals’ parking and the $5million a year ($15 million total) for the pavement management plan there is no debt capacity to do anything else including building a permanent west branch library. The significance of these decisions is that there will be no debt capacity to build a west branch library for SIX more years until Fiscal Year 21-22. We will have waited for the west branch library for 25 years. There is no word to describe this situation other than disgraceful.

The last item was a public introduction of AEG as the proposed new manager of the city owned Gila River Arena. There was no mention of the Coyotes who continue to declare that they will move to some magical, undefined new facility somewhere else in the Valley. The reality is that AEG, as arena manager, the Coyotes and the city will have to come to terms in the meantime. I continue to believe if the Coyotes and AEG can come to agreement for a few years, why not long-term?

Under council requests for future workshops only one councilmember spoke, Sammy Chavira. He requested that the city present its travel policy and compare it to other Valley cities. What was more interesting is that Sammy, largely invisible these days, was cornered by an Arizona Republic reporter and questioned about his trips. Sammy’s only response was, “I want to stick to the policy to find out from now on – so next time, if you look at your policy, if you see anything, that you know that’s what we’re adhering to. What I want to do is I want to put something in concrete.” Say what? What did he say? Here is the link to the full story in the Arizona Republic: http://www.azcentral.com/story/news/local/glendale/2016/04/06/glendale-councilman-sammy-chavira-requests-review-travel-policy-after-council-trip/82631826/ .

I can see it now. Sammy’s defense is that he followed city policy. OK, so now it’s the city’s fault? Where is Sammy’s ethical and moral compass? In essence he is admitting that he took advantage of a policy. It’s the same as if there were a policy that said, thou shall not steal. Since the policy is so vague an argument could be there is no definition of the word “steal.” Sammy is playing word games but they won’t work this time. He is accountable for his actions. He should voluntarily reimburse the city for the nearly $25,000 he spent for trips to see the Pope, his buddy sworn into Congress, his excessive baggage claims and rebooked flights, and his two highly suspicious trips to California. Don’t hold your breath on this one.

© Joyce Clark, 2016

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It has been 17 years and 283 days since the city’s pledge to build the West Branch Library.

Two new items have been added to the city council agenda for Tuesday, October 13, 2015. They were added just before the close of business on Friday, October 9, 2015. They are agenda items 58 and 59. Both items are related to one another and call for city council approval the purchase of  99 acres at 91st Avenue and Bethany Home Road for $15,526,542.00 from the Pendergast family. The Pendergast family deserves the city’s thanks. They have lived in Glendale for generations and have roots here as well as a genuine love for the city. They have been involved in the life of Glendale for many years and have contributed their time, talent and money for the benefit of the city. I, for one, thank them.

I congratulate Interim City Manager Dick Bowers and the city council for this action. In this instance, the city has been proactive in solving a long standing problem, namely that of being required to build a city parking garage at Westgate for the benefit of the Bidwill family. The city is required to provide 6,000 parking spaces for football games as well as major events that occur at the University of Phoenix stadium. As land was consumed at Westgate for new development the proscription to provide those spaces became more and more difficult forcing council discussion to consider building the facility. With purchase of the Pendergast land there will now be more than enough land to satisfy that requirement without the need to build a garage.

That garage would have cost the city far north of the $50M acknowledged as the construction cost. Paying $15M for the land plus the cost of constructing a parking area on a portion of the land is far less costly than at least $50M for the garage. Voila! Suddenly there will be no need to build a Taj Mahal of a parking garage. The parking spaces will not consume the entire 99 acres. It is not known as of this date how much land would be required.

The balance of the undeveloped land provides the city an exciting opportunity to control a portion of its own destiny. With regard to the development of the portion unused for parking, the city might consider partnering with a Class A private developer. There are many advantages to doing so. Among others, it could mandate final approval for any development that might be proposed. If it is developed commercially I would suggest that with over 2,500 existent apartment units (with another 4,000 approved) and over 4,000 homes close by, the city should use its best efforts to create a neighborhood shopping district with a grocery store and dry cleaners. There is no grocery store in west Glendale and those sales tax dollars go to Phoenix and Peoria. The closest dry cleaners is minimally 4 miles away in other West Valley cities.

No matter what the future holds for this land, kudos to all those involved with a special and most warm thank you to the Pendergast family.

© Joyce Clark, 2015

FAIR USE NOTICE

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Tomorrow, July 13, 2015 the Glendale city council will meet in executive session at 11 AM. What is the topic? Your guess is as good as mine. No one is talking and how could they? Senior staff has decided (perhaps wisely) that council will not know the subject matter of the e session until the actual meeting. The only other period of time staff went to such lengths was when Phil Lieberman was on council. It was suspected but never proven that he leaked e session material on a regular basis to Canadian folk during previous Coyotes’ buyer negotiations. This time the alleged leaker(s) may be Councilmembers Sherwood and/or Chavira spilling all to the owners of the Coyotes.

It may be that senior Glendale staff will present a Coyotes offer to the city council. There are events that hint that this may be the topic. Several councilmembers were scheduled last week for depositions with regard to the Coyotes law suit. Abruptly those deposition sessions were cancelled. Was it because the city’s attorneys were in talks with the Coyotes’ attorneys? The Coyotes payment of $1M bond and the city quarterly arena management payment of $3.75M are linked together and are to be paid concurrently. Neither has been paid to date.

If this is indeed what occurs tomorrow council will have several options. They do not vote in workshops or e sessions but do provide direction for staff. They can provide direction to: 1. Accept the offer; 2. Reject the offer; or 3. Send the offer back to the Coyotes with a counter proposal.

If you look at the council e session agenda for this meeting it is rather specific:

“A. The City Council will meet with the City Attorney for legal advice, discussion and consultation regarding the city’s position in pending or contemplated litigation, including settlement discussions conducted in order to avoid or resolve litigation. (A.R.S. § 38-431.03(A)(3)(4))

“B. Council will meet to discuss and consider records exempt by law from public inspection and are specifically required to be maintained as confidential by state or federal law. (A.R.S. § 38-431.03(A)(4))”

A.R.S. § 38-431.03 (A)(3)(4) is also pretty specific:

“(iii) discussion or consultation for legal advice with the city’s attorneys (A.R.S. § 38-431.03(A)(3));

“(iv) discussion or consultation with the city’s attorneys regarding the city’s position regarding contracts that are the subject of negotiations, in pending or contemplated litigation, or in settlement discussions conducted in order to avoid or resolve litigation (A.R.S. § 38-431.03(A)(4));”

It is possible that they will discuss the city’s current law suit with Vieste over recycling issues at the city landfill but it doesn’t seem probable based upon the events of this past week.

On another topic, the University of Phoenix Stadium hosted a soccer cup game today, July 12, 2015. A friend happened to have lunch at Westgate today. The friend related that the Westgate parking areas were jammed and they finally found a parking space literally in the “back forty” of one of the free lots. They almost decided to leave assuming that if the parking lots were filled, so were the Westgate restaurants. That was not the case. Their restaurant, as well as others, was nearly deserted. Who was parking in all of those free Westgate spaces? They learned it was the soccer game attendees at the University of Phoenix stadium.

The stadium has since its inception relied on Westgate parking spaces for football games and major events. Per the agreement with the Arizona Sports and Tourism Authority (AZSTA) the city is responsible for providing 6,000 parking spaces for the football games and major events such as the Super Bowl and Fiesta Bowl. The city has always fulfilled its commitment to do so. Now AZSTA and the Bidwills are pressuring the city to build a $46M parking garage and the city is acceding to that pressure. Last fall senior staff brought forward a new capital improvement project – the infamous and very expensive parking garage at Westgate. Instead of building a library or a swimming pool as a capital improvement project Glendale taxpayers will be footing the bill for a Taj Mahal of a parking garage. You can count on its cost mounting. Don’t be surprised if the final bill is way north of $50M.

Glendale’s taxpayers are not happy about this. They ask why AZSTA and the Bidwills don’t build their own parking garage. They are the ones who need it. They are aware that the Bidwills sought and gained city approval for the development of Sportsman’s Park East and West. Those development plans include approval for several parking garages. Why don’t the Bidwills invest in a parking garage to meet the demands of their patrons attending their football games? Is it because they don’t want to pay for it? Is there a trigger threshold or event that requires the city to build this parking garage? What is it and has it occurred? Does the parking garage have to be as large and grand as staff presented or can it be scaled down to meet a minimal requirement? Can we wait until Glendale’s financial picture is stronger and can absorb yet another debt payment? When is the city going to prioritize the needs of its citizens first? So many questions – met with…silence.

© Joyce Clark, 2015

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.

It has been 17 years and 119 days since the city’s pledge to build the West Branch Library.

Before we delve into the world of finances used to host the Super Bowl remember that the city actually hosted 3 major events at the stadium in 2015: the Fiesta Bowl, the Pro Bowl and the Super Bowl.

We’ll look at the murky finances of hosting the Fiesta Bowl. It is the only one of the three major events for which there is any mechanism of even partial financial reimbursement. When the University of Phoenix stadium opened on August 1, 2006 the city entered into an agreement not with the Arizona Sports and Tourism Authority (AZSTA) but with the management company, Global Spectrum, which AZSTA hired to manage the stadium. The Fiesta Bowl Committee rents the stadium and contracts with Global Spectrum to manage the event. The agreement between Global Spectrum and the city requires police and fire service partial reimbursement. Global Spectrum reimburses the city for only these two services.

The two latest agreements between the parties are dated October 22, 2013 for fire services and April 10, 2014 for police services. In the 2013 agreement Global pays an hourly rate of $40.00 for fire services. In the 2014 agreement Global pays an hourly rate of $51.10 for police services with provision for an annual increase of 3%.

From the March 20, 2012 city council budget workshop minutes we learned the following, “Councilmember Lieberman asked if the city paid the salary of all the officers from other municipalities that come to help them in trafficking for events such as the Fiesta Bowl. Assistant Chief Greg Dominguez, explained the city does have an account that was budgeted for the staffing that was specific to the Fiesta Bowl. Therefore, the city does cover salaries for those events.”

In response to my Public Information Request I received the following information from the city for police costs for the Fiesta Bowl:

  • Police billable hours are 1,152.38 and billable wages are $53,671.63
  • Police non-billable hours are 1,287.89 and non-billable wages are $70,765.20
  • Total police hours are 2,440.27 and total wages are $126,436.83

Yet another city document I received entitled 2015 YTD (Year to date) Budget Control Report Details listed police expenses for the Fiesta Bowl of:

  • Temporary pay of $36,640.00
  • Overtime pay of $43,999.07
  • Emergency Service pay of $880.00
  • Fire & Liability insurance of $727.51
  • Professional and Contractual to Airwest Aviation Academy of $1,174.50
  • Line Supplies (Insight, Zoro tools, Best Buy and Motorola) of $3,926.97
  • Total of these line items is $87,347.06

With no further clarification from the city I have to assume that $87,347.06 is in addition to the total wages reported of $126,436.83. These two city generated reports total $213,783.89 for which the city received reimbursement for billable hours and wages of $53,671.63. These reports confirm that city paid at least $160,112.26 from its General Fund to host the Fiesta Bowl. I suspect that this figure is low because in the city’s FY 2015-16 budget $245,975 is the figure used.

Fire costs for the Fiesta Bowl are:

  • Hours of 425.25 and wages of $26,953.18
  • There is no distinction between billable and non billable hours and wages

In its 2015 YTD Budget Control Report Details fire expenses are listed as:

  • Overtime pay of $19,330.61
  • Emergency Service pay of $2,200.00
  • Fire & Liability insurance of $296.24
  • Line supplies (Insight, Lowes, Salsa Blanca, Shane’s Rib Shack, Home Depot, AGP Propane, Segway of Scottsdale, RV Storage, Roadrunner Oxygen, Cabela’s, Office Depot) of $6,999.14
  • Total of these line items is $28,826.99

The two city generated reports total $55,780.17. This tracks with the FY 2015-26 budget of $58,816.00 for fire. Note that fire does not make any budgetary distinction between billable and non-billable hours and wages. Since it tracks so closely to the budgeted amount it may be safe to assume that this cost reflects non-billable hours and wages.

In yet another city generated 2015 YTD Budget Control Report for Transportation we see:

  • Overtime pay of $74.88
  • Fire & Liability insurance of $191.25
  • Professional & Contractual for shuttle services of $26,049.40
  • Line supplies (Culver’s) of $60.74
  • Total of these line items is $26,376.27

After reimbursement for some public safety costs the best estimate of total non-reimbursable costs for the Fiesta Bowl paid by the city’s General Fund is $301,783.99. But this figure is only attributable to police, fire and shuttle services.   Remember there are other costs not tracked by the city. Items not tracked are salaries, straight time and overtime in transportation, sanitation, marketing, building safety plus the use of city equipment. How much did they use in time, equipment and material? We don’t know and guess what; neither does the city because it doesn’t track any of these additional costs. That makes my assumption as to Fiesta Bowl costs as reasonable as theirs.

The figure to host the Fiesta Bowl is $300,000 on the low end and about $500,000 on the high end. It is reasonable to assume that it is closer to $500,000 when the hidden, untracked, unreimbursed expenses are identified.

Why doesn’t the city track all costs for these major events? Pick your reason. It could be laziness or sheer incompetence. Conspiracy theorists will say that the city doesn’t want its citizens to know. They believe, and they may be right, that Glendale residents would be outraged to learn exactly how much the city’s role as a sports mecca costs. Residents may realize that sports hosting costs remove available revenue to upgrade or to construct amenities that enhance a city’s quality of life…and that is a bigger deal than a football game.

Next up the cost of the Super Bowl (and Pro Bowl).

© Joyce Clark, 2015

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.

A quick note before taking a look at the NFL bid requirements for a Super Bowl. Yesterday I wrote about Glendale Mayor Jerry Weiers’ inability to purchase tickets for the Super Bowl taking place a mere 5 days from now in Glendale. Today the Arizona Republic has an editorial very much in agreement. They refer to the NFL’s actions, or better yet, inaction, as “petty.” On this assessment I disagree. The pettiness is owned by the Bidwills. If they wanted Mayor Weiers to have Super Bowl tickets, the deed would already have been done.

On to the Super Bowl bid process. There are two links that provide the NFL requirements for hosting a Super Bowl. The Minneapolis Star Tribune has the entire 153 page document has a limk. Here it is:  http://www.startribune.com/local/minneapolis/262253921.html . Glendale, years ago, posted only that portion of the bid document (43 pages) relevant to a host city. Here is the link: https://www.glendaleaz.com/clerk/Contracts/8806.pdf . I am not going to go into excruciating detail about the requirements. You have the links to read the entire bid for yourselves.

It is interesting to note that there are several phrases very, very liberally sprinkled throughout the bid specifications. The first is “at no cost to the NFL.” The second is “made available to the NFL rent-free.” The third is “provided by the Host Committee at no cost to the NFL.” The fourth is “discounted to the NFL.” The last is “the NFL must have exclusive rights at no cost to the NFL.”

Host cities go to great lengths to get noticed by the team owners in the hope that they will win the bid. In 2011 Arizona presented each team owner with an IPad, customized with each team’s logo and already loaded with a video presentation touting the Arizona bid. In 2012, Indianapolis had children deliver its bid to each of the team owners. Florida promised the owners yachts; Tampa offered all of the owners a golf outing with Arnold Palmer; and Texas just outright offered a million dollars to cover the Super Bowl game day costs. Here is a sampling of the ‘must haves’ included in the bid:

  • Provide 35,000 free parking spaces
  • Free billboards across the Valley
  • Receipt of all revenues for the game’s ticket sales
  • Installation of NFL preferred ATM’s at the stadium
  • Presidential suites, at no cost, in high-end hotels
  • Free access to three high-end golf courses in the summer or fall before the game
  • Free curbside parking at the NFL house
  • Free access to two top quality bowling venues

And the list goes on:

  • Temporary stadium seating must be 19” wide
  • Seating for the hoards of media must be 20” wide with an accompanying 24” clear, workspace
  • Grass field must be re-sodded for the game; and the NFL can remove chunks of it after the game, for resale, if it wishes
  • The stadium must be available to the NFL 4 weeks prior to Game Day and 4 days after; exclusive use for the NFL is 2 weeks prior
  • NFL has complete and exclusive control for 2 weeks prior to game of all club, restaurant, meeting, and hospitality facilities at the stadium
  • The host city must guarantee that its police, fire, permits, etc. are the top priorities
  • NFL has exclusive right to sell game day programs and novelties at the stadium
  • NFL will receive the stadium’s percentage from the sales of food, beverages and catering
  • Only NFL sponsor’s products will have logos seen on all products; all other logos are to be covered or removed
  • NFL allotted suites get a 30% discount on food and beverages
  • NFL requires 300 top quality buses; 65 limos (no older than 5 years); 5 premier quality buses and 125 “school” buses
  • Hotels where the teams stay obligated to televise the NFL Network for a year before the Super Bowl

There’s far more but this alone is enough to make one’s head spin. What does the NFL expect its game day costs to be? About $2.5 million dollars but let’s be generous and double that to $5 million dollars. For a several million dollar investment it earns billions. Yet it will not reimburse host cities for their costs. How greedy can it get? Oh, and the Host Committee must stipulate which of the NFL game day costs of $2.5 million dollars it will cover.

Did you know the Arizona Host Committee, just like the NFL, is a 501 (c) 6 non-profit organization? Its contributions are not deductible as charitable contributions but they can be deducted as a trade or business expense if ordinary and necessary in the conduct of business. Don’t you think every one of the businesses that contributed to the Arizona Host Committee had their CPAs and attorneys justify their contributions as deductions to the IRS? You bet they have.

Did you know that the Bidwills bought Tom’s Tavern in downtown Phoenix? It’s being operated by Rojo Hospitality, a division of the food company the Bidwills created to serve the University of Phoenix stadium. No wonder Michael Bidwill is so ecstatic to see NFL major events occurring in downtown Phoenix rather than in Glendale.

Why is Michael Bidwill feuding with the City of Glendale? He wants the City of Glendale to build a parking garage in the Westgate area at a cost of $25 to $35 million dollars. Why the need? Every inch of land surrounding the footprint of the stadium has been approved for development as the Bidwill’s Sportsman’s Park East and Sportsman’s Park West. These approved plans call for hotels, apartments, offices and retail — some 200’ feet tall, twice the height of the stadium (to date unapproved by the FAA). Of course those plans call for parking but it is parking dedicated to the structures to be built while removing all of the football parking space surrounding the stadium. That football dedicated parking has to be replaced and what better dime to use than the city’s.

If all of this doesn’t make you angry, nothing will. Perhaps someday the general public (read taxpayers) will realize in reality, they pay for the Super Bowl, and not just with tickets to the game or the merchandise they buy. I still call for all of the potential host cities to form their own league (or consortium), present a united front to the NFL and say “enough already.”

©Joyce Clark, 2015

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.

It appears that Glendale cannot catch a break financially. Camelback Ranch opened in 2009 as the new Spring Training home of the Dodgers and White Sox at a cost to Glendale of $158 million: The ballpark cost $121 million, plus $37 million for off-site infrastructure. Glendale knew that reimbursement from the Arizona Sports and Tourism Authority (AZSTA) would be a long time in coming but at least it knew that in the future it would be partially reimbursed for its investment (if I remember correctly, it was 70% of the cost) .

AZSTA utilized a 2000 voter approved tax on car and hotel rentals to pay for the construction of the University of Phoenix Stadium and various Spring Training facilities in addition to reserving a portion for youth sports. It issued bonds for stadium construction that are paid from the rental taxes.

On Tuesday, June 17, 2014 Maricopa County Superior Court Judge Dean Fink ruled that the car rental tax was unconstitutional because the tax was being used for what he determined were impermissible uses. Here is the link:  http://www.azcentral.com/story/money/business/consumer/call-12-for-action/2014/06/18/judge-strikes-rental-car-tax-stadiums/10723905/ .

There is a hotel industry suit waiting in the wings claiming that it’s tax is also unconstitutional. No doubt there will be an appeal of all rulings related to this issue so it may be at least a year or more until there is final resolution.

If the car rental industry and the hotel industry finally prevail Arizona will be forced to rebate all of the tax it collected to those industries. It will be an amount way, way north of $150 million. This action raises a host of questions. Will AZSTA come up with another taxing mechanism to replace the unconstitutional one? Will it take it to the voters for approval? Will it renege on its obligations? Will cities with new, spring training facilities be able to sue AZSTA for breach of contract if it fails to reimburse them? The implications of such a ruling, should it be upheld, are breath taking.

For Glendale it is not catastrophic in the short term because it knew AZSTA’s reimbursement was some time off. But, if AZSTA does not fulfill its obligation to reimburse Glendale and it is solely responsible for paying off the construction debt of approximately $17 million a year, it becomes another financial obligation that bond rating agencies will take into consideration when rating Glendale’s ability to pay its massive debt. This result, if not reversed on appeal, provides no light at the end of Glendale’s long and dark financial tunnel.

 © 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.

On April 22, 2014 on a vote of 16-10 HB 2547 was rejected in the Arizona Senate. It would have partially reimbursed Glendale for public safety expenditures related to hosting the upcoming Super Bowl in 2015. This is an event that generates large sales tax revenues all over the state and especially in the Phoenix Metro area.

Here are realities some Arizona senators conveniently ignored. The state, the county, the Arizona Sports and Tourism Authority (AZSTA), the Arizona Super Bowl Host Committee and the Bidwills all breathed a sigh of relief when Glendale stepped up to the tune of $35M for infrastructure improvements surrounding the stadium and accepted construction of the University of Phoenix Stadium in Glendale when no other city in the Phoenix Metropolitan area was willing to do so.  Glendale held its tongue when publicly slapped in the face by the naming of the stadium as the University of Phoenix Stadium.

Glendale looked forward to its first Super Bowl hosting experience and assumed that new sales tax revenues would cover the costs associated with being a host city. It was a pilot project and learning experience. Glendale did an outstanding job of hosting and has been praised as a model experience. Glendale spent $2.2M in 2008 as a host city. It earned sales tax revenue of $1M losing $1.2M in the process. It was an expensive lesson.

If anyone believes that public safety was the only cost to Glendale for hosting the 2008 Super Bowl, they are fools. Don’t forget at a minimum to include sanitation and transportation. Glendale sanitation had extra duties in assuring that the venue was clean and neat for a minimum of two weeks.. Glendale’s transportation staff coordinated all of the transportation logistics during the NFL Experience and on game day. Then there were the countless hours of Glendale staff time in preparation for the event and the countless meetings with NFL and Arizona Host Committee officials. Glendale put a lot of skin into the 2008 game yet it was cities like Scottsdale, Tempe and Phoenix that reaped gorilla sized sales tax revenues.

Some of these Arizona senators were lied to with impunity. They were told that Glendale made money on the 2008 Super Bowl. I was there. I was on the city council. I saw the figures. Glendale did not make money. I was one of only two councilmembers who voted against hosting it again in 2015 for the very reason that Glendale lost money. I said publicly at the time that without a reimbursement mechanism in place I could not support hosting it again.

If anyone believes that $2M will cover the costs of hosting the Super Bowl in 2015, next year, they, too, are fools. City Council intended to build up a fund of $4 to $6M over 6 years to cover the anticipated expenses. Everything from gas, to salaries, to vehicle use, to supplies has gone up. Then council became preoccupied with the Coyotes mess and was raped by the NHL to the tune of $25M a year for two years. The set aside fund never materialized.

Finally, this year Glendale crafted a bill to recapture its costs as a host city. The original figure requested was $4M and it watched as the bill was steadily watered down to $2M accepting that something was better than nothing.  In the meantime AZSTA, the Host Committee and the Bidwills came up with their own bill requesting $10M. It never made it to the Arizona House of Representatives’ floor for a vote. It died an ignominious death.

So where were they? Why didn’t AZSTA, the Host Committee and the Bidwills buck up and support Glendale? When their bill died did they just pick up their marbles and leave the fight? You bet they did. They view Glendale as a red-headed stepchild  – a child that doesn’t play well with others. After all, how dare Glendale not make its hotels bow to the pressure and cap their room rates? They blamed Glendale for not dictating terms to private hotel entities. They also claimed, falsely, that Glendale would not provide the necessary, stipulated parking needed for game day. Not true but in their view Glendale, quite simply, had become a pain in their butts.

Mayor Weiers and Vice Mayor Knaack publicly acknowledged at the April 22, 2014 council meeting that Glendale cannot continue to absorb the costs of hosting the Super Bowl without reimbursement. They made it quite clear that it is an unsustainable proposition. I applaud the fact that they have put everyone on notice and unless a reimbursement mechanism is created Glendale will not be in the business of hosting future Super Bowls. It’s about time. It’s nice to finally have some public company on this issue. Way to go Mayor Weiers and Vice Mayor Knaack. The ball is in AZSTA’s, the Host Committee’s and the Bidwill’s court. It’s their turn to play nicely and to acknowledge that Glendale is a valuable asset to them. After all, they can’t pick up their marbles (er, stadium) and go away, can they? Ironic, isn’t it? They may have cooked their golden goose.

© Joyce Clark, 2014

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jobing.com arenaFor months on end during the campaign of 2012, Glendale citizens were told by candidates for elected office, the Goldwater Institute, the opposition to any deal in the form of Ken Jones, et.al., and the media that Glendale would not be paying any Coyotes team buyer/owner a management fee but rather it would be a subsidy to prop up team losses. After all, if all of these entities said that, it must be true.

Oh really?
Having dealt with the ongoing Coyotes saga since Jerry Moyes declared bankruptcy in 2009 (after all, he asked the City for a management fee that would really cover team losses, didn’t he?) I have collected all kinds of information on arena management fees. In fact what I have to share with you may be considered downright boring. So, if you have trouble sleeping at night this could be your cure.
Let’s begin our Arena Operations and Maintenance Course 101 with the management deal between the City of Glendale and Greg Jamison. Not the latest deal renegotiated between the City and Jamison that would have dropped the management fee to $6M for this year but the original deal before finances in the City were discovered to be bad…very, very bad.

Year by year it went like this:                                         COG Ls Mgmt Agree 2012
Year 1……….……………….$17 million
Years 2 thru 4…………….…$20 million
Years 5 thru 7……………….$18 million
Years 8 thru 11………………$16 million
Years 12 thru 14…………….$15 million
Years 15 thru 19………….…$10 million
For an average of $15 million a year.

All of this nifty information can be found in a 90 page document entitled Arena Lease and Management Agreement by and among City of Glendale, an Arizona municipal corporation (the “City”) and Arizona Hockey Arena Manager, LLC, a Delaware limited liability company (the “Arena Manager”)and Arizona Hockey Partners, LLC, a Delaware limited liability company (the “Team Owner”) Dated as of _____________, 2012. The title is almost as long as the document and one of several documents related to the City Council originally approved lease management agreement in June of 2012.

Would the City have received ANY revenue in return? Yes. The team would pay a base rent of:
Years 1 thru 5 –     $500,000 per year
Years 6 thru 12 –   $650,000 per year
Years 13 thru 19 – $800,000 per year
(pp. 49-50, Sec 10.1.1. – 10.1.6.)
If you think that’s not very much, read on. Later we will take a look at the University of Phoenix Stadium, the arena’s southern neighbor.

The City would also have received a City surcharge per ticket of:
Years 1 thru 5 of $2.75 per ticket
Years 6 thru 19 of $3.00 per ticket
(p. 48, Sec 9.1.2.a a and b)
At an average attendance of 10,000 per night for 40 nights at $2.75 per ticket, that’s an additional $1.1M per year and at $3.00 per ticket it’s $1.2M per year. Perhaps you consider this to be chump change.

Then there are the intangibles that are more difficult to estimate. In a recent news article of Nov. 13, 2012 entitled Glendale businesses cope with games lost to NHL lockout by Sarah Pringle of the Cronkite News, Aaron Hernandez, Manager of McFadden’s, stated that his restaurant was losing between $18,000 to $25,000 in revenue per hockey game missed. At a city restaurant tax rate of 3.2% the City loses approximately $23,040 of sales tax revenue for 40 nights of hockey. And that’s just ONE restaurant. Multiply that figure at the Yard House, Kabuki, Margaritaville and the dozen or so other restaurants located at Westgate. Now add another figure from the same news report. The City loses approximately $60,000 per game from the arena alone in sales tax revenue. For 40 games the City would have realized another $2.4M. I cannot even begin to estimate the number of room nights lost and their sales tax impact. The numbers are beginning to grow. Oh, I almost forgot. The City would also have received 15% of the sale of arena naming rights.

After renegotiation with Mr. Jamison, the lease management agreement became even better for the City. It included penalties for games not played in the arena, set a minimum number of events and added an incentive for events achieved over the minimum number. However, my reasoning for looking at the original agreement is that I have a feeling that we may see something very similar if there is an Anthony LeBlanc/Matthew Hulsizer deal.

So, to answer Councilwoman Alvarez’ persistent question, “Does the arena make any money?” The answer, dear woman, is “yes.” What she failed to ask is, “Is the arena profitable for the City?” The answer is clearly “no.”

UofP stadiumHowever, if that is her only measure of success then the University of Phoenix Stadium is in trouble. The UofP Stadium is a Maricopa County facility, voter approved. The County created the Arizona Sports and Tourism Authority commonly known as AZSTA to run the stadium. Each year the State’s Auditor General is charged with auditing AZSTA’s finances. The latest report available is online in the 2010 Audit.

AZSTA receives its operating revenue from normal operations of the facility, including rental payments, concessions commissions, and facility use fees for all events held at the facility, except Cardinals games. It also receives the majority of its revenues from a Maricopa County hotel bed tax AZSTA Cover Sheetand car rental surcharge, state income taxes paid by the Cardinals’ corporate organization, its employees, and their spouses, and sales taxes generated from events held at the facility (pg 4). So it is different from Glendale’s arena as the bulk of it revenues come from a hotel bed tax and car rentals, both of which are fueled by tourism. The majority of Glendale’s arena revenue is generated from sales taxes both inside and outside the arena. Responsibility for payment of operating and maintenance expenses are also different from each other. Glendale’s arena manager would be responsible for payment of operating and maintenance expenses and come from the management fee. If the fee was not adequate the arena manager would be responsible for making up any shortfall. In the case of the UofP Stadium AZSTA pays a management fee to the current manager, Global Spectrum, and AZSTA additionally pays all stadium operating and maintenance costs.

What is the management fee paid to Global Spectrum by AZSTA? An average of $300,000 a year (p. 52 of State Audit Report, 2010). Well, that seems a lot more reasonable than the $17MAZSTA Mgr fee Glendale would pay to an arena manager. Remember, the $17M covers all operating and maintenance costs for the arena. The Global Spectrum fee does not.

Then we must ask what the O&M costs are and who pays them? AZSTA pays them and according to the State Audit Report, Appendix, pg. 12, Table 3 the expenses are considerable and the stadium does not generate enough revenue to cover its expenses.

AZSTA Rev ExpIn 2008 stadium revenues were $13.1M and stadium expenses were $22.7M for a loss of $9.6M.

In 2009 stadium revenues were $10.3M and stadium expenses were $19.9M for a loss of $9.6M

.In 2010 stadium revenues were $23.2M and stadium expenses were $28.2M for a loss of $5M.

As noted previously the Coyotes base rent begins at $500,000 a year. The Cardinals, on the other hand, paid $265,300 in rent for 2010. Their rental payment escalates at the rate of 2% per year. Another interesting bit of information is that in 2007, the year the stadium opened, there were 179 events with a total attendance of 499,699. By 2010 the number of events had dropped to 101 and attendance for the year had also dropped to 325,185 (p. 35 Table 7).

So, there you have it. If it were up to Councilwoman Alvarez and her ilk, the stadium should not host the Cardinals and a new stadium manager, who “would make money”, would be hired.

In Part II I will look at the City of Seattle and their 2012 Memorandum of Understanding for an arena as well as other venues nationally- what they pay and what they don’t pay.

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