Header image alt text

Joyce Clark Unfiltered

For "the rest of the story"

Jun 14

27

War declared

Posted by Joyce Clark on June 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 • Westgate  | Tagged With: , , , , , , | 9 Comments

I had just finished writing this blog when I received 2 robo calls. The first one was from the Arizona Free Enterprise Club announcing it was seeking petition signatures to put the city council’s affirmative decision to eliminate the sunset provision of the temporary sales tax increase on the ballot. In the call they announced that they would be at the Foothills Recreation Center and the Glendale Main Library this weekend from 9 AM to 5 PM both days gathering signatures to get it on the ballot. I wish them success. I will make a special point of going to the Main Library this weekend to sign their petition.

The second robo call was several hours later and it was from the Glendale Fire Union urging people not to sign the petition and promising dire consequences if the sales tax increase is sunset in 2017. Everyone acknowledges that Glendale’s debt burden is unsustainable. Perhaps it would be more productive if the Fire Union got behind an effort to urge reduction of the city’s debt by selling some of its assets. It would make the entire sales tax sunset issue a moot point. 

The battle lines are drawn. Voters will be fed misinformation and exaggeration from both sides. They will have to wade through the claims and counter claims made until their eyes are crossed. Will voters decide to send a strong message of austerity to the city council or will they decide Glendale cannot continue to exist without a permanent sales tax increase? It looks like the voters of Glendale will be given the opportunity to ultimately decide the issue. Which side will be more successful in activating their voter base? It’s fair to say that the Sales Tax Sunset Elimination War is officially declared. Now…on to the rest of this blog.

The June 24, 2016 city council meeting had two major items not yet reviewed in my blog. One was the passage of Ordinance 2897 removing the sunset provision from the sales tax increase. The other was Ordinance 2899 eliminating city permitted events from the requirements of the city’s noise ordinance.

The elimination of noise provisions for city permitted events is a city-wide ordinance. If there is a city permitted event in Sahuaro Ranch Park, it applies. If there is a city permitted event at Arrowhead Mall, it applies. It does not affect just the residents adjacent to Westgate. It was approved unanimously by city council. Councilmember Chavira, representing west Glendale and the area of Westgate, had no qualms about throwing his residents under the Glendale bus. Perhaps it is time for the voters of his district to question his representation of them, their concerns and their interests.

Sam Allen, Code Compliance Director, also neatly side-stepped a question about the number of previous noise complaints in the Westgate area by saying he did not have that figure as noise complaints are handled by the police department. There were allusions by staff that neighborhoods would remain protected but no specifics as to how that would be accomplished.  Another question asked was how many events declined to locate in Glendale as a result of the city’s noise ordinance? That, too, was deftly ignored.

Ken Sturgis, a citizen commentator, said that he lived .8 of a mile away from Westgate and often heard Westgate event noise within his home. His neighbors heard it as well but felt that the city would do nothing about it. I live a mile away from Westgate and heard noise but not at the same level of intrusion that neighbors living closer to Westgate would have heard. So, in the name of flexibility and competiveness, all neighborhoods throughout Glendale have lost all protection from city permitted event noise. They will experience sound and fury…signifying nothing.

The other ordinance, passed on a 4 to 3 vote (with our usual 4, Knaack, Martinez, Sherwood and Chavira in the affirmative), was the elimination of the sunset provision of the sales tax increase. I was the councilmember who originally insisted it be a provision of the sales tax increase. I did not offer that stipulation on a whim. It was the only way I could support the increase. I trusted and relied upon my fellow councilmembers to keep their word. Little did I know that their acceptance of the sunset provision was done with fingers crossed behind their backs.

Barrel district council candidate Randy Miller spoke to the issue and said the two options, making the sales tax increase permanent or utilizing draconian cuts, were not the only options available. Mayor Weiers agreed and that was the basis of his “no” vote. Mr. Miller said there is always an Option 3 and crafting it should be the goal.

At the time of the passage of sales tax increase with the sunset provision senior staff offered a plan to gradually absorb the $25 million in the temporary sales tax increase by making incremental cuts of $5 million a year over a 5 year period. The first signal that council would not have the fortitude to make the necessary cuts over 5 years was when they could not even accept privatization of custodial maintenance of city buildings. That decision sent a message, loud and clear, to senior staff that making the necessary spending cuts over 5 years was a council non-starter.

I marvel at the city’s propensity and adroitness in propagandizing the issue.  Knowing that the Arizona Free Enterprise Club (AFEC) is currently circulating a petition to get the council’s vote for elimination of the sunset provision on the ballot, senior staff slipped in a new concept.  The sales tax increase will be reviewed during the budget process each year. Be careful what you wish for. It would be ironic indeed if, at the next budget discussions in the spring of 2015, council decided to raise the sales tax increase. After all, Councilmember Sherwood publicly stated that he believed it would be necessary.

The offer of sales tax increase review every year was strategically offered to mitigate the anger of Glendale voters should the AFEC be successful in getting the question on this fall’s ballot. The city will be holding out the hope that the increase has a chance of being reduced or going away in the future. Maybe after we’re all dead.

The city assertion flies in the face of the fact that the bond rating agencies are taking a close look and relying upon the elimination of the sunset provision to satisfy them. The bond rating agencies will again be very concerned about Glendale’s financial stability when they realize that now the sales tax increase stands an annual possibility of reduction or elimination. By adding this provision of annual review the stability that the bond rating agencies rely upon has been removed.

Another mitigation strategy that the city is already employing is on its website under Frequently Asked Questions about the elimination of the sunset provision. Here is the link:http://www.glendaleaz.com/documents/FAQEliminationofSunsetforTempTax062514.pdf .

The city’s message is that dire consequences will occur should the tax sunset in 2017. They used the same strategy years ago when a group of us nearly got the elimination of food sales tax on the ballot. The city prepared a slick pamphlet asking Glendale citizens to choose what cuts they would be willing to make. All choices were dire and it scared the voters. It worked that time and sadly, it may work this time.

If the Arizona Free Enterprise Club is successful in acquiring the requisite number of signatures to get the question on the fall ballot, don’t buy into scare tactics this time. It’s time for Glendale voters to send a direct message to council and senior management staff. That message is, live within your means. Don’t spend more than the city receives in revenue. If 22% of the budget is devoted to the debt burden, tell them it is their job to reduce the debt.

Which brings up the question, can Camelback Ranch, the Media Center, the Parking Garages, the Convention Center, the Civic Center or Jobing.com arena be sold? I’m not an attorney but I would say “yes.” Many years ago as a small business owner, my landlord sold the building in which I was a tenant. The new landlord and I could not come to mutually agreed terms. When my lease expired I did not renew. I left that location.

Glendale owns these buildings and has the right as landlord to sell them. Tenants in any of these sites would then have to negotiate new lease terms with the new landlord. Glendale may lose some money by selling at present market value but it would remove the debt and/or the O&M costs associated with the asset. Glendale must get its debt burden under control. Right now it is over 22%. It should be under 10%. If Glendale cannot afford these assets, selling them seems to be a prudent course of action.

There are those who will immediately say, we can’t do that. Instead, council direction should be given to the city attorney to make it happen. The city simply cannot continue down this unsustainable debt burden path forever.

There are those who will say, what’re you… nuts? The city can’t do that! It reminds me of something Councilmember Hugh said at this council meeting. He said, paraphrased, that the current council is fractured because its members do not share the same strategy for curing Glendale’s financial situation. Each side believes it has the better path and the right path to solve Glendale’s fiscal crisis.

I have no doubt that the councilmembers love this city. They demonstrate it daily by their service. Unfortunately, a majority believe the only solution is to tax the city out of its financial crisis. The minority believes that there are other choices, painful, yes… but other choices.

It has been my honor and a great privilege to have served as a Glendale councilmember for 16 years. I have lived in Glendale for nearly 50 years. I love this city. You love this city. It is our home. Placing a greater and greater tax burden on those who live in this home, is not prudent…and it sure isn’t the best way to grow Glendale.

© 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.

Jun 14

20

Do you still want the casino if…

Posted by Joyce Clark on June 20, 2014
Posted in Casino • City Council Actions • City issue and actions • City of Glendale • Glendale finances  | Tagged With: , , , , , | 3 Comments

I have written about the proposed Tohono O’odham (TO) casino and its impact on Glendale too many times to count. The other day a thought occurred to me. We all know that Glendale is in a financial mess. Its debt burden has prevented the construction of so many much needed facilities such as a western branch library and has caused the cuts in service to residents’ quality of life.

We often hear Councilmember Alvarez complain about service cuts and the on-going lessening of basic infrastructure maintenance. Yet she is all too willing to support the construction of the proposed casino in the name of jobs. Realistically the job numbers touted by the TO are highly inflated and everyone seems to ignore the stipulation that 25% of them must go to Native Americans.

Has anyone considered the financial impacts to a city already struggling financially? I think not.

Several years ago senior Glendale staff presented a cursory assessment of the financial effects of the casino. It was made clear that a new water treatment facility would be required to service the intense demand for water that would be created by the casino and its ancillary uses.  The construction of such a water facility is upwards of $70 million. Who would pay for it? Certainly not the Tohono O’odham. The persons paying the construction bill would be water ratepayers through an increase in water rates.

Then there is the issue of public safety. While a TO reservation would have its own tribal police to handle issues within the reservation it would be Glendale’s police and fire that would respond outside the reservation boundaries. At the very least, Glendale taxpayers would have to bear the costs of an increase in personnel and could experience delayed response times.

Lastly there are transportation costs. Streets adjacent to the reservation may need improvement to handle the increased traffic that will occur 24/7. There may be a need for upgraded traffic signals, signage and upgrades to the city’s Intelligent Traffic System.

For all of those who support the coming of the TO casino, do you still want the casino if it means that you have to pay more for your water provided by the city?  For all of those who support the coming of the TO casino, do you still want the casino if it means that public safety response times get longer as Glendale’s public safety personnel deal with a major traffic accident on adjacent streets or respond to a heart attack victim on the reservation? For all of those who support the coming of the TO casino, do you still want the casino if it means that instead of resurfacing or improving your street the money is used to improve or maintain streets to accommodate the increased traffic adjacent to the reservation?

You know, of course, that because of reservation status, the TO pay no taxes of any kind – no federal taxes, no state taxes, no county taxes and no Glendale taxes. If you were counting on increased sales tax revenue from the casino to offset these new financial burdens to the city’s General Fund, you can forget it. It’s not going to happen.

There are those like Councilmember Sherwood that believe Glendale can negotiate reimbursement for its added financial burden to support the casino from the TO. Do you really think the TO will shell out $70 million for a new water treatment facility or pay the ongoing costs of an increase in public safety personnel or pay millions for new or upgraded street improvements?

Even if a deal is struck, how can you trust people who violated agreements and the trust of their sister Tribes or kept secret its purchase of land for 7 years? If they renege on any kind of agreement with Glendale how will those who have complained about the costs of law suits feel about yet another law suit to get the TO to honor an agreement with Glendale?  

Please don’t regurgitate that the TO are required to give a small portion (8%) of their revenue to non-profits throughout the state. That presupposes that the TO will give their entire portion to non-profits in Glendale and ignore those in the Tucson area (site of their real reservation). Not going to happen. None of that money can go to Glendale’s General Fund to offset the new financial demands created by the proposed casino.

For every action there is an equal reaction. It’s the age old law of unintended consequences. While you may support the proposed casino because it will “create jobs,” are you willing to place further financial burdens on a city already under financial stress? Are you willing “to put your money where your mouth is” and to pay more for your water, deal with longer public safety response times and watch your streets deteriorate even further? I’m not.

© 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.

Jun 14

19

No light at the end of the tunnel

Posted by Joyce Clark on June 19, 2014
Posted in Camelback Ranch Spring Training Facility • City issue and actions • City of Glendale • Glendale finances • University of Phoenix Stadium  | Tagged With: , , , , , | 1 Comment

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.

Jun 14

16

Apathy wins every time

Posted by Joyce Clark on June 16, 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: , , , , , , , , , | 2 Comments

On June 12, 2014 Mike Kenny had an opinion piece in the Glendale Star entitled, Ring the alarm – city once again wants you to foot bill. Here is the link: http://www.glendalestar.com/opinion/editorials/ . Generally I do not agree with Mr. Kenny’s stance on many issues but this time I do.

One sentence stood out, “This current city administration banks on two things for survival, and they’re both yours: money and apathy.” The current city council simply cannot stop itself from spending money, your money. The latest example of their inability to reign themselves in is the expenditure, one-time and on-going, for an electronic voting system to be used at 24 council meetings a year. Why? Because they want to assure that you are confused as to who might be the deciding vote on any hotly contested issue…and to relieve Councilmember Chavira’s stress level.

What if there’s not enough in the budget to cover their willingness to spend your money? Not a problem. They will just create a new tax or raise an existent tax. Need money to cover the construction debt and annual management fee for the arena of approximately $27 million a year or the construction debt on Camelback Ranch of $18 million a year?No problem. Just make the temporary sales tax increase permanent. Need money to raise employee salaries? No problem. Just create a new annual licensing fee of $20 on your alarm system or make sure Glendale charges the highest fee in the state for driving school as you try to avoid those points on your record.

Why are 4 councilmembers led by the nose by senior management? Simple, it’s the easier way for them because you, the taxpayer in Glendale, never object. It’s called apathy. I can remember when a bunch of us tried to repeal the sales tax on food. Senior management put together a slick piece of propaganda asking citizens to decide what service(s) to cut if the sales tax on food was eliminated. It was a scare tactic and it worked beautifully. Glendale voters bought city rhetoric.

This time we heard the same scare arguments, i.e., half of Glendale’s staff would be terminated; services would continue to be cut. Those arguments only hold true if citizens allow this council to continue to spend beyond the city’s means. If citizens had demanded council adopt a phased plan of $5 million in cuts per year for 5 years there would be no need for the temporary sales tax to become permanent. Instead it was easier for them to accept Finance Director Duensing’s demands that the temporary sales tax be made permanent now…not in 2017 when it was due to sunset…but now.

This council, with the exception of Mayor Jerry Weiers, has adopted a budget that is not balanced as required by state statute. The budget starts with a $2.7 million deficit. But that’s OK according to senior staff. The money can come from $5 million in Contingency. If Phoenix demands a payment of over $3 million this October, that’s OK too…just take it out of Contingency. But wait…there’s not enough in Contingency to cover both obligations. Well, that’s OK too…just take it out of the Unappropriated Fund Balance (just a slick, new name for what is basically another Contingency account). They play games with your money and by now, you are so confused you can’t figure out what is going on.

Because of citizen apathy you, the Glendale taxpayer, will continue to be “nickled and dimed” to death until you have no more nickels and dimes. What many fail to recognize is that it takes so few of you to have an effect on this council’s financial decisions. Because so few citizens object to anything at council meetings when 20 or 30 citizens show up and speak to an issue council’s sensitivity radar kicks into high gear. Yep. That’s all it takes… 20 or 30 speakers to object. Are there 20 or 30 Glendale residents ready to scream, “I’m mad as hell and not going to take it anymore?” or will citizen apathy allow this council to spend beyond your means?

© 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.

Jun 14

7

Arizona Free Enterprise Club Initiative Packet confirmed

Posted by Joyce Clark on June 7, 2014
Posted in City issue and actions • City of Glendale • Glendale finances  | Tagged With: , , , , | 1 Comment

Another blog follower sent me copies of the paperwork filed with the Glendale City Clerk by the Arizona Free Enterprise Club on June 6, 2014. I was originally informed that it was a referendum packet but that information was incorrect. It is an initiative effort. Below are copies of the first page of the Statement of Organization of a Political Committee (PAC) and the Application for Initiative or Referendum Petition. The PAC has until July 3, 2014 to gather the necessary number of signatures, 10,434. I suspect they will have no difficulty in collecting not only the requisite number of signatures but many more. 

The text of the Initiative is as follows: “Adopting the Glendale Taxpayer Protection Act of 2014, which amends the Glendale City Charter, Article VI, Section 7, by decreasing the transaction privilege tax rate, as defined in the art, by seven-tenths of one percent (.7%), with such decrease taking effect August 1, 2017, and requiring a supermajority vote of the council to increase the transaction privilege tax, effective upon passage and proclamation of the act.”

The supermajority provision to increase the sales tax rate means that 5 out of 7 councilmembers would have to approve any increase.

The packet was taken out by Scott Mussi, Executive Director of the Arizona Free Enterprise Club and the Committee Treasurer is Timothy La Sota, an attorney with the firm of Tiffany & Bosco.

Applicationandlanguage_Page_1

Application for Initiative

Untitledattachment00020_Page_1

Statement of Organization

© 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.

 

 

 

 

 

Jun 14

6

An Odds ‘n’ Ends Friday

Posted by Joyce Clark on June 6, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale and the Super Bowl • Glendale finances  | Tagged With: , , , , , | 5 Comments

One of my many followers sent me this link:  http://www.macrumors.com/2014/06/06/apple-others-2-million-each-super-bowl-50/.  Apple, along with other Bay area tech companies, Intel, Yahoo and Google, has given their Super Bowl Host Committee $2 million in cash and other unspecified services to offset San Francisco Bay area taxpayer costs of hosting Super Bowl 50.

Hey Apple…could you spare a little more and gift Glendale $2 million in cash to offset the taxpayer costs of hosting our 2015 Super Bowl?

The Arizona Free Enterprise Club visited Glendale City Hall today, June 6, 2014 and made a beeline for the City Clerk’s office. What for, you say? It seems they have taken out a referendum packet on the issue of council’s decision to make the temporary sales tax increase permanent. Don’t be surprised if Glendale’s voters get to weigh in on the issue this fall.

© 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.

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

30

City of Glendale April 2014 Monthly Arena Report

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

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

April 2014 MonthlyArenaReport 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Joyce Clark,

2014 FAIR USE NOTICE

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

May 14

28

Restraint of trade?

Posted by Joyce Clark on May 28, 2014
Posted in City issue and actions • City of Glendale • Glendale elected officials • Glendale finances • Jobing.com arena • University of Phoenix Stadium • Westgate  | Tagged With: , , , , , , , | 7 Comments

Caitlin McGlade had a story in the Arizona Republic of May 28, 2014 entitled Glendale to collect less than projected on Coyotes Accord. I found the spin by stakeholders fascinating. For instance, Monty Jones, of Global Spectrum and general manager of the arena, had the following to say about the non-hockey events booked into the arena this year, “it had a successful year.” Wow. They set the bar so low that no one can see it. Seven non-hockey, revenue earning events is embarrassing when the anticipated number of non-hockey, revenue producing events was in the 20’s. Jones went on to say, “The company hopes to book more events next year.” I hope to win the Pulitzer Prize next year but it isn’t going to happen. So far, it’s not looking so good for Mr. Jones, et.al., with 5 non-hockey, revenue producing events booked in the arena for next year.

Parking revenues continue to be a problem for IceArizona and the city with cheaper parking available at the Cardinals’ stadium and another 3,000 free spaces throughout Westgate. Who would have guessed? After all the ink on the management agreement was barely dry when  the Cardinals announced that they would undercut the Coyotes parking charge and the Westgate manager announced that there would be no change in their policy of keeping spaces free during hockey games.

The article went on to say Councilmember Sherwood’s solution was, “that the city consider blocking off a road to make it more difficult to access those lots (stadium lots) during arena events. Councilmember Martinez seemed to think it’s an idea worth considering and said of blocking access, “(it) probably crossed most of our minds.” Those minds would be the four councilmembers who voted for the arena management agreement: Sherwood, Knaack, Martinez and Chavira.

Sherwood’s cock-a-mammy idea of using governmental authority to directly impact a private business in competition with the city is akin to asking for a law suit. What are they thinking? Are they thinking?

© 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.

« Previous Page — Next Page »