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Joyce Clark Unfiltered

For "the rest of the story"

Jun 14

4

What’s a handshake worth?

Posted by Joyce Clark on June 4, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , | 1 Comment

Caitlin McGlade, a reporter for the Arizona Republic, has a story on June 4, 2014 regarding a debt that IceArizona allegedly owes to the PR firm of Rose+Moser+Allyn (RMA). Here is the link: http://www.azcentral.com/story/news/local/glendale/2014/06/03/coyotes-owner-sued-deal/9942991/ . The PR firm has filed suit in Maricopa County Superior Court,”arguing that the team stiffed them on nearly a quarter of a million dollars.”

It seems that in August of 2013 after IceArizona had successfully secured the $15 million annual management arena contract from Glendale, it wanted to forestall any type of Coyotes referendum effort that would lead to an election on the issue. IceArizona hired RMA and promised to pay a base fee of $25,000, provide two front row tickets to eight hockey games per season and pay $250,000 over five years as a sponsorship fee to the Scottsdale Polo Championships (an event owned by the PR firm). It appears that the IceArizona check for the base fee of $25,000 bounced. It also appears that IceArizona is not disputing the facts of the deal but rather is claiming that there was a caveat that the polo sponsorship was supposed to bring value to IceArizona and it has not done so. That appears to be the basis of their reasoning for reneging on the $250,000 sponsorship fee.

What is interesting is that this deal was a “handshake” deal agreed to by all parties verbally and in email exchanges. Don’t you think RMA’s first clue that there might be problems with IceArizona would have been the bounced $25,000 check?

Didn’t RMA realize that IceArizona’s modus operandi appeared to be reliance upon everyone else’s money but their own? After all, the IceArizona owners put comparatively little of their own money up to buy the team. Instead they took out huge loans from Fortress Investment Group and the National Hockey League. IceArizona is in debt up to its eyeballs and the interest on that debt is being covered by Glendale every year in the form of the $15 million payment for arena management. Glendale has been directed by IceArizona to send the money directly to its lenders.

This suit promises to be fascinating but ugly. Rose+Moser+Allyn is a smart and saavy PR firm that has the capability to do a lot of damage to IceArizona’s reputation (such as it is). You would think IceArizona would settle out of court. If that happens RMA would be well advised to get a Cashier’s check or better still, cash.

© 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.

May 14

27

A coat with many pockets, Part VI

Posted by Joyce Clark on May 27, 2014
Posted in Camelback Ranch Spring Training Facility • City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , , , , , , , | 5 Comments

This is the last blog in a six part series about Glendale’s debt. In previous blogs we explored the different kinds of debt, how those debts are paid and the purposes for which each debt was created. Some debt such as Enterprise Fund debt, Highway User Revenue Fund (HURF) debt, Transportation debt and a portion of the General Obligation (G.O.) debt are reasonable debt. A portion of the G.O debt could be characterized as imprudent and unnecessary debt. The Municipal Property Corporation debt, in hindsight, is unnecessary debt created to fulfill the commonly held vision of former Mayor Scruggs and former City Manager Beasley.  

The purpose of this exercise is to manage Glendale’s debt by paying it down or eliminating portions of it. Very simply the city’s expenses are greater than its revenues. The result has been to strip the city bare and reduce services to its residents (such as reduced library days and hours) because the debt is absorbing revenues that could be used for other purposes. When a mistake is made it is better to accept accountability, rectify it and move on. A city is required to do the same.  

A simple example might be that you decide you want a new car. You don’t need a new car. The old one is fine but you have decided you must have a new car. You buy a Tesla (extravagantly expensive) just because you want it. However, to make the payments you cut back on food, utility expenses and other necessities. You end up eating beans and rice every day, live without air conditioning and stop using doctors but, by God, you have the car of your dreams. You may be comfortable with your decision but the rest of your family may not be so happy especially if they are not allowed to weigh in on its purchase. One day your child is ill and the family learns that you stopped making medical insurance payments. If it is a decision that affects only you, fine, but it’s not right to obfuscate when that decision affects others without their buy-in. In Glendale’s case it is the residents of the city many of whom are not fine with past decisions that incurred tremendous debt and have resulted in a diminishment of their services.  

Before I go too much further I wanted to share a newspaper clipping that I received. A scant 11 years ago this is what the Arizona Republic reported about Glendale’s finances:  Gl finances 3

By September of 2003, former City Manager Dr. Martin Vanacour had resigned (that’s a whole ‘nuther story) and Ed Beasley had been appointed by City Council. Make no mistake, Fiscal Year 2003 was Vanacour’s budget and Beasley never attributed its success to Dr. Vanacour’s management.

I hope Dr. Vanacour will not take offense if I refer to him as Marty. I respected and admired Marty a great deal. He was and still is, highly respected by his peers. Marty was an excellent city manager and was also fiscally conservative. I genuinely liked Marty. He was approachable and respected confidences. Sometimes he reminded me of a Buddha or sphinx as he would sit stoically, listening to my latest series of questions, comments or rants. 

There were a few, alas an important few, who wanted new management. They wanted someone who would lead Glendale into becoming the “new” Glendale acknowledged by all as THE Sports and Entertainment city. That someone chosen to be the new City Manager was Ed Beasley. Between 2003 and 2009, on former Mayor Scruggs’ and former City Manager Beasley’s watch all of the current MPC debt was incurred.  

The MPC debt is killing Glendale financially. This debt is paid out of Glendale’s General Fund because MPC debt is paid from sales taxes. Sales tax monies are received and accounted for within the General Fund. It should be the prime imperative for the city council to reduce or remove MPC debt by any means possible as quickly as possible. The elimination of MPC debt frees up General Fund money for other purposes such as restoration of library hours or other basic services Glendale provides to its residents.  

What does Glendale do now? It must use a combination of strategies that will bring Glendale’s expenses in line with its revenues eliminating the need to extend the temporary sales tax increase beyond its 2017 sunset date.  

STRATEGY #1: Implementation of the sale of Glendale’s assets. I am pleased to see that Glendale staff has finally drawn up such a list and presented it to council at the workshop on May 20, 2014. Staff acknowledged that they omitted the two city owned golf courses: Desert Mirage and Glen Lakes and that they belong on the list. Here is a link to Glendale’s current assets: http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/052014-W02.pdf.

Executive Director of Finance, Tom Duensing, said recently, “Selling city property is just ‘one-time money’.” I beg to differ. Not in all cases. If a city facility’s O&M is being subsidized by General Fund revenues or if it still has construction debt then the city gains in two ways. It brings in much needed one-time cash that can be used to pay down or off the construction debt but it also eliminates an on-going General Fund expense.

A case in point is the Civic Center.   The Civic Center was built as Pay-As-You-Go with cash from the General Fund. It has no construction debt. Did you know that since it opened the city has subsidized its operation and maintenance in some form or fashion? There was even aCivic Center period of years when all city departments were required to hold all of their events at the Civic Center. It was a way to subsidize the Civic Center without being readily transparent since department event expenses are a line item in a department’s budget and there is no explanation regarding those payments.  

No matter what is suggested as an asset to be sold someone’s ox will be gored. There are so many stakeholders each supports a different city asset. It will be a painful experience for everyone. However, there’s either a will to finally fix this problem or not.  

What should be sold? My list will be different from yours. I welcome all comments to this blog that argue for or against the sale of a particular asset. My list would include, but not be limited Jobingto, in the downtown area, the Civic Center, the downtown parking garage, the Bank of America building, the Sine building, the Thunderbird Lounge property, the Civic Center Annex, the St. Vincent De Paul property and the city court property. In north Glendale, I would sell the Foothills Recreation & Aquatic Center. In west Glendale the city should sell Jobing.com Arena, the Media Center and Parking garage, and the Convention Center. If a legal way can be found to sell Camelback Ranch, that would be on the list as well.  

STRATEGY #2:  No employee raises until the General Fund has enough of a surplus to accommodate it. The current City Manager Brenda Fischer has complained that there is a 17% turnover rate of employees in Glendale but she never compared that figure to other Valley cities. In this economy people are thankful to have a job and we should know what vacancies currently exist, how many people apply and how long does it take to fill a vacancy? In other words, more information than the public has received to date. In police and fire there are always tons of people who apply.  

STRATEGY #3: While we are on the subject of vacancies, it should be standard practice to eliminate all unfilled vacancies each budget cycle. This is an accounting trick that has been used for years. It has always been a fist-fight to get staff to remove unfilled vacancies once and for all.  

STRATEGY #4:  All departments would be required to live within their annual budget appropriation, with no exceptions. No more fire department requests for additional money to cover overtime. Council should require (not request yet another study that goes nowhere) the fire department to move immediately to implement 3 man staffing on trucks and to implement the use of small, 2 man vehicles to answer medical calls.  

STRATEGY #5:   No carry-over requests from year to year with one exception. A project currently under construction but not completed within the year should be allowed carry-over to complete the project. If it is a project not yet begun it should have to compete for the appropriation the next fiscal year.  

STRATEGY #6:  Each department’s “Professional & Contractual Expense” must only be used for specific essential expenses. Only a specialty’s required licensing and organization membership should be permitted. The city’s payment for publications should be eliminated. The city’s policy on car allowances and cell phone use should be reviewed and the usage monitored carefully monthly.  

STRATEGY #7:  Council’s will to live within its means must be implemented as well. A majority of council possesses the prevalent attitude that it can approve new expenses and somehow the staff will find a way to cover them.

This is a time in Glendale’s history that calls for austerity. Austerity begins with the policy makers. If they cannot demonstrate their willingness to practice what they preach it sends the wrong signal to the entire organization. Signals emanate from Glendale regularly and are usually just as clearly understood as the white smoke that signals the choosing of a new Roman Catholic Pope. One clear signal that we all have seen is that Glendale will not stop spending. It makes one think of the people who declares bankruptcy but not before maxing out every credit card they possess. They “get their stuff” and use it before the court steps in to stop them. Sadly the creditors end up getting mere pennies on the dollar when that inevitable day comes careening down the tracks. I hear warning sirens in the distance…  

© 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.  

 

May 14

27

A coat with many pockets, Part V

Posted by Joyce Clark on May 27, 2014
Posted in Camelback Ranch Spring Training Facility • City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , , , , , | No Comments yet, please leave one

The major categories of debt that Glendale carries have been identified in the bdu-4-pocket-khaki-tan-jacket-100-ripstop-cotton[1]previous 4 blogs. How the revenues are spent has also been explored.  The next question is…was the issuance of all Glendale debt prudent and necessary?

The issuance of Enterprise Fund debt, Highway User Revenue Fund (HURF) debt and Transportation debt has historically been reasonable and prudent. The debt associated with these three funds are for the “bricks and mortar” of the city. They fund projects for the construction of new infrastructure as Glendale grew and for the repair and maintenance of all city infrastructures. They were used on projects as diverse as new water treatment facilities to new traffic lights to Northern Parkway.

There is one form of debt that I have not covered previously and that is the Interfund Loan debt. The General Fund borrowed from the Water/Sewer, Landfill, Sanitation, Technology Replacement and Vehicle Replacement Funds to cover two annual $25 million management fee payments to the National Hockey League (NHL) for Jobing.com Arena during Fiscal Years 2011 and 2012. The first $25 million annual fee payment in 2011 came from the General Fund’s Contingency Fund and no Enterprise Funds were used.

The second $25 million annual fee payment in 2012 came from loans from the above mentioned funds with the lion’s share of $20 million borrowed from the Water/Sewer Enterprise Fund. We know from Ordinance 1451 that, “The sanitation fund shall be a separate and protected fund, to be used for no other purpose than expenses associated with sanitation services.” The other Enterprise Fund Ordinances carry the same caveat.

There are some who have heart burn over the concept of the city having borrowed money from these funds. What they fail to recognize is that over many years, General Fund dollars were used to support these funds by carrying some of the Enterprise Fund employees or by not receiving full compensation for the support functions performed by General Fund employees. Historically, over the years, the Enterprise Funds have been supported financially in some form or fashion by the General Fund. Under those circumstances borrowing from the Enterprise Funds is not as egregious as some think it to be. Here is just one example of the financial interrelationship between the General Fund and the Enterprise Funds occurring on January 8, 2013, “This is a request for City Council to waive reading beyond the title and adopt an ordinance approving an operating cash transfer from the General Fund (GF) to the Water/Sewer Enterprise Fund; and the transfer of 3.5 Full Time Employees (FTEs), and the associated appropriation authority, from the Water/Sewer Enterprise Fund to the GF, both of which are within the Financial Services Department.”

The debt issuance decisions associated with the General Obligation (G.O.) bonds and the Municipal Property Corporation (MPC) bonds have not always been prudent or even necessary. As has been stated previously some of the council decisions were political. In the G.O. bond category just two examples are: the accelerated advancement of the Foothills Recreation & Aquatic Center which was politically motivated; as was the Capital Improvement Program (CIP) number 1 placement of the Public Safety & Training Facility (PSTF). The PSTF was funded with a combination of G.O. debt and MPC debt.

Was the need for either of these facilities critical? No. Those that get everything in north Glendale wanted more and in this case it was their own recreation and aquatic center so that they wouldn’t have to travel down “there.” The number of resident-owned swimming pools in north Glendale and especially the Cholla district is astronomical compared to any other region of Glendale. It’s ironic that this facility has become regional serving the interests of Peoria and Phoenix residents. Councilmember Martinez would be quick to point out that the facility earned revenues that just about cover the annual O&M facility costs but those revenues do not cover the debt issued to pay for its construction. That’s being paid off by every property owner in Glendale with their secondary property tax.

Was the need for a Public Safety Training Facility (PSTF) critical? Again, the answer is No. To this day new police recruits go to a regional police academy such as the Arizona Law Enforcement Training Academy (ALETA) for initial training. The PSTF is used by Glendale police for advanced training only, another function whose needs can be met elsewhere. The Glendale fire department just had to have this facility even though they have always been able to obtain training slots for new recruits at the regional facilities in Phoenix and Mesa. Training slots had never been an issue. Suddenly the dearth of slots became the rationale for Glendale’s very own training facility.

Lastly we arrive at the MPC Bond debt. Were the projects funded by MPC debt critical and necessary? The answer is No.  Decisions regarding MPC expenditures were often political. Former Mayor Scruggs always went ballistic when she heard references to Glendale as the town of “hicks and sticks, plows and cows.” She and former City Manager Ed Beasley shared a vision. Their vision was that Glendale would become an equal of the well known Valley cities who had developed a niche and a city brand for themselves. Tempe is known as a college town. Scottsdale has always been the “west’s most western town.” Chandler and Gilbert were becoming the technology towns. Glendale wanted to be the sports town.

The former mayor often had majority council support from Councilmembers Eggleston, Martinez, Frate and Goulet. All wanted Glendale to be a member of the “big boys’ club” that included cities like Phoenix, Scottsdale and Tempe. All had cache and Glendale had none. The road to acceptance meant Glendale’s branding as a sports and entertainment mecca and accepting the cost associated with making that a reality. As major developments appeared and wanted costly incentives to locate in and around the Westgate area, more and more MPC debt was issued.

Glendale has issued more MPC debt than it can sustain for such projects as Jobing.com Arena, Camelback Ranch, the Regional Public Safety Training Facility, Zanjero infrastructure and the Westgate parking garage, media center & convention center. All…very “big ticket” projects. These projects are the albatrosses hanging from Glendale’s neck.

The final blog in this series will explore any possible solutions to paying down or eliminating the MPC debt. Can it be done? Yes but it requires the will to do so.

© 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.

May 14

8

A tax and spend city council

Posted by Joyce Clark on May 8, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances • Glendale zoning issues  | Tagged With: , , , , , , , , , | 2 Comments

The Glendale City Council Workshop of May 6, 2014 had 4 items: the 2035 General Plan Update; the West Phoenix/Central Glendale Light Rail Update; discussion of adding electronic voting to council meetings; and the ever present FY14-15 budget follow up.

The 2035 General Plan Update discussion was led by Jon Froke, Glendale’s Executive Director of Planning, joined by Celeste Werner and Rick Rust, VPs of the Matrix Group. The Matrix Group is the consultant hired by the city to conduct the 2035 General Plan Update at an unbudgeted cost of $110,000 to be paid over two years: $31,000+ the first year; and $78,000+ the second year (FY2014-2015). Here is the link to their presentation: http://www.glendaleaz.com/Clerk/agendasandminutes/documents/01A-Glendale2035GeneralPlanUpdatePowerPoint.pdf .

The city has put up a website for the General Plan Update at www.glendale2035.com. It’s in its infancy right now and there isn’t much to see when you visit the site. At some point there will also be Facebook and Twitter links. Perhaps the greatest take away from the presentation was the continual emphasis upon the Citizen Steering Committee’s role in the process which is advisory only. It was made clear that the final approval rests with council before it goes to the voters in a General Election on November 8, 2016.

As citizens what can you do? Get involved…learn as much as you can…voice your opinion, your vision for Glendale’s future… and concerns, if you have any. There is a natural tension between property owners of vacant land and citizens and their neighborhoods. Make no mistake. Property owners will work hard to maximize the designated zoning for their vacant property because when it is sold a more intense zoning designation means more money for them. Sometimes what they may want will be in direct conflict with what is compatible with your neighborhood. Be vigilant. Check what’s vacant around you and then find out what kind of zoning designation may be placed on that land. Make sure it works to the betterment of your neighborhood. As an example, a property owner may want a multi family (apartment) zoning designation. Your neighborhood might be made up of large or medium sized lot homes. Apartment zoning on vacant land adjacent to your neighborhood will inevitably create future problems and could lower your property value.

Next up was the West Phoenix/Central Glendale Light Rail Update. Cathy Colbath, Glendale’s Interim Executive Director of Transportation Services, introduced Stephen Banta and Benjamin Limmer of Valley Metro. Both men made an excellent presentation. Here is the link: http://www.glendaleaz.com/Clerk/agendasandminutes/documents/02B-LightRailUpdate-PPT.pdf .

Funding for mass transit will be generally along the lines of: 50% from the federal government; a large percentage from voter approved Proposition 400 administered by Valley Metro; an undetermined percentage by the cities in which the mass transit is sited.

Take aways were, in terms of cost per mile: light rail, as most expensive, at $60 to $90 million per mile; a modern streetcar system at $40-$60 million a mile; and bus rapid transit at between $2 to $20 million a mile.

Valley Metro is still in the initial planning stages identifying which of the 3 modes of service would work the best and identifying a corridor extension from 19th Avenue and Bethany Home Road, Phoenix into Glendale. The study area is from Northern Avenue to Camelback Road, including the use of Grand Avenue. Based upon their findings Valley Metro has excluded Northern Avenue, Bethany Home Road and Grand Avenue. It appears the final corridor will be either the Glendale Avenue or Camelback Road. Mass transit is becoming more and more of a necessity in the Valley as resources shrink and the costs of purchasing fuel continue to rise. Did you know that for every billion dollars invested in mass transit in the valley there was a return of $7 billion in economic development along the light rail lines?

Valley Metro will host a public meeting and present their latest information on the study and will offer the public a chance to comment and ask questions. The meeting will be on Thursday, May 22, 2014 from 6 PM to 8 PM at Glendale City Hall, Council Chambers. It’s worth it to attend and to share your opinion on what kind and where mass transit should be sited in Glendale.

Economic redevelopment is critical along all of Glendale Avenue. Redevelopment of Glendale Avenue has been planned to death for at least 20 years with no discernible results to date. I was on the Miracle Mile Committee years ago as a private citizen and was a councilmember when the latest plan, Centerline, was approved. I can’t even remember all of the iterations of planned redevelopment that occurred in between those two efforts. Glendale Avenue is our namesake street. All of it, from 43rd Avenue on the east to Sarival Road on the west, deserves special recognition in terms of development and redevelopment planning. Centerline, the current name for Glendale Avenue redevelopment, only targets 43rd Avenue to 67th Avenue. If I may be so bold as to suggest, a broader, long term vision is required for all of Glendale Avenue and perhaps it should be considered as a whole but in phases. Phase I could be the current 43rd to 67th Avenues. Phase II could be 67th to 105th Avenue (location of our airport and public safety training facility). Phase III could be 105th Avenue to Sarival Road. We should cherish this entire corridor and plan for its future now.

Most of council was receptive to the Glendale Avenue corridor with the exception of Vice Mayor Knaack. Her reservations are understandable. After all she owns property at 55th and Glendale Avenues. However, she is being short-sighted. She is thinking in terms of short-lived financial pain, in the form of relocation or construction, creating financial hardships for business owners such as herself. The long-term gain of finally securing a tool for the economic development /redevelopment of Glendale Avenue between 43rd and 67th Avenues is too important to Glendale’s future viability.

The third agenda item just boggles the mind. Vice Mayor Knaack, under Council Items of Special Interest, brought up the subject of electronic voting at council meetings. Someone on staff may have slipped her the suggestion. Chuck Murphy, Glendale’s Executive Director of Technology & Innovation, and Diana Bundschuh, Deputy Chief Information Technology Officer introduced Chris Voorhees and Thao Hill of Granicus, Inc. Granicus is the provider of the current system used at council meetings.

Two questions should have decided the fate of this idea in short order. Is it critical to the current operation of council meetings and what does it cost? Now, I’m a technology nerd. I love new technology but in the light of Glendale’s current financial crisis electronic voting is not a necessity…now, at this very moment. Yes, it’s sexy and new. Yes, some other cities already have the technology but we can do without it for now. It is not critical to the process of council meetings. What about the cost? Well, Glendale can have the new, sexy technology for a mere upfront cost of $23,000 and an annual cost of approximately $18,000. And that doesn’t include the cost of replacing hardware such as tablets on a periodic basis – perhaps every 3 to 4 years. Hardware is expensive and is used by all personnel including council. Of course this is all unbudgeted. Of course Glendale has no money for a Cadillac right now.

It didn’t faze a majority of council for one single minute. It didn’t bother Councilmembers Knaack, Martinez, Sherwood and Chavira who constituted a majority giving direction to move forward with the new system. Mayor Weiers was decidedly uncomfortable and observed that the cost equates to one position within the city. What was the point of Councilmembers Martinez and Knaack urging all councilmembers to give back a portion of their council budgets if they are all too willing to be imprudent about Glendale’s unbudgeted expenditures such as this one. It’s ridiculous. If they cannot control their spending on relatively small items, God help us on the really, really big ones.

The last agenda item was Fiscal Year 14-15 Budget Follow-Up Items presented by Tom Duensing, Glendale’s Executive Director of Financial Services. By the way, I keep waiting for City Manager Fischer to live up to her pledge to get rid of all of these Executive Director titles…still hasn’t happened…wonder if it ever will? Here is the link: http://www.glendaleaz.com/Clerk/agendasandminutes/documents/04-POWERPOINT-FiscalYear2014-15Follow-UpItems.pdf .

Following Glendale’s budget this year is like trying to find your way through the smoke and mirrors.  It’s the same pot of money no matter what new names are used. Now we have General Fund Sub-Funds, a Permanent Fund and an Internal Service Fund. Go figure. When you watch senior management discuss the budget this year you end up feeling confused,  down right befuddled and just as if you had been sold a bottle of snake oil.

The take aways are that your Primary Property Tax Rate will increase by 2%, the Temporary Sales Tax increase will become permanent and there’s a new strategy called Alternative Service Delivery. The least offensive of the two increases is the increase in the primary property tax rate. Glendale’s portion of your property tax bill is relatively small. Hence the increase in real dollar terms is also proportionately small.

What should be of concern is making the temporary sales tax increase permanent and eliminating the sunset provision that was to occur in 2017. In an attempt to avoid painful cuts to the budget council took the easy way out. It’s a promise broken. Instead senior staff ratified by this council continues to overextend Glendale’s finances and to spend more than is in the budget.

Alternative Service Delivery is the new buzz word for privatization of services Glendale residents receive. The problem is, that while senior staff implements this strategy, no one and most certainly the public or even council for that matter, have been told exactly what they are doing. Then again, it’s another refusal on the part of senior staff to share information. If you were to ask any councilmember about Alternative Service Delivery they would parrot the explanation they heard at this workshop meeting. That is, positions when vacant are being evaluated. If you asked what specific evaluation criterion is used and what jobs have been privatized, they would not be able to answer. After this article, they probably will.

Tentative budget adoption is scheduled for the May 27, 2014 meeting of council with final budget adoption scheduled for June 10, 2014. At the June 24, 2014 council meeting the increased property tax rate and the permanent sales tax increase will be adopted.  Glendale’s voters got what they wanted…a tax and spend city council.

© 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.

May 14

5

Coin of the City Hall realm

Posted by Joyce Clark on May 5, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials  | Tagged With: , , , , , , , | 1 Comment

One of the comments I received on my latest Tindall blog was in the form of questions. “If it (referring to Tindall’s advice) were legal advice given to the City, wouldn’t it be provided to the entire City Council? Does a subset of people on the City Council (fewer than would qualify as quorum) qualify as ‘The City’?” They are interesting questions raising a subject I have been thinking about for quite some time. One of the most precious commodities in local government is arguably, the power accrued from knowledge. There is an old saying, “that knowledge is power” and in government is it golden.

From the time I took my seat as a councilmember in 2000, Dr. Martin Vanacour, City Manager at that time, managed by the precept, what one councilmember knew, all councilmembers should know. Whenever I asked for further information on an issue or raised questions, my questions and the answers I received were always copied to all councilmembers and I received the same when other councilmembers asked. That practice was always followed under subsequent city managers until my retirement in 2013. That was the ethical thing to do.

So what has happened to the ethics quotient in City Hall lately? What caused an email request for legal advice to be sent by 3 councilmembers and former City Attorney Craig Tindall’s return response solely and exclusively sent to those 3 councilmembers? To refresh your memory about this specific email, here it is: Tindall email 3 correctedAn investigative cause of concern may turn out to be the legal advice he provided without benefit of a separate agreement permitting him to do so per his Severance Agreement. Legally it may prove troublesome to him at some point.

The greater issue that should be of concern to all Glendale city councilmembers, as well as to that of Glendale’s management, is one of morality and ethics. The three councilmembers that solicited Mr. Tindall’s legal advice were well aware of the terms of his Severance Agreement. I am sure those terms were discussed in at least one council Executive Session. They cannot plead ignorance. If they attempt to do so, shame on them. It is their responsibility to know and understand the terms of agreements such as these. Ignorance, if proffered, is no excuse.

Mr. Tindall was employed by the city for many years. He should have known better than to respond to only 3 councilmembers and not the entire council. During his tenure habit and practice dictated that he share with all of council. Was he advancing the agenda of the pro IceArizona councilmembers? A few months later he became General Counsel to IceArizona.

There is another underlying serious concern and that is, why were three of the four councilmembers who supported the IceArizona Management Agreement, asking Tindall about that very same agreement? They should have properly directed their question(s) to Dick Bowers, Interim City Manager or Nick DiPiazza, Acting City Attorney. Did they hope to gain some advantage over those councilmembers who did not support the IceArizona agreement? In any event, their motivation in seeking exclusive legal advice, not shared with others on the council, is suspect.

There is a separate, ongoing issue regarding ethics and that is the reluctance of senior staff to share all information with the entire council, whether it be helpful or detrimental to their agenda. There is a natural tension between senior management and the council about information sharing. It appears when it is information that furthers staff’s agenda they are all too willing to share but if it is information that does not, it is not shared readily or sometimes, at all, with council. There remains a culture of secrecy at the senior staff level, a walling-off of information that should be shared. It is all too apparent when a councilmember publicly asks for information that a senior staffer believes to be detrimental to his/her agenda. The request for information is stone-walled and a councilmember will frequently and publicly state that his/her previous request still has not been met. It is often obvious what staff’s position is on an issue simply by the way councilmembers’ questions are answered or ignored. It is senior staff’s duty to provide information on an issue, positive and negative, in a fair and impartial manner. It is council’s duty to make a policy decision based upon the provision of such information. It is not senior management’s prerogative to make a pre-determined decision on an issue and then manipulate the manner in which it is presented to council.

Over the years I occasionally asked for copies of a Freedom of Information (FOIA) request made by a member of the public. Sometimes staff would provide copies of FOIA requests when they thought it might be of particular interest to council. None of the copies provided ever contained redactions (blacking out of information). Lately that is no longer the habit and practice of senior management. Copies of FOIA requests have been provided with redactions. So much for transparency. It is not appropriate and the practice should stop immediately. Councilmembers must be fully informed about any situation and redaction of information does not serve them well.

Information is the coin of City Hall’s realm and councilmembers are not receiving their share. We are poorer as a result of this unethical practice.

© Joyce Clark, 2014

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May 14

3

Glendale Monthly Arena Report, March 2014

Posted by Joyce Clark on May 3, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , | 6 Comments

The Glendale Monthly Arena Report for March, 2014 is now online at the city website. Here is the link: http://www.glendaleaz.com/finance/documents/FY14MonthlyArenaReport-20140331.pdf . It tracks similarly to the previous reports with qualified ticket sales (of 14,061) being up slightly. April’s report will have the figures from the last 5 games. That report, also, will look quite similar. Here is the March Report: Mo Arena Report Mar 2014

I have also prepared a Summary of the last 7 months’ worth of financial information. Here it is: Mo Arena Report Summary May 2014_Page_1Mo Arena Report Summary May 2014_Page_2Take aways from the Summary show that all “enhanced revenues”, and I included the Supplemental Qualified Ticket Surcharge of $1.50 per ticket, to date have totaled $3,641,547. The city’s expenditures to date total $6,502,055.

Note that some items are prorated. The Agreement start date was August 5, 2013. It is one month and 4 days shy of a full fiscal year. As a result, the Base Rent for the first year is not $500,000 but rather $326,712. The Safety & Security Fee is not $174,122 for the first year but rather $156.948. The big one is the Management Fee the city pays of $15 million a year. The first year it is $13,750,00.

The extreme right column labeled “FY Est.” is an educated guess, based upon 7 months of fiscal performance to date, of the final numbers for the Fiscal Year. I have relied upon publicly available figures. The Fiscal Year estimated revenues to the city are $5,523,000 and the expenditures are $14,200,68.

The city has $6 million budgeted leaving it with a deficit for the year of $8,677,685. Add to that figure an annual construction debt payment of about $12 million a year. This year’s loss on the arena will come in somewhere around the $20 million mark.

The city’s Contingency Fund sits at zero as it was used to pay a portion of the management fee. If there is an immediate crisis the city will have to reapportion some regular line item amount to cover it. I’m sorry but I don’t see how the new senior management has done any better at managing the city’s money than the old regime. No matter what, the current situation is…Unsustainable.

© Joyce Clark, 2014

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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

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Apr 14

28

USA Pawn Shop…round 2

Posted by Joyce Clark on April 28, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale zoning issues  | Tagged With: , , , | No Comments yet, please leave one

On Thursday, March 6, 2014 the Glendale citizen Planning Commission voted to deny a Conditional Use Permit for USA Pawn Shop. Thank you to the citizen members of the Planning and Zoning Commission for your decision.

Recently I received an email from a Glendale resident who told me it’s not over yet. USA Pawn, as is their right, has appealed the Planning Commission’s decision to the Glendale City Council. It will be heard before council at their Tuesday, May 27, 2014 meeting at 6 PM.

USA Pawn is asking to locate a mere 300 to 500 feet away from another pawn shop, Go Daddy Pawn at 59th Avenue and Bethany Home Road, in zip code 85301. It’s time to give south Glendale a break. There are at least a half dozen pawn shops within spitting distance of one another in the area.

Whether you live in the immediate area or not, you have the right to let your voices be heard. Share your opinion on the granting of yet another pawn shop in south Glendale by emailing the Glendale City Council. Here are their city email addresses:

You can let them know that you oppose the granting of a conditional use permit for the USA pawn shop and your reason(s) why you oppose it.

Or you can speak to the issue on the night of May 27, 2014 by appearing before the city council and speaking when it is presented on the agenda. Either means is effective but only when there are many voices. It doesn’t take many to persuade council. I have seen 20 or 30 people mount a charge on an issue and succeed. The danger is that you assume someone else will participate so your voice isn’t necessary. Never make that assumption for then no one comes forward. Silence indicates to council that there is tacit public approval. I am always reminded in these situations of a poem in which the author says, paraphrasing, they came for others and I said nothing. When they came for me there was no one left to speak for me. Public silence and apathy are the hallmarks of bad ideas that are allowed life. Another pawn shop in south Glendale is a bad idea that should not be given life.  

© Joyce Clark, 2014

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Apr 14

25

Another Glendale referendum on horizon?

Posted by Joyce Clark on April 25, 2014
Posted in Casino • City Council Actions • City issue and actions • City of Glendale • Glendale elected officials  | Tagged With: , , , , , , , , , , | 3 Comments

Lately I have been in a “take no prisoners mode.” Think of Peter Finch as Mr. Beale in the film, Network, when he screams, “I’m mad as hell and not going to take it anymore!” I am thoroughly disgusted with the lies and subterfuge offered on various Glendale issues masked in a guise of altruism and high-mindedness. Rather than advancing issues that serve the best interests of our community opinions and actions have degenerated into advocacy of personal agendas. Yes, I know “we all do it” and “it’s done all the time,” usually accompanied by an admonishment to be “realistic.” It’s time to call “a spade,” “a spade” and not the PC description of, “a hand-held implement with a sharp-edged, rectangular, metal blade and a long handle used to loosen or break up the upper strata of the earth.”

The Glendale Star is a perfect example. Newspapers once had the reputation of objectivity in their reportage. Like many other time honored values news objectivity has fallen by the wayside.  When it comes to the proposed Tohono O’odham casino the Glendale Star obviously supports it. It is no secret that its Editor, Carolyn Dryer, attended an Alvarez hosted pro-casino meeting as a like-minded individual. There were also TO representatives in attendance. Her editorial choices seem to clearly reflect her bias.

There is a referendum petition in circulation designed to put the recent council vote to reject US Representative Trent Franks’ HB 1410 on Glendale’s fall ballot. By the way, if HB 1410 successfully passes in the US Senate the TO’s proposed casino will die a righteous death. The defeat or passage of HB 1410 is more critical than the public realizes. Make no mistake. If HB 1410 passes there is sure to be more litigation.

The referendum effort is being led by Glendale resident Gary Hirsch, a former city council candidate. Mr. Hirsch’s position is well known as one of the Glendale citizen plaintiffs in a previous lawsuit against the Tohono O’odham’s (TO) proposed casino.

On April 24, 2014 the Glendale Star Editor Dryer published an opinion piece on the casino referendum issue written by Mike Kenny, its Web Editor. Here is the link: http://www.glendalestar.com/opinion/editorials/. Mr. Kenny’s opinion piece is a puff piece signifying “nothing.” I guess if one cannot speak to the issue the next best course of action is to denigrate it.  He refers to the referendum effort and characterizes it as achieving “nothing.” He goes on to say, “Oh, and it’s (council vote) a non-stance that likely has zero implications. It’s highly doubtful our nation’s Senate – if this bill is ever heard – will take into account the opinion of a city that can barely decide what its opinion is.” Really? If that were the case why did Councilmember Alvarez and her minions work so hard to bring it to a council vote? They believe that rejection of HB 1410 by the city in which the proposed casino would be sited would indeed send a strong signal.

What about other personal agendas on this issue? Those councilmembers who hold a pro-casino position appear to have done so for purely personal reasons not because they believe it is in the best interest of Glendale (although they will proclaim so loudly and often). Councilmember Alvarez seems to be in “pay-back” mode. It’s her way of sticking it to councilmembers who she perceives as having “disrespected” her when she first came on board. It’s purely personal and the TO have taken advantage of her vindictiveness. Councilmember Chavira owes Alvarez and the TO big time for their support and endorsement of his candidacy. It appears that their bill has come due and he is making good on his debt. Councilmember Hugh’s pro-casino stance is in contradiction to his usual fiscal conservatism. It’s been heard his wife is driving his pro-casino stance. Water cooler opinion has it that Councilmember Sherwood who ran as an anti-casino council candidate lusts to become Glendale’s next mayor and is expecting substantial financial support from the TO in his run for that office.

So much for decision making in the best interests of already beleaguered city. After all, it’s just politics. Isn’t it time for Glendale residents to say, “They’re mad as hell, and not going to take it anymore?”

© Joyce Clark, 2014

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Apr 14

7

Jamison deal vs. IceArizona deal…answers

Posted by Joyce Clark on April 7, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , | 17 Comments

From the second I posted my last blog on the topic of the most recent Glendale Monthly Arena Management Report I have been inundated with Facebook private messages, emails and Twitter DMs asking so many questions I’ve decided to answer many of them here and now.

I’ve been asked how the Ice AZ deal is different than the Jamison deal I supported. Why was that more beneficial and why did I support it? I received a flurry of offended IceArizona supporters demanding I announce why Jamison’s deal failed, why I “pick,” “target,” “harass” the new owners. I am not at liberty to discuss why the Jamison deal did not succeed due to confidentiality issues. I can, however, compare the two deals – Jamison’s and IceArizona’s. My only agenda throughout the entire process was to get what would be, in my opinion, the best deal possible for Glendale within the context of the financial environment as it existed at that time. Each deal had its strengths and weaknesses vis a vis Glendale.

 Then there’s the “interested-in-Glendale” crowd who want to know why I continually berate the new Council and is it because I’m running again in the future? Again, I categorically state that I will not run for any office, now or in the future. I have seen some councilmembers who remained well into their 80’s. One could see the diminishment in their faculties and abilities. It is a disservice to the constituents they represent. Instead I appreciate the gift I have been given to opine on Glendale issues and events using the benefit of my 16 years of service to the city. I am enjoying my retirement immensely and writing about Glendale is just plain fun.

Some asked, did I think individual councilmembers or the mayor personally benefit from deals? Then there are the few accusations of “I bet you benefitted just like these lousy politicians” implying that somehow I would financially benefit from a successful Jamison deal. Jamison never, ever made any offer of compensation of any sort and if he had it would have resulted in personal insult at the thought and would have insured my “no” vote on his bid.

Now…for the rest of the story as Paul Harvey would say…Let’s begin with the unsuccessful Jamison bid.  In page citations references with regard to the Jamison bid are the City Council Voting Meeting Presentation of November 27, 2012 or the Substantial Final Draft of the Arena Management Agreement dated October, 2012.

  • It was a long-term deal of 20 years with a 5 year option to renew with no opt out clause by either party (Council meeting of November, 2012).
  • Base rent was in years 1 to 5, $500,000; years 6 to 12, $650,000; and years 13 to 22, $800,000; (Final Substantial Draft of Arena Management Agreement, page 24, Section 6. Leasehold Interest. 6.6. Base Rent).
  • Stipulation if full 40+ games were not played it would be arena manager’s responsibility to book other events to compensate for lost games (Arena Management Agreement, page 29, Section 8. Arena Management. 8.1.0).
  • Minimum of 40 games per year with additional 30 events per year. Management fee reduced by $25,000 for each non-hockey event below 30 minimum. Reduction of $60,000 per game below 40 minimum (Council meeting of November, 2012).
  • Parking Rights belonged to team owner/manager (page 30, Section 8.2).
  • Stipulation of 15% of the gross from naming rights would go to the city (page 35, Section 8.5).
  • City surcharge on qualified tickets was years 1 to 5, $2.75; and years 6 to 22, $3.00 (page 51, Section 9. Charges and Fees. 9.1. City Surcharge).
  • Arena Management Fee: In year 1, $11M; year 2, $14M; years 3 to 4, $15M; year 5, $16M; years 6 to 10, $18M; and year 11, $17M; years 12 to 15, $16m; year 16, $14M; and years 17 to 20, $13M (Council meeting of November, 2012).
  • Stipulation of 5 year option to purchase the arena (page 89, Section 23. Arena Purchase Option).
  • City offered a bonus incentive of $500,000 for every additional 20 events over 30 minimum required (Council meeting of November, 2012).

Was it a perfect deal? Of course not but I supported it for several reasons. Mr. Jamison continually demonstrated his willingness to compromise during the negotiations with the city. Every nuance of the Jamison deal was highly publicized.  There was no backroom negotiating amongst councilmembers.

A restructured arena management fee was crafted and the first year fee dropped from $17M to $11M. Penalties and bonuses were added — something not seen in any previous deals. The Five Year Scenario presented at the November, 2012 council meeting showed an ending City Fund Balance in 2017 of $63.2M if the team stayed and an ending Fund Balance in 2017 of $63.4M if the team left. The difference was negligible and seemed reasonable as both scenarios required General Fund expense reductions.

It was a deal that offered the city arena stability over 20 years and most importantly, there was an option to buy the arena in the first five years making the balance of the deal a moot point while relieving the city of further financial obligations. The “buy” option in the first five years would have removed the financial debt burden the city was facing at that time. Jamison provided a long term contractual commitment insuring an anchor tenant in the arena for 20 years. His deal was based upon having raised the necessary team purchase equity – no loans were involved.

Why didn’t it happen? Many of the reasons are not public and I am not at liberty to speak of them but I do know that at the eleventh hour the NHL demanded greater team purchase equity. Jamison was raising cash to purchase the team rather than relying upon loans. It was simply impossible to raise in two months the additional equity that the NHL suddenly required before the city’s imposed deadline of January 31, 2013. The originally requested equity amount had been raised but the new, last minute NHL demand was a deal killer. Why the sudden and unexpected requirement of more purchase equity? One would have to ask the NHL officers and they are not talking.

Now, let’s look at the IceArizona deal. Since it was the successful bid and of recent vintage, many of the deal points are already familiar to you. The IceArizona citations used are from the Professional Management Services and Arena Lease Agreement of June 28, 2013. The council approved the agreement on August 5, 2013.

  • The agreement is subject to an early termination right after 5 years (page 3, Arena Lease Agreement, Section 1. Statement of Intent. 1.1.1.)
  • Revenues to be received by the city include surcharge of $3 on qualified hockey tickets; a $5 surcharge on non-hockey qualified tickets; and a supplemental surcharge of $1.50 on every qualified ticket; parking revenues of $10 per vehicle for hockey events and $11.33 per vehicle for non-hockey events less $20,000.00 per event to the team owner; 20% of the sale of naming rights (page 4. Section 1. Statement of Intent. 1.1.5. a through j).
  • Arena Management Withdrawal grants the right of agreement default if there is an arena manager dissolution, bankruptcy or insolvency (page 7, Definitions. 1.2. a through e).
  • Definition of qualified ticket with a distribution limit of 1,000 per event (page 16. Section 1.)
  • Annual rent is in years 1 to 5, $500,000; years 6 to 12, $650,000; years 13 to 15, $800,000 (page 25. Section 6. Leasehold Interest. 6.6.1 to 6.6.3)
  • Penalty of $150,000 per hockey game less than the 40 games per year. There is no penalty for non-hockey events or any minimum of non-hockey events required (page 31. Section 8. Arena Management. 8.3. Event Requirements. 8.3.1. b and c).
  • Qualified hockey ticket surcharge based on attendance of less than 15,000 is $3 per ticket; 15,000 to 15,999 is $3.25 per ticket; 16,000 to 17,000 is $3.50 per ticket; more than 17,000 is $3.75. All non hockey events will be $3 per ticket regardless of attendance figures (page 49. Section 9. Charges and Fees. 9.1.2 a and b).
  • Supplemental ticket surcharge of $1.50 per qualified ticket imposed (page 49. Section 9. Charges and Fees. 9.1.3).
  • City receives 20% of arena naming rights (page 35. Section 8. Arena Management. 8.6.4.b.ii).

Is this a perfect deal? Of course not but it is one that is far more difficult to support. I cannot speak as to whether there was a spirit of compromise as I was not directly involved with the prospective team purchasers. There appeared to be “back room” negotiating amongst councilmembers in the search for the elusive 4th vote.  

Obviously there was no compromise on the annual management fee of $15M. There couldn’t be compromise because the team purchase relied heavily on loans from the Fortress Group and the NHL rather than on raising a large amount of purchase equity. I find it ironic that the NHL killed the Jamison deal by requesting even greater purchase equity than he has already acquired and now it is stuck with granting an $80M loan to the new owners. The $15M that the city pays for arena management is passed through by the team owners as interest payments on their loans. They quite simply must have that $15M for interest payments.

On the face of it the IceArizona deal speaks to a long-term commitment but that is not necessarily the case. There is an opt out clause after 5 years and that is extremely disturbing. It has been highly publicized that the opt-out trigger is losses aggregately of $50 million. Anyone who is under the assumption that the team owners will not suffer loss is dreaming. Business 101 classes teach that any new business venture can routinely expect losses in the first 2 to 3 years. The question becomes how much will the owners lose and how quickly will it reach the target of $50 million? Even though the city has and will exercise its right to audit at the end of every fiscal year that information will not be publicly available. P&L statements are usually proprietary. The public will not know until if and when the team owners choose to exercise their opt-out provision.

 The city could go through another exercise of crafting an agreement with another new owner but more likely, the team would be sold or relocated. There is also an Arena Manager Withdrawal clause that provides a default opportunity for sale or relocation.

Keep in mind in BOTH deals there are very few new revenue streams to the city. The city had been, in years previous, collecting all sales tax generated within and outside the arena. That is not new money. It also had been collecting a ticket surcharge on all events. That is not new money. These revenues were already going into the city’s General Fund and specifically used to pay the arena construction debt. In the IceArizona deal the revenues flow to the General Fund as well but there is no specific dedication of those revenues to fulfill the city’s arena debt obligations and may be used for any purpose.

In the Jamison deal the only new money was 15% of the revenue from naming rights. In the IceArizona deal the only new money is 20% of naming rights, the supplemental ticket surcharge and parking revenue. None of these revenues are predicted by the city’s Executive Finance Director as being substantial enough to recompense the annual $15M management fee.

In my judgment the better deal was the Jamison deal. He offered a long-term commitment to stay in Glendale with no opt out clause and an opportunity to buy the arena in the first five years. It would have relieved the city of the financial obligations of the arena. Not so with the IceArizona contract. While their advertising states, “Here to stay” there is always that pesky 5 year opt out clause lurking.

Because of the Jamison group’s purchase equity position there was flexibility in pegging the annual management fee to accommodate the city’s needs at the time. Make no mistake. Each deal placed a tremendous annual financial burden upon the city. Coupled with the Jamison deal staff recommended city expense reductions and instituted other strategies such as restructuring city debt that would have offset that burden.  With the IceArizona deal there is too much reliance upon promised revenues that may or may not be realized.  With so little owner equity, their reliance upon large loans and the 5 year opt out clause I wouldn’t take a bet about their future. Would you?

 I am sure that in expressing my POV on the two deals I will raise a great deal of protestation along with, “your facts are flawed” or “you have no faith” or “once again you have delivered an IceArizona hate piece.” There is no doubt that the subject is divisive and highly polarizing. Please remember that my conclusions are based upon publicly available information. It is my best attempt to share my reasoning regarding the many questions received. My initial vote to accept the Jamison deal while still on council resulted in leaving the door open for consideration of other bids resulting in IceArizona’s success. I have never been anti-Coyotes. I have always been pro-Glendale. My prism has always been the best interests of Glendale. It is fair to question whether accepting the IceArizona deal the best choice for Glendale. You decide.

© Joyce Clark, 2014

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