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Joyce Clark Unfiltered

For "the rest of the story"

Mar 14

20

Taxes…are they worth it?

Posted by Joyce Clark on March 20, 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: , , , , , , , | 4 Comments

As promised here is the rest of the story on the city council workshops held on March 18, 2014. The morning session was devoted to money – the budget, the medical benefits plan and an increase in fire staffing.

The General Fund budget discussion yielded some important gems of information. Staff, for the first time ever, used zero-based budgeting. It is a methodology for which I advocated for years. It’s about time.  There will be $15.5 million in expenditure reductions and revenue enhancements. Most of the reductions are of the smoke and mirror variety and reflect internal movement of monies. The only exception is that all departments will make cuts totaling $4.75 million. The lion’s share of those departmental cuts is the result of eliminating unfilled, vacant positions. This is a strategy that has been used before reluctantly.

When council got to departmental budget cuts Councilmembers Martinez and Knaack again asked the rest of council to return a portion of their council budgets to the General Fund as a signal that they were willing to absorb some of the same pain other departments were enduring. Vice Mayor Knaack again expressed her concern and displeasure about Councilmembers Alvarez’ and Hugh’s practice of giving the lion’s share of their council budgets to non-profits. Once again, Alvarez dug in her tiny toes and said she would give up nothing.

The big budget take away is this: Glendale residents will experience a 2% increase in their property tax rates and the temporary sales tax increase will now become permanent. For one reason only. As Tom Duensing, Executive Director of Finance said, “The level of contractual obligations (Jobing.com Arena and Camelback Ranch Ballpark) is unique to Glendale.” If not for these two major debt burdens, “Glendale’s financial picture would look very different.” He went on to say according to the major rating agencies a city’s debt burden should be under 10% and most are in the 8% range. Glendale’s debt service burden is in the 25% to 28% range. Translating it means that the reason your taxes are increasing or in the case of the temporary sales tax increase remaining, is because of the debt created by Jobing.com Arena and Camelback Ranch Ballpark. That has been the elephant in the room that no one wanted to acknowledge. Glendale staff finally has done so. When will your councilmembers finally admit that these two city-owned properties are the reason?

How did the council fall on this issue? Councilmembers Martinez, Knaack, Chavira and Sherwood (a majority) gave approval and direction to remove the sunset provision from the temporary sales tax increase thereby making it permanent and to increase Glendale’s portion of your property taxes by 2%. Councilmembers Alvarez and Hugh wanted the sales tax issue to go before Glendale voters and silently gave approval to the property tax increase. Mayor Weiers wanted an additional week to confer with major stakeholders in Glendale. He didn’t get it but we can presume that he supports the majority council action taken. The next budget workshops are scheduled for April 8 and April 10, 2014.

One perplexing comment made by Mr. Duensing was that WITHOUT the temporary sales tax increase the ending fund balance is ONLY a positive 10% in 2017. If this is correct, One would think a positive fund balance of 10% seems to negate the need to make the temporary sales tax permanent.

Another issue taken up was the medical benefits plan. Retirees can expect another substantial increase to their monthly medical insurance payments while current employees will see no increase. Jim Brown, Executive Director of Human Resources (weren’t they getting rid of “Executive Director” titles??), said there would be no increase to current employees but retirees are an unfunded liability causing the increase in their premiums.

The last issue was an increase in fire staffing of 15 fire fighters as a result of a SAFER grant. As with a COPS grant there is a sliding scale and the SAFER grant will cover the first two years of fire fighter salaries. After that, the city will absorb the costs. Chief Burdick said that with the addition of 15 fire fighter positions there should be a savings of an estimated $400,000 in overtime pay. Let’s hold him to his word.

Lesson learned is that taxes are remaining or increasing because of the debt burden created by the city-owned Jobing.com Arena and Camelback Ranch Ballpark. Are they worth it to Glendale residents?

© Joyce Clark, 2014

FAIR USE NOTICE

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

Mar 14

13

Connections…

Posted by Joyce Clark on March 13, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Glendale finances • Jobing.com arena  | Tagged With: , , , | 9 Comments

In the March 13, 2014 edition of the Arizona Republic there is a story by Paul Giblin and Craig Harris entitled Contract violated Glendale Policies. Here is the link: http://www.azcentral.com/story/news/local/glendale/2014/03/13/contract-violated-glendale-policies/6359209/ .

It reports that former City Attorney Craig Tindall may have used his influence to award a no-bid contract for the city’s external audit to a friend, Jose de Jesus Rivera of the firm of Haralson, Miller, Pitt, Feldman and McAnally. Apparently Tindall was close enough and comfortable enough to Rivera to send an email on his city computer soliciting tax exempt tuition funding for his son.

Typically contracts over $50,000 are required by city policy to go out to bid as a Request for Proposal (RFP). As a professional services contract that requirement may not have been necessary but there remains a question of undue influence. Surely for a contract of this dollar amount, while not required to go to bid, it may have been prudent to do so. Members of the Glendale City Council seem to be shrugging their shoulders while kicking the can down the road and alluding to “that’s the way it has always been done.” They don’t want any part of this latest debacle.

By the end of the external audit the cost would be over half a million dollars, ten times the amount required for an RFP. Rivera thought there would be an RFP and asked Tindall via email about its timing and release. Instead Tindall submitted a memo to then Interim City Manager Horatio Skeete recommending the use of Rivera and his law firm. Skeete wanted to put the contract out for bid and to issue an RFP but for reasons unknown that did not occur. The result of the external audit was to place blame on Skeete and to completely exonerate Tindall. Could it have been that Rivera, as Tindall’s friend, was well aware of the bad blood between Tindall and Skeete? As friends it appears plausible they may have discussed it. Did that knowledge play any role in the final outcome of the external audit? It seems to be worth your consideration and your decision.

Was the external audit result payback to Skeete by Tindall for having lost his bid to become Interim City Manager? It there a connection between Tindall’s failed attempt to become Interim City Manager and the audit conclusions? You will have to decide. It was a bloody battle for the position of Interim City Manager. Tindall’s supporters on city staff lobbied me and I assume, the rest of council, disparaging Skeete. No such effort occurred on the part of Skeete or any supporters he had. During this period Tindall apparently stalled contracts and other documents on his desk seemingly in an effort to further bloody Skeete’s nose. Council was evenly split between the two candidates and it was Alvarez who broke the tie in favor of Skeete. It appears that Tindall wanted the position far more than he was willing to admit publicly and was disappointed that he did not prevail.

The Republic story goes on to say that Tindall is under on-going investigation by the state Attorney General’s regarding the issuance of this no-bid contract. He is also under an on-going investigation by the state bar as a result of a complaint filed by former Councilmember Phil Lieberman regarding a presumed conflict of interest. Lieberman’s complaint alleges Tindall was employed by the city while he also was general counsel to IceArizona, successful bidders on the Jobing.com Arena management contract, constituting a conflict of interest. I do remember a conversation had with Tindall during the period of the Jamison bid for the arena management contract and his assertion that he was talking to other “serious” bidders ready to come forward if the Jamison bid failed. Was Anthony LeBlanc, of IceArizona, one of those “serious” bidders? How much information about the Jamison bid was shared with these “serious” bidders? Skeete alleged to me, and presumably other councilmembers, that Tindall appeared to be holding up negotiations as the Jamison contracts sat on his desk for inordinately long periods of time. When Skeete was queried as to his awareness of the most recent Jamison contract amendments, his response was that Tindall still had them and he had not seen them. Were these actions by Tindall more payback to Skeete or even worse, was it an attempt to railroad the Jamison bid in favor of these other “serious” bidders? I don’t know and don’t know if we will ever find out. All we know is that there are connections – between Tindall and Rivera; Tindall and Skeete; and Tindall and “serious” bidders for the arena management contract.  What part these connections played in the outcomes is yet to be discovered.

© Joyce Clark, 2014

FAIR USE NOTICE

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

Mar 14

10

Monthly arena revenues to date

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

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

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

               # of hockey           Ticket Surcharge divided            Average number

                          events                  by $3 per game                        of Qualified tickets/game

August, 2013                0                             0                                                 0

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

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

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

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

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

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

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

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

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

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

© Joyce Clark, 2014

FAIR USE NOTICE

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

Mar 14

3

What’s with the Coyotes?

Posted by Joyce Clark on March 3, 2014
Posted in City issue and actions • City of Glendale • Jobing.com arena  | Tagged With: , , , , | 19 Comments

I have watched nearly every Coyotes game this season. The St. Louis Blues game on March 2, 2014 was positively painful as the team disintegrated in the third period and blew a lead. Does that suddenly make me an expert? Gosh, far, far from it. Yet even the most uneducated fan recognizes the team’s lack of consistency from game to game. In one game they are brilliant. In the next it’s as if they don’t know each other. What seems to be happening now is more than a lack of consistency. It’s as if a malaise has settled over the team destroying its chemistry.

Everyone has assumed since 2009 that stable ownership would offer certainty to the players and would remove the team’s collective anxiety causing them to play with more confidence. Yet in 2012 while under the ownership of the League’s front office and with no ownership surety the team made the play offs and won the divisional title. Is throwing money at the problem the solution? Don Maloney and Dave Tippett operated on a shoe string that year and pulled it off. They had no choice. They were magicians.

In the face of disappointing team play this year, the year of stable ownership, ffn the face of disappointing team play nce. Yetary 28, 2014 game against the Colorado Avalanched acquire new ones. hat was it wian chirping has begun – but in a subdued fashion as no one wants to anger or alienate the new owners. The collective fan solution seems to be to get rid of some players and acquire new ones. Candidates identified after the February 28, 2014 loss to the Colorado Avalanche are Schlemko, Stone, Riberio and Smith. The team’s core has remained intact throughout the years of uncertain ownership drama  – Doan, Hanzel,Virbrata, Bissonette, and Yandle, to name a few. Instead of removing and replacing players the real question is, what has happened mentally and collectively to this core? There is evident frustration and anger. Witness some of Doan’s public remarks about the team’s abysmal play. One would think it has spilled over into the locker room – oh, to be a fly on THAT wall.

It’s too late to right the ship this year. Maloney and Tippett have to identify the mental poison and apply the antidote. That takes time. Unfortunately this year’s poor showing will affect the bleeding bottom line of the owners and of the City of Glendale. How long can either entity sustain the financial loss? In the case of the owners they would have you believe it’s not a problem for them but it most certainly is for Glendale. Glendale entered into the ownership deal relying upon the new owners’ promise to partially reimburse (the estimate was $9 million) the city for the management fee of $15 million a year through “enhanced revenues.” All estimates are that this figure will not be met – not even close to it.

On a different note: The owners just hosted Jewish Heritage Night. Great. I would expect to see Christian, Muslim and Buddhist Heritage Nights as well. If there is no recognition of other faiths, don’t we call that discrimination in this country?

© Joyce Clark, 2014

FAIR USE NOTICE

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

Mar 14

2

An idea whose time has come

Posted by Joyce Clark on March 2, 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: , , , , , | 1 Comment

Glendale Mayor Jerry Weiers delivered his State of the City remarks to a packed audience at the annual Glendale Chamber of Commerce dinner at the Renaissance Hotel on Thursday, February 27, 2014. Although his news about Glendale’s finances was dire it was also a fair assessment. He is to be commended for his forthright speech. Here is a link to a recap: http://www.azcentral.com/community/glendale/articles/20140228glendale-arizona-state-of-the-city-mayor-financial-problems-real.html . Here is also a link to a Mayor Weiers You Tube video that visually explains Glendale’s debt and revenues: http://www.youtube.com/watch?v=s2nBWBojUh0&feature=em-share_video_user .

He didn’t remark on how Glendale got to where it is today financially but I will because I was one of the council that got us there. Although I approved the arena I did not approve of Ellman’s plans for his development of Westgate. His “vibrant” building colors look like WalMart on steroids and his billboards are monstrosities. He also would not dedicate an additional land to place another eastbound lane on Glendale Avenue. I was more reluctant about Camelback Ranch but the deal called for future reimbursement by the Arizona Sports and Tourism Authority (AZSTA). I agreed because there were development plans in place for the surrounding land and an AZSTA reimbursement on the horizon.

Council knew we would never be a Scottsdale, the west’s most western town; or a Tempe, a college town; or a Chandler and Gilbert, with their high tech manufacturing. We believed that these facilities would create a niche, a branding of Glendale and that they would help to grow Glendale.  After approval of Camelback Ranch the city began negotiation to place a USAA basketball training facility in the area. It looked as if we were about to add another major sporting facility. Glendale’s future looked bright.

There are two major contributors to Glendale’s current debt burden: Jobing.com Arena and Camelback Ranch Spring Training Facility. At the time of these facilities’ approval it was clear that Glendale could sustain the debt. Deals were in place to develop commercial and retail around both. They would generate new sales tax revenues to cover the expected construction debt. The arena did not have an annual management fee. Glendale’s economy was surging as was the national economy.

There was no hint of the Great Recession that would lay waste to so many of Glendale’s plans. Glendale’s sales tax and property tax revenues sunk like a stone as did its state shared revenue.  Developers and their plans dropped like flies as one after another went into bankruptcy.

Suddenly the city’s debt had become unsustainable.

What was council’s plan back in the day? It was three fold. Pass a temporary 5 year sales tax increase to provide much needed revenue while other strategies took hold; restructure our debt; and embark on a 5 year plan of targeted cuts to expenses while rebuilding the city’s contingency fund. It was even suggested, at the time, by Interim City Manager Skeete that the city sell the arena. I was shocked by the thought at the time but over time, it has become an idea that has a great deal of appeal.

It is no coincidence that Glendale’s future debt burden is about $30 million. That is very close to the city’s annual arena debt: $12-13 million in an annual construction debt payment; $500,000 to $1 million annual payment to a capital repair account; and $15 million in an annual management fee. The solution of selling the arena at fair market value is now very appealing. While the city loses money already invested in the facility the bleeding stops. Suddenly there would be no more construction debt; no more annual management fee and no capital repair account to maintain. It’s an idea whose time has come.

© 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.

Feb 14

23

Citizens respected and valued?

Posted by Joyce Clark on February 23, 2014
Posted in City Council Actions • City issue and actions • City of Glendale • Glendale elected officials • Jobing.com arena  | Tagged With: , , , , , , , , , , , | No Comments yet, please leave one

The Glendale City Council flirted with Public Comments occurring at the beginning of their meetings. It was a pilot project. After several months council voted to move Public Comments back to the end of the meeting citing that it got in the way and delayed council’s real business which is certainly not hearing from the public.

The biggest gorilla in the Valley, Phoenix, just had its council voting on February 5, 2014 to move its Citizen Comment Session to the beginning of their meeting. The move was in response to a citizen petition which claimed citizen input was not respected or valued.

It seems ironic that Phoenix has now done what Glendale rejected. If Glendale citizens submitted a petition to move the Public Comment period to the front of the meeting again would council acquiesce as Phoenix has done? What do you think? You can weigh in by voting in my informal poll to the left of this column.

A coalition on Glendale’s city council has emerged. Look for Knaack, Martinez, Sherwood and Chavira voting as a majority. That puts Weiers, Hugh and Alvarez on the losing side of most issues. I bet Alvarez rues the day she helped Chavira to get elected as he has voted in opposition to her positions since he started in office. The biggest issue was the vote on arena management and Alvarez may never forgive him for that one.

However, this November is election time in Glendale with 3 council seats up for grabs. This newly formed, rather fragile majority may not last long. Will Chavira, et.al, work behind the scenes to defeat Alvarez and get someone who is more simpatico? It would be a good move on his part as it would get rid of a problem before he stands for reelection in 2016. All he has to do is throw his support behind Jamie Aldama, Alvarez’s opponent.

Don’t forget, Knaack and Martinez are retiring. Martinez has anointed Robert Petrone but candidate Petrone’s past financial troubles may get in his way. Knaack appears ready to endorse Bill Toops, owner of the Glendale Star. Toops will have his own problems explaining how his ownership of the local paper does not conflict with serving on council. Look for more candidates to emerge as it gets closer to the end of May when nominating petitions are due. Historically in recent times there have never been less than 2 candidates for every open seat. It will be interesting to see how this election shakes out. Stay tuned…

© 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.

Feb 14

22

Camelback Ranch

Posted by Joyce Clark on February 22, 2014
Posted in Camelback Ranch Spring Training Facility • City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , , , , | 5 Comments

On Tuesday, February 19, 2013 the city council’s afternoon workshop was devoted to an informational presentation by staff on the history of Camelback Ranch. It’s a good a time as any to review what happened and how did Glendale get into this financial sinkhole? For the record, I did support this project and voted in the affirmative.

Camelback Ranch was first discussed in the spring of 2006. Keep in mind, the national economy was booming. Glendale was earning record revenues. That was the character of the economic climate in which the decision was made to move forward. No one had a crystal ball foretelling of the Great Recession about to descend upon the country. There was no issue with the arena. Steve Ellman had just sold his interest in the Coyotes to Jerry Moyes who became the new arena manager. The city was not paying an arena management fee. It would be 2009 when Moyes declared bankruptcy and the national recession hit.

Council had commissioned an economic impact study by Economic Research Associates released in March of 2006 to determine the potential financial impacts of the proposed Camelback Ranch project. It said the potential estimated direct economic impact of the two teams would be $14.9 million a year if used only during the spring training season and $19.2 million if the facility was used year round. Part of that estimate took into account that Right Path Limited would be developing the land surrounding the actual ballpark facilities. It was against this backdrop that council moved forward with approval for the project.

It was a complicated deal. Glendale’s partners were or are: the City of Phoenix; the Arizona Sports and Tourism Authority; the Dodgers and White Sox teams; and Right Path Limited (as the developer).

Camelback Ranch is located physically within Phoenix. Glendale purchased the parcel on which the major league baseball facility (MLB) sits as well as several other parcels for commercial/retail development. Phoenix’s obligation in the deal is to pay 80% of the sales tax it received on this site for 40 years up to a maximum amount of $37 million. It was its contribution toward the development of the site. In return Glendale assumed the obligation of paying Phoenix for a specific right-of-way and land adjacent to that right-of-way. The deadline for that purchase in the amount of $3.7 million is October of this year. If Glendale reneges all terms of the Phoenix/Glendale Intergovernmental Agreement (IGA) become null and void. From 2009 until 2013 Glendale received over $200,000 from Phoenix in sales tax revenues.

Ralph Burton, principal of Right Path Limited, was to be the developer of the land adjacent to the MLB facility. At the time Glendale had a great deal of confidence in him. He had been very instrumental in Cabelas locating in the Westgate area. He had purchased a substantial amount of land along the western side of Loop 101 named “Main Street” and there were plans in the works to site the Olympic basketball training facility and headquarters there. He had taken over the airport fixed base operation (FBO) and had performed major renovations. He unfortunately partnered with Danny Herndon (of Danny’s Car Wash fame and illegal immigrant workers) and Bob Banovach to develop the Main Street project. It wasn’t long before there was in-fighting between them resulting in litigation. In the meantime the recession factored into their development plans. All plans ground to a halt and ended in bankruptcy.

The Dodgers and White Sox agreement with Glendale stipulated that they would operate and maintain the facility. Capital repairs would be Glendale’s obligation. They were required to pay $1 a year for rent. There is no management fee obligation for Glendale. Glendale is responsible for providing public safety services but the revenue it receives appears to cover those costs.

The Arizona Sports and Tourism Authority (AZSTA) pledged to cover 66.7% of the project’s costs as it has historically done with other baseball spring training facilities in Phoenix, Mesa, Peoria and Surprise. Reimbursement was originally scheduled to begin in 2017 but again, the recession destroyed that schedule. AZSTA’s revenues dwindled and the new projection for payments to Glendale is now scheduled for 2025-2026.

The debt service for construction of the project range from a high of $17 million in FY 2014-15 to a low of $9 to $11 million in subsequent years. Glendale is obligated to contribute to a Capital Repair account with annual payments of $400,000 to $800,000.

The financial obligations of Camelback Ranch and Jobing. com Arena are substantial for Glendale. The annual financial requirements of these two city owned facilities are clearly unsustainable.  Camelback Ranch requires infusions ranging from a high of $18 million (debt service and Capital Repair account) to a low of $10 million a year. Jobing.com Arena requires an annual management fee of $15 million and annual debt service of approximately $13 million. Add to those figures the $5 million a year owed to the NHL, the annual contribution to the Capital Repairs account of half a million to a million a year and another million to repay the city’s Enterprise Funds and we’re looking at a low of $28 million a year to a high of $34 million a year. Combined these two facilities require cash infusions each year from a low of $38 million to a high of $52 million. A disclaimer is in order. Since I am no longer on city council I am not privy to current financial information and obligations related to these facilities that may be considered confidential. However, the underlying concepts remain valid. Some of the cash required by these facilities may be offset by revenues they generate. We simply will not know how much offset there is for the arena until the start of the next fiscal year on July 1, 2014.

Is there any solution available? Perhaps yes. The many partners and contractual obligations associated with Camelback Ranch do not lend themselves to a sale by the city of Camelback Ranch. However, Jobing.com Arena is not in the same situation and could be sold. In doing so it removes substantial annual debt service and management fee obligations from the city. It is an option that merits consideration. Personally, I would be sad to see the city lose the arena but sometimes ya gotta do what ya gotta do.

As a side note I am discontinuing my informal polls, at least for now. It is obvious that those for or against an issue are padding the results by voting repeatedly. The results of the poll have now become meaningless.

If you would like to receive an email advising you of a new blog post, simply insert your email address in the space provided on the top right side of this column.

 

© 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.

Feb 14

8

There are two elephants in Glendale’s room

Posted by Joyce Clark on February 8, 2014
Posted in Camelback Ranch Spring Training Facility • City Council Actions • City issue and actions • City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , , , , , , | 6 Comments

The afternoon workshop session of the Glendale city council of February 4, 2013 was a presentation by Stuart Kent, Glendale’s Executive Director of Public Works (there’s that pesky Executive Director title again!) and the consultancy firm of Rider Levett Bucknell, Ltd. (RLB) at a cost of slightly over $100,000. The presentation was a Total Life Cycle Cost Assessment of the city owned facilities of: Jobing.com Arena; Renaissance Hotel Convention Center & Media Center; Renaissance Parking Garage and Camelback Ranch. Here is the link to the slides used for the presentation: http://www.glendaleaz.com/Clerk/agendasandminutes/documents/01PPT-TLCCAssessment-FinalFinalWorkshopPresentation.pdf  .

The afternoon session was over in the blink of an eye, and lasted for about the half hour it took to make the presentation. Councilmembers eyes glazed over and there was only one question from Councilmember Martinez on a point on which he needed clarification.  Did these councilmembers read this report? Your guess is as good as mine but I would wager most of you would say they did not read it. Well, I did – all 150 pages plus. I even had to find one of my Dad’s magnifying glasses to read all the exhibits which were compressed into teeny, tiny print to fit on an 8 1/2” X 11” sheet of paper. That was no mean feat.

The city can’t catch a break. The financial news goes from bad to worse as contractual costs of maintaining these facilities contribute to the ever-mounting bills the city must pay every year. RLB uses a 50 year life cycle for these facilities. They believe these facilities will last for 75 to 80 years. While that may be accurate, it seems that in 20 years or so the tenants will demand facility updates to remain competitive. That issue was never asked and never addressed. Here are the more important “take aways” from RLB’s Assessment.

Take Away #1: From the Workshop Council Report, Page 1: “The facilities are managed by the current tenants, with associated costs for operation and basic maintenance the responsibility of the tenants. The cost for the capital replacement and repairs are the responsibility of the city in each of the facility agreements.”

Take Away #2: The chart below is an estimate only. The figures could be higher or could be lower than projected or council may decide to delay some improvements.

Capital Improvements: Budget Recommendations, 5-Year Summary

FACILITY

 FY 2015 FY 2016 FY 2017 FY                   FY 2018               2019                 Totals
Jobing.com   Arena $4.9M $3.1M $0.0M $0.3M $9.6M $17.9M
Renaissance   Convention & Media Center $0.3M $0.5M $0.6M $0.0M $0.2M $1.6M
Renaissance   Parking Structure $0.1M $0.0M $0.9M $0.0M $0.1M $1.1M
CamelbackRanch   Park $2.1M $0.1M $1.3M $0.7M $1.9M $6.1M
Totals $7.4M $3.7M $2.8M $1.0M $11.8M $26.7M

Take Away #3: Assessment Page 5: “The (arena) facility includes adjacent sitework, parking areas and a service road.” On Page 9 of the Assessment it says, “The City shall be responsible for capital maintenance of the arena Parking Area, which shall include but not be limited to striping, patching, and resurfacing. Section 8.2.1(d).” Yet the city only receives parking revenue after the first $20,000 per event goes to IceArizona. One would think there should have been some cost sharing  for repair and maintenance negotiated.

Take Away #4: Although on page 7 of the Assessment it says it provides the following, no attached facility condition assessment checklists were provided in the report. “The defective items are listed in the attached facility condition assessment checklists and evaluated in the attached facility condition assessment estimate.” It is an important omission. The NHL when managing the arena identified the roof as needing major repair at an estimated cost of $2 million. Without the defect list it is difficult to determine if immediate major roof repair of the arena is included. Defects are categorized under the following headings; 

  • Programmed Maintenance
  • Preventive Maintenance
  • Unscheduled Repairs
  • Emergency Repairs
  • Deficiency Repairs”                                                                                                                                                   

Take Away #5: Page 21 of the Assessment states, “Based on review of the information received to date RLB believes the current building related Sustainment, Operations and Maintenance costs are in the region of $10,000,000 per annum (for the following items):

  • Custodial
  • Energy
  • Grounds
  • Maintenance & Replacement
  • Management
  • Pest Control
  • Refuse
  • Security
  • Telecom
  • Water & Sewer”

It continues on Page 22 with, “In addition to the above noted items there are other additional event-specific related Operational costs (direct event labor and expenses) which currently cost up to $4,000,000 per annum, depending on the number of events being held at Jobing.com Arena. At the time of commencing this TLCC Assessment RLB understood that a portion of the event related expenses were being reimbursed by the National Hockey League (NHL).” To whom?

Take Away #6: From 2003 to 2013 the Projected Arena Income was a negative $43,319,000. When you think about it, it is logical. From 2003 to 2009, 6 years, the city paid no management fee. Since then the city paid the NHL $25 million a year for a total of $50,000 million. There were revenues earned during that period but not enough to cover that major expense. What should be of concern that from 2014 to 2018, the next five years, the projected revenue income is projected to be a deficit of $20,577,000.

Take Away #7: There are 910 parking spaces in the 4 level parking garage per page 7 of RLB Renaissance Parking Structure Assessment. On Page 13 it states that the Hotel has 460 garage spaces + 240 surface parking spaces. Jobing.com Arena Management is allotted 450 of the garage parking spaces. Those are premium parking spaces for which IceArizona charges $20 or $25 per space.

Take Away #8: On Page 28 of the RLB Camelback Ranch Assessment it states,  “As noted previously within this report, RLB did not receive any detailed, specific information pertaining to current Sustainment, Operations and Maintenance costs for Camelback Ranch Park. Based on RLB’s review of a 2011 Cactus Little League Facility Summary (as researched by Broughton/Heimstead) we believe the current facility related Sustainment, Operations and Maintenance costs may be in the regions of $3,800,000 per annum (for the following items):

  • Custodial
  • Energy
  • Grounds
  • Maintenance & Replacement
  • Management
  • Pest Control
  • Refuse
  • Security
  • Telecom
  • Water & Sewer”

What does all of this mean? Darned if I know. No, really, it demonstrates that there are two elephants in Glendale’s room. Check out this comparison.  It’s down and dirty because some of the numbers can only be estimated at this point but it gives one a feel for what is happening at each facility.

                                                        Jobing.com Arena           Camelback Ranch

 

Annual construction debt                    $12M                           approx. $25M

Average annual Capital                      $3.5M                                      $1.2M

Improvement Expense Est.

(over next 5 years)                          

Annual Management fee                      $15M                                           0 

Total average annual expense             $30.5M                                  $26.2M

 

AnnualEst. projected revenue            –  $3M                                      -$ .3M

Annual Est. projected deficit               $27.5M                                   $25.9M

                                        

As can be seen, the deficit numbers for each facility are pretty close to one another. Yet, I cannot begin to count the number of times that someone has said, “Don’t blame the arena for Glendale’s financial problems. Take a look at Camelback Ranch. That’s the real problem.” As you can see, each is a tremendous financial burden on the city at a time when the city faces financial crisis. There are, indeed, two elephants in Glendale’s room. 

© Joyce Clark, 2014

FAIR USE NOTICE

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

          

Jan 14

31

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Joyce Clark, 2014

FAIR USE NOTICE

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

Jan 14

25

Take a deep breath and wait

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

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

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

  Fund ID     Amount  
Arena Event Operations

$247,457.06
Arena Special Revenue

$1,947,103.03
   
Account

Amount
Arena Annual   Rent

$326,712.33
Arena Base Team   Fees

$48,681.51
Arena Naming   Right Revenue

$60,000.00
Arena Parking   Fees

$18,835.49
Arena Parking   Rev-Hockey Games

$309,898.94
Arena Parking   Rev-NonHockey

$91,719.49
Arena Ticket   Surchg-Hockey

$896,393.39
Arena Ticket   Surchg-NonHockey

$194,861.88

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

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

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

Under a generous scenario it looks like this:

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

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

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

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

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

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

© Joyce Clark, 2014

FAIR USE NOTICE

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

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