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Joyce Clark Unfiltered

For "the rest of the story"

May 14

19

A coat with many pockets, Part I

Posted by Joyce Clark on May 19, 2014
Posted in City issue and actions • City of Glendale • Glendale finances  | Tagged With: , , , | 6 Comments

Suppose you had a coat with many pockets…many, many pockets. You are allowed to put certain dollars into each pocket and you may spend, with bdu-4-pocket-khaki-tan-jacket-100-ripstop-cotton[1]restrictions, for only one specific thing from any one pocket. It would be complicated and problematical, eh? Well, the coat is Glendale’s budget and each pocket has a specific purpose and restrictions. Why bother to learn about Glendale’s debt? There is no doubt that Glendale’s debt burden is at the root of its financial mess.

We’re going to look at the pockets that handle debt…all kinds of debt; Enterprise Fund debt, Highway User Revenue Fund (HURF) debt, Transportation Debt, General Obligation (G.O.) debt and Municipal Property Corporation (MPC) debt. All of the facts, figures and information came from public sources such as Glendale’s Budget Book for 2014 and other public, official Glendale documents.

Glendale’s total debt for Fiscal Year 2014 is $89,228,314 out of the total of all revenues received from all sources of $576,000,000. Roughly 15% of all revenue received by Glendale goes to pay off debt. 15% is way too high. It should be under 10%. These five categories constitute the major sources of Glendale’s debt burden:

  • Enterprise Fund debt is $24,975,437……….28%
  • MPC debt is $29,496,137………………………….33%
  • G.O. Bond debt is $22,729,785………………..26%
  • Transportation Debt is $7,331,080…………..  8%
  • HURF debt is $4,695,875…………………………   6%

Let’s take the easier debt pockets first and get them out of the way.

In Pocket #1 is Enterprise Fund Debt of $24,975,437 – 28% of Glendale’s total debt. Water & Sewer Bonds are 27% of the city’s total debt and Landfill debt is another 1%.Enterprise Funds are water, sewer, sanitation and landfill. The Enterprise Funds were established by ordinance in 1986. Here is a portion of the text from the Sanitation Ordinance 1451: “The purpose of the sanitation fund is to accumulate all revenues and earnings received for sanitation services, to accumulate all interest earnings thereon, pay all administrative, operational and maintenance expenses, direct or indirect, of same, and accumulate contingency funds as an operational fund reserve to the sanitation fund. 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 funds reflect the same language in their enabling ordinances. Note that these funds are protected and not to be used for anything else.

Enterprise Funds are accounted for in a manner similar to a private business. Enterprise funds are intended to be self-sufficient with all costs supported primarily by user fees. They are stand alone funds. Their revenue does not go into the city’s General Fund. What Glendale residents pay each month for city utility bills goes into these Enterprise Funds. When debt (in the form of bonds) are issued it is for infrastructure projects such as the new 91st Avenue Regional Wastewater Treatment Plant, the Cholla Water Treatment Plant, the replacement and repair of water lines throughout the city and treatment plant upgrades to meet new federal regulations. Landfill bonds will be used to close the south portion of the city landfill and to open up the north portion.

This debt is issued based on revenues received from customers for service. In an emergency the city could use secondary property tax revenue but by habit and practice, it has never done so. We know where the money comes from for this pocket and when we take it out we know the narrow, restricted uses for this money.

The next blog will look at Pocket #2, HURF and Transportation Bond debt. It’s an easy one as well. Understanding a city’s debt burden is as dry as dust but in order to arrive at solutions for dealing with Glendale’s debt, it needs to be understood. Once we get a handle on it, let’s see if there are any solutions to bring it under control.

If Enterprise Fund debt is still unclear to you or you have a question related to it, please offer your question as a comment at the end of this blog. I will do my best to answer it. That way everyone will be able to see the question and answer.

© 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

16

It’s time for rightsizing

Posted by Joyce Clark on May 16, 2014
Posted in City issue and actions • City of Glendale • Glendale finances • Glendale's Fire Union  | Tagged With: , , , , , , , | 4 Comments

Glendale is not the only municipality facing financial pressure. One has only to look at Phoenix’s $37 million shortfall. Many municipalities are adopting new strategies to cut their budgets. One area of a municipal budget that merits further scrutiny is the fire department. Let’s look at Glendale.

Public Safety consumes over two thirds (67%) of Glendale’s General Fund. Glendale’s proposed  FY 2014-15 budget shows a total police department budget of $77,604,581 and a total fire department budget of $36,744,314 (roughly half that of police). The police department has total personnel of 537 and the fire department has total personnel of 267 (roughly half that of police). Everything tracks. The police department has twice the personnel and twice the total budget as that of the fire department. Except in one, major area – Overtime (OT), Hourly & Specialized Pays. You would expect the fire department expense in this line item to track at about half that of the police department. Not so.  The police department line item figure for OT in the FY 2014-15 budget is $1,675,000 covering 537 personnel. Astoundingly, the fire department OT line item figure is slightly higher than that of police’s at $1,681,000 covering 267 people.  Clearly, the fire department’s OT, Hourly & Specialized Pays is out of control.

So, we know the police department’s budget and personnel are twice that of the fire department’s with the exception of Overtime Pay in which they spend virtually the same amount. How can that be? The fire department’s practice of Constant Staffing requiring 4 people on each fire truck is creating unsustainable demands for overtime pay.

There is one other piece of information that is important to consider. In FY 2013-14 the Glendale Fire Department answered 30,040 EMS (Emergency Medical Service) calls; 3,570 fire calls; 2,238 miscellaneous calls and 619 special operations calls. Glendale’s medical calls have become the “elephant in the room” for the fire department. Its medical calls are ten times that of fire calls. Obviously the fire department’s mission has evolved over time. Its first priority is now medical response and fire suppression response, while still critical, has become its secondary mission.

Municipalities across the nation are recognizing the tremendous financial burdens placed upon them in covering the costs of fire department overtime as well as the costs associated with sending a large fire truck to a medical emergency. And they are beginning to act.

In Spokane, Washington as of January 2, 2013 the city decided that three fire stations and one ladder station would start using smaller vehicles on medical calls as opposed to the larger ladder trucks, which age quickly and operating and maintaining them was becoming more and more expensive. They decided it was important to spend their limited resources wisely taking into account that 78% of those three stations’ calls were medical.

Here’s another example: The Tualatin Valley Fire and Rescue (TVF&R) near Portland, Ore., was one of the early adopters of a fire/ALS deployment model using smaller vehicles. The department initiated its “Car Program” in 2010 as the way to respond to the increasing demand for EMS in a more efficient and effective manner. With 80% EMS calls, the department searched for a way to effectively respond to lower-priority requests for service and still maintain readiness for major emergency incidents. Instead of deploying a four-person staffed $400,000 full-size apparatus, the department purchased a $31,000 Toyota FJ Cruiser and staffed it with a single fire paramedic to handle calls such as minor traffic accidents, community service requests and lower-priority medical emergencies.

Or… In August 2012, the city of Grand Rapids, Mich., received a report that highlighted the recent trend of fire department rightsizing. The ICMA (International City Managers Association) made 22 recommendations to Grand Rapids municipal leaders that included a variety of changes to the fire department’s EMS response. One of the first recommendations was to eliminate five full-size fire department apparatus and replace them with smaller, more cost effective RRVs. The result was an estimated savings of $2.1 million.

And this… The Los Angeles County Fire Department (LACoFD) began providing rescue services in the late 1950s with the use of panel vans that carried firefighters to the scene of motor vehicle accidents and other requests for non-fire suppression services. This model of prehospital care delivery was retained as the LACoFD became one of the nation’s first fire ALS providers in the early 1970s. Today, the department still delivers ALS care by way of quick-response squad trucks staffed with firefighter paramedic personnel. The primary benefit of this ALS model is that it ensures a better utilization of resources while maintaining a cost-effective response. When an LACoFD squad arrives, the paramedic can determine if ALS care is required and then either accompany a contracted ambulance transport provider or return to service for another response.

San Jose, California as well as other cities across the nation are considering or have already reduced the number of firefighters on each response truck. It has proven to provide fire departments with more flexibility and better coverage. Four people on each engine to answer a medical call, was impracticable. Neighboring agencies, like Santa Clara County Fire, already assigns just three people per engine. The reasoning was that since 94% of all calls are medical, the Santa Clara County Fire Department was over deploying.

The practice of responding to medical calls with full-size apparatus is proving to be an expensive and inappropriate use of equipment. One deployment concept that appears to be gaining as an option for the fire service to meet both a decrease in budget and an increase in the demand for organizational efficiency is the transition from full-size fire apparatus to smaller rapid-response vehicles (RRVs). Some departments have used this concept for years to deploy ALS personnel to the scene of a medical emergency and to work in conjunction with other apparatus on fire suppression incidents. Fire departments must embrace new approaches to the deployment of their EMS resources by using peak demand staffing and changes to apparatus.

The “right resource, right place and right time” model has become the key concept for the deployment of fire EMS first response resources. Adopting a clinical, financial and operational strategy; and changing and rightsizing EMS resources appears to be the answer to many of the challenges faced by fire departments today. The modern fire service is now expected to be innovative and able to change its business practices by recognizing  evolutions in the response to the majority of service requests, especially as a majority of calls are now medically related.

As we move toward a change in the nation’s healthcare delivery system based on accountability and clinical outcome, the department that can adapt to new norms will be the most successful.

Models with reduction of personnel on response units and redeployment of those personnel to reduce overtime and the use of small, medical response units staffed with fire paramedics are being used successfully throughout the country.

It’s time to right size the Glendale fire department. Will the Glendale City Council have the strength of will to request that changes be made? Will the Glendale fire department and more importantly, the Glendale fire union, innovate and adapt to the reality of shrinking resources and the increased demand for more effective, reasonably priced medical response? Or will they use the buzz words of “diminished service and response time” to fight it?

© Joyce Clark, 2014

FAIR USE NOTICE

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

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

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

FAIR USE NOTICE

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

Apr 14

30

Former Glendale City Attorney Craig Tindall…Act 2

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

 

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

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

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

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

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

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

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

Tindall email 3 corrected

 

 

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

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

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

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

© Joyce Clark, 2014

FAIR USE NOTICE

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

Apr 14

26

Fire truck purchase resurrection

Posted by Joyce Clark on April 26, 2014
Posted in City issue and actions • City of Glendale • Glendale finances • Glendale's Fire Union  | Tagged With: , , , | 4 Comments

Remember the fire truck purchase debacle? As a refresher on November 26, 2013 the Glendale city council accepted a grant of $425,000 from the Salt River Pima-Maricopa Indian Community for the purchase of a new fire truck. Typically grants such as these are good for a year from the date of award.

On January 28, 2014 the purchase of said fire truck was on the council voting agenda for approval. The fire truck’s purchase price was $484,206.92. The price was $59,206.92 greater than the grant awarded to pay for it.  It was to be purchased cooperatively using a Houston‐Galveston Area Council (HGAC) purchase agreement. An RFP was to have been issued to solicit local bids but that never occurred. Why an RFP was not used has never been answered satisfactorily.

During the Public Comment portion of the January 28, 2014 council meeting a representative of Freightliner spoke of the irregularities he encountered in attempting to satisfy specifications for the fire truck purchase. After the meeting Fire Chief Burdick went ballistic on this gentlemen in the City Hall lobby. The Freightliner rep’s comments raised enough eyebrows that City Manager Brenda Fischer pulled the item from the agenda.  She determined and communicated to council that she would investigate and an RFP would be issued.

Three months later and you can throw those city manager pledges out the window. Word has sifted out from the usually tightly fortified City Hall that the very same fire truck purchase will be up for city council approval sometime this June.

Apparently the Human Resources Department was tasked with investigating any fire employee improprieties in the process and found none. Even if there had been something discovered, it would have been handled internally and neither council nor the public would have been informed.

The reasons given by Tom Duensing, Executive Director for Finances, for reverting to the old process are: 1. Not enough time and 2. Not enough people to manage an RFP. If you buy these reasons I have a bridge in Brooklyn for you. There is already enough information to dust off and to write an RFP in short order. But let’s for argument’s sake, say it took a month to write it. It could be issued by the end of May 2014. Typically an RFP requires 45 days for responses. That gets us to the middle of July 2014. The successful response would then be presented to council for final approval no later than September 2014 (as council vacates either the month of July or the month of August). The grant award is good until November of 2014.

As for lack of people to manage an RFP… Come on, really? Council recently authorized two more bodies in the Purchasing and Procurement Department. Somehow or other the city has managed to issue timely RFPs for a host of other items all this time.

If the City Manager had acted responsively after she pulled the item in January of 2014, at this June 2014 meeting council would be acting on a successful response to an RFP issuance instead of resurrection of the original scheme.

So much for the representations of a new era of governance by senior staff. It’s merely the same old game with new players.

© Joyce Clark, 2014

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

Apr 14

24

The Tohono O’odham proposed casino and jobs…Myth vs. Reality

Posted by Joyce Clark on April 24, 2014
Posted in Casino • City issue and actions • City of Glendale • Glendale finances  | Tagged With: , , , , , | 2 Comments

On April 24,2014 there is a report that petition signatures are being collected calling for a referendum on the city council’s vote to repudiate US House of Representatives Trent Franks’ bill, HB 1410. If passed it would create law that would stop the Tohono O’odham’s effort to build its proposed casino. I support this effort. As the crow flies, I live a scant mile from the proposed casino site. Neighborhoods that will be directly affected by the impact do not want the casino. In my informal poll 50% of the respondents do not support negotiating with the Tohono O’odham and 50% of the respondents do. I believe this is the most divisive issue in Glendale’s history.

Our national and local economies are still abysmal. Unemployment is still way, way too high. Every politician worth his or her salt is running on a platform of job creation. Is it any wonder that the Tohono O’odham (TO) inordinately exaggerate and emphasize job creation associated with the proposed casino as a major means of garnering public support for its plan? Of course not but they do so in a rather Pinocchio-esque form. Remember the job creation numbers come from a Tribe that kept its land purchase secret for 7 years. That alone should make people think twice about their assurances of job creation. It’s time to take a realistic look at the TO promised job creation numbers.

Of course the proposed casino will create jobs both temporary and permanent. The disagreement occurs over TO touted numbers versus reality. The TO has consistently claimed the creation of 6,000 construction jobs and another 3,000 permanent jobs. Their numbers are highly inflated and that is understandable given their history of truth telling and their zealousness to build this casino at all costs.

Let’s look at some other Tribal casino projects. In Lansing, Michigan the Sault Tribe of Chippewa Indians is constructing a $245 million, 125,000 square foot casino. The tribe says the number of construction jobs is a little over 700 with 1,500 permanent jobs. That is reality, not myth.

In California the Graton Rancheria Tribe is constructing an $800 million entertainment and gaming destination. It has created 750 construction jobs and expects 2,000 permanent jobs. That is reality, not myth.

It’s time for the TO to explain exactly how they arrived at a figure of 6,000 construction jobs and 3,000 permanent jobs. How many jobs in what industries? What methodology did they use to arrive at those numbers? If they used a research study that they commissioned then the numbers can be considered highly suspect. It’s too bad that someone like Elliot Pollack hasn’t done independent research on jobs gained versus jobs lost.

As for permanent jobs a more realistic assumption is in the 1,500 to 2,000 range. Of course, we all know because the TO has made it abundantly clear that 25% of those jobs must go to Native Americans.  There is absolutely no way to determine how many jobs will go to Glendale residents. It is reasonable to assume that many jobs will go to residents from the surrounding Metro area. While that’s a great prospect for other cities, it’s not so good for Glendale who will bear the brunt of costs associated with a casino in the town while losing out on the benefits of the “multiplier effect.”

The great majority of jobs at casinos can regularly be found on the Forbes list of worst paying jobs in America – including that of ‘gaming dealer.’ According to the 2007 National Compensation Survey compiled by the US Dept of Labor’s Division of Labor Statistics the median hourly wage for gaming service employees is estimated at $6.34 per hour with annual median earnings of $13,179. That is $2,000 above the 2014 Federal poverty level.

The unions are fully on board and have been one of the most public advocates for the proposed TO casino as visions of union construction jobs dance in their heads. Wait…Arizona is a right-to-work state. If the unions have a behind-closed-doors, back-slapping “understanding” with the TO about using union labor exclusively they better get it in writing. They might want to get the TO to waive sovereign immunity with regard to any contracts and possible breaches. They should never forget the lesson of the TO’s secret land purchase. They also need to look at what happened to union labor used on the Graton Rancheria Tribe’s casino construction. Initially union labor was used but was quickly replaced with out-of-state construction workers, largely non-union. Sometimes it pays to be careful what you wish for as the California unions on the Graton Rancheria project painfully learned.

The proposed TO casino will create temporary construction jobs and permanent jobs, as will other industries which do not require reservation or sovereign status and can develop according to Glendale’s existent General Plan for that area while generating new construction and sales tax. With the exception of the cluster services associated with gambling, studies consistently reveal that new businesses tend not to locate in areas allowing legalized gambling and pre-existing businesses will face added pressures that push them toward illiquidity and even bankruptcy. The proposed casino will act as a disincentive to other businesses that would otherwise locate in western Glendale resulting in the loss of future, good-paying jobs.

The benefits of economic development is overstated by the TO and its proponents who never account for jobs lost from businesses that fail or choose not to locate in west Glendale due to the all-encompassing predatory nature of casino capitalism.

That’s reality.

© Joyce Clark

2014 FAIR USE NOTICE This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

Apr 14

23

Is the golden goose cooked?

Posted by Joyce Clark on April 23, 2014
Posted in City issue and actions • City of Glendale • Glendale and the Super Bowl • Glendale finances  | Tagged With: , , , , , , , , , , | 7 Comments

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

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

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

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

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

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

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

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

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

© Joyce Clark, 2014

FAIR USE NOTICE

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

Apr 14

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

FAIR USE NOTICE

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

Apr 14

2

April Fools’ Day

Posted by Joyce Clark on April 2, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances  | Tagged With: , , , , , | No Comments yet, please leave one

The City Council Workshop occurred on April Fools’ Day. Councilmember Alvarez was not physically present but did participate telephonically. Does this signal another medical issue and another long period of absences? The 3 items up for discussion were: the Risk Management Trust Fund and Workers’ Compensation Trust Fund; Downtown Parking and the Procurement Process.

Upper management is recommending that the Risk Management Trust Fund and Workers’ Compensation Trust Fund be separated. It’s a rearrangement of the deck chairs which in this case does no harm. Many of the proposed changes had been recommended by the citizen Risk Management and Workers’ Compensation Trust Fund Board as a result of the audit and were made just before I retired and while I was still chairperson.

Downtown parking was up next. A survey had been distributed to the downtown merchants about the issue. The response was underwhelming. The conclusion by staff was that the 2 hour parking restriction at some locations is a non-issue and recommended no change to the current policy. Mayor Weiers and Councilmember Hugh, as a minority, expressed continued concern and believe that all 2 hour parking restrictions should be lifted.

The last item was a presentation by Tom Duensing, Executive Director of Finance and Michael Bailey, City Attorney, on the procurement process. There is no question that current policies are fuzzy, at best. It most certainly is time to tighten up policies in this area. However, the recommendations offered by staff still preserve a lot of discretion (read in staff terms, flexibility) for the City Manager. Not good enough. City council needs to be fully informed about every type of procurement which has not been a past practice. Practices that need reformation include the policy of not requiring bids or quotes on purchases less than $5,000. This is a practice that can bleed the city of dollars by a thousand paper cuts. These purchases are cumulative and can add up quickly. At the very least written memorialization of these purchases should be made and provided to council periodically even though no bids or quotes are required. Purchases between $5,000 and $10,000 allow the policy of verbal quotes. There should be no verbal quotes allowed.

There may be reason for an emergency purchase greater than $50,000. Currently the policy requires city manager approval and council confirmation after the fact.  This practice should be revised to inform the council (at the time of occurrence) of the city manager’s approval of such purchases. The city manager currently requires written determination from the materials manager justifying such purchases. The code should be revised to require the city manager to provide council with the determination the city manager receives from the materials manager.

Upper management continues to advocate for the provision allowing the city manager to allow exemptions and exceptions. It is time to end this practice. There should be no exemptions or exceptions for it can, and often does, lead to misinterpretation and misconception.

Under Council Special Items of Interest, Councilmember Alvarez asked for further clarification on city policy regarding irrigation. She also asked for a discussion on diversity. She was as clear as mud as to what about diversity she wanted discussed. The city already has very strong diversity policies. Councilmember Martinez requested that the issue of short term rentals be taken up. Councilmember Sherwood asked that the policy of traffic signals flashing at midnight be revised to begin at 10 PM. Vice Mayor Knaack asked that the city consider electronic voting for city council meetings.

It was another meeting short and sweet. So many questions to be asked and so few actually offered.

© Joyce Clark, 2014

FAIR USE NOTICE

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

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