On June 10, the Glendale city council voted 5-2 to cancel the current lease management agreement with Ice Arizona. This was the agenda item:
“DISCUSSION AND POSSIBLE ACTION TO DIRECT THE CITY MANAGER AND CITY ATTORNEY TO CANCEL THE PROFESSIONAL MANAGEMENT SERVICES AND ARENA LEASE AGREEMENT BETWEEN THE CITY OF GLENDALE AND ICEARIZONA MANAGER CO., LLC AND ICEARIZONA HOCKEY CO., LLC, PURSUANT TO ARIZONA REVISED STATUTES § 38-511, AND TO PURSUE ANY AND ALL OTHER LEGAL ACTIONS AND REMEDIES NECESSARY TO EFFECTUATE CANCELLATION OR TERMINATION OF THE AGREEMENT.”
Here is the text of Arizona Revised Statutes §38-511:
38-511. Cancellation of political subdivision and state contracts; definition
- The state, its political subdivisions or any department or agency of either may, within three years after its execution, cancel any contract, without penalty or further obligation, made by the state, its political subdivisions, or any of the departments or agencies of either if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any of the departments or agencies of either is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract.
- Leases of state trust land for terms longer than ten years cancelled under this section shall respect those rights given to mortgagees of the lessee by section 37-289 and other lawful provisions of the lease.
- The cancellation under this section by the state or its political subdivisions shall be effective when written notice from the governor or the chief executive officer or governing body of the political subdivision is received by all other parties to the contract unless the notice specifies a later time.
- The cancellation under this section by any department or agency of the state or its political subdivisions shall be effective when written notice from such party is received by all other parties to the contract unless the notice specifies a later time.
- In addition to the right to cancel a contract as provided in subsection A of this section, the state, its political subdivisions or any department or agency of either may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the state, its political subdivisions or any department or agency of either from any other party to the contract arising as the result of the contract.
- Notice of this section shall be included in every contract to which the state, its political subdivisions, or any of the departments or agencies of either is a party.
- For purposes of this section, “political subdivisions” do not include entities formed or operating under title 48, chapter 11, 12, 13, 17, 18, 19 or 22.
The special voting meeting was preceded on Tuesday, June 9, 2015 by a special workshop session when council immediately voted to go into executive session and then there was a regular workshop meeting. Did the executive session lead to council’s decision to hold the special June 10, 2015 vote about the IceArizona contract? We will never know for executive session cannot be discussed per state statute.
Interestingly Anthony LeBlanc revealed some executive session information when he was on the radio last week. Gary Hirsch, a Glendale resident, raised a question about LeBlanc’s radio comments during the public comment period of council’s regular meeting on June 9, 2015. He asked if anyone representing the city had filed a complaint. No one on council responded but that is not unusual as a statement is made at the outset that council is there to receive public comment but not to respond.
OK, so there is a state statute that allows a political subdivision to cancel a contract. So what? There is one more piece of information that is essential to this surprising action. Most of you do not have a copy of the IceArizona/Glendale Lease Management Agreement. I do and A.R.S. § 38-511 is cited in that contract on Page 84 (in an old contract, page 96 of newer version). I quote:
“24.13 Conflicts of Interest
24.13.3 (in newer contract this is 23.13.2) The Parties acknowledge that the provisions of A.R.S. §38-511, which are hereby incorporated in this Agreement by this reference, may create a situation in which the City might have a right to cancel this Agreement pursuant to A.R. S. §38-511.”
Who made sure this clause was included the Lease Management Agreement? And why? Was city council aware of this provision when they approved the contract? I doubt it. The Jamison contract written by Tindall is the framework for the Ice Arizona contract. There were modifications to specifically address the IceArizona deal. The first thought when reading 24.13.3 is Craig Tindall. How does Tindall fit into all of this? Here’s a quick timeline:
- April 1, 2013 Tindall resigns as Glendale City Attorney but continues employment with city for 6 months
- June, 2013 Tindall emails prior to approval of agreement demonstrate his extensive involvement in crafting the final language (please refer to my previous blog on Tindall. Here is the link: Former Glendale City Attorney Craig Tindall…Act 2 http://wp.me/p3aHul-xb )
- July 3, 2013 Glendale IceArizona Lease Management Agreement approved by city council
- August 20, 2013 IceArizona hires Tindall as its General Counsel
- October 1, Tindall’s employment with the city officially ends
State statute says quite clearly that a political subdivision within 3 years after a contract’s execution may cancel the contract if any person is significantly involved in negotiating, crafting or drafting the contract on behalf of the political subdivision and is an employee or agent of any other party. Why did IceArizona accept this provision? Did Sherwood read this contract? If so, why did he not object to provision 24.13.3 within the contract? Why did Tindall and Nick Wood (another Coyotes attorney) allow this clause to remain within the contract? Was it deliberately placed within the contract to offer either side a way out without invoking the 5 year out clause? If it was deliberately left in and invoked by the city then the city wears the “black hat” – not IceArizona for invoking the hated 5 year out clause. Hmmm…
Councilmember Sherwood did not attend tonight’s meeting. Apparently he was in Salt Lake City. I don’t know but one would think that such a critical vote would demand that he cancel his trip. He did find time that afternoon to be interviewed on NBC Sports Radio 1060AM by Roc and Manuch.
Why cancel the contract now? The time limitation under state statute is 3 years. This July 3, 2015, 2 years will have passed. If council’s move to cancel the contract did not occur now it would have happened sometime in the next 12 months. Why this exact moment? I don’t know.
Since the approval of the contract City council has changed dramatically with the departure of former Councilmembers Martinez, Knaack and Alvarez. Martinez and Knaack supported the deal while Alvarez did not. The majority that approved the contract at the time of its approval was Martinez, Knaack, Sherwood and Chavira. With new councilmembers taking office in December of 2014 a seismic shift occurred. No longer did the deal appear to enjoy a 4 councilmember majority.
The city issued a press release on the morning of June 10, 2015 stating, “The City Council has scheduled a discussion and possible vote regarding Glendale’s contract with the Arizona Coyotes. Discussions and negotiations regarding the contract have been ongoing for months. Specifically, the City is open to a resolution but it must be one that provides certainty and fairness to both parties, especially the taxpayers. The Council has agreed to stand for transparency and the highest standards of ethics for any future agreement with the Coyotes.” Was the city’s press release forced by IceArizona’s threat to sue the city? Translating the government speak, the city appears to have taken the position that it wants the Coyotes to stay as the anchor tenant in its arena but it can no longer sustain the annual loss of revenue. Clearly it is sending the signal that it wants to renegotiate the annual management fee from $15 million a year to ??? Tom Duensing, Interim Assistant City Manager, has pegged this year’s loss to the city to be in the $8.7 million dollar range. To date IceArizona’s position is that they refuse to renegotiate the contract and they reiterated that statement when Barroway and LeBlanc met with Mayor Weiers and Vice Mayor Hugh. And why would they entertain a renegotiation? They are in the catbird’s seat and they retain that pesky 5 year out clause.
Some of the comments made by various individuals during the course of the meeting:
- City Attorney Bailey – his office sought numerous outside opinions; the contract is the opposite of the goal of public-private partnership; management fee paid by the city not to be used to retire ownership debt; the purpose of the statute is to protect taxpayers from any employee having a dual relationship
- Nick Wood (Attorney for the Coyotes) – city has no claim; said NHL and Coyotes will sue; claimed Tindall was a ‘former employee’; questioned timing of council action; predicted terrible things will happen to Westgate
- Anthony LeBlanc (Coyotes minority owner) – the city’s action has had a significant financial impact on the Coyotes already; called council action ‘political grandstanding’; claims meeting on Monday with Mayor Weiers was the first time city had asked to renegotiate
- Many citizens spoke for over an hour – majority were Coyotes fans; included Jeff Teesel, Manager of Westgate; however there were a few brave Glendale citizens who asked council to weigh the needs of the community vs. the needs of professional sports.
At the start of the meeting Councilmember Aldama made a motion to table for 2 weeks. Chavira seconded. The majority voted no on the motion. The vote on cancelling the contract was 5-2 with Aldama, Tolmachoff, Turner, Hugh and Weiers voting to cancel and Sherwood and Chavira voting to keep the contract. Mayor Weiers commented prior to his vote with the cryptic statement, “if you are breaking the law there is no exception.” He went on to say as time progressed more information would be available so that the public would understand why council voted as it had.
There’s more to say but I will save it for my next blog. I will offer one comment now. The meeting was ugly and the air was filled with threats, intimidation and breathless anger. If there are any typos or poor English please accept my apology. It was due to a rush to get this blog out. My only hope is that LeBlanc and crew reach out immediately to the city, willing to renegotiate the deal and living up to their promise to keep the Coyotes in Glendale.
© Joyce Clark, 2015
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Would like to note weiers suggested there was more than one person involved. So Tindal and ?
My guess and only a guess at this point…perhaps Frisoni??? Don’t know yet.
Looks like you were correct, judging by the hearing that just ended.
Pizzacat, do you mean Frisoni was a former employee involved>
Well, glendale said Tindall and a former Assistant City Manager at the TRO hearing today (as stated by KTAR station) sooooo it seems like it?
Yes…. it was Julie Frisoni.
Glendale was forced to name her today as the other person in the complaint.
Frisoni recently did some contract work for the Coyotes in putting together their bid for the 2017 World Junior Championships….. after she had resigned from Glendale and started her own PR company.
Frisoni was still PR director at the time the IA lease was being negotiated so there is absolutely no way she would have been involved with the lease negotiations. She did a phone interview tonight with Channel 15 and went on to say for the city to claim a PR director would be directly involved with negotiating a multi-million dollar lease with a major sports franchise is “ludicrous.”
Legend, and I have a bridge in Brooklyn for sale….
Joyce — if you have something that shows Ms Frisoni having a significant input into the crafting of the IA lease then by all means lets see it.
Tindall was given a COI waiver when they asked him to resign, which amounts to excusing him of doing exactly what they want to accuse him of now.
But it’s no matter,… it’ll be how the judge interprets it all..
Frisoni is somehow tied into things… Do not EVER doubt it.
TheLegend… look at what ARS38-511. Her admitting that she did the work for the world juniors bid is a direct violation of it. Why? Because it’s a procurement of an event, something that falls under the subject matter of the lease….
Thanks Pizzacat. I had not heard that till this morning and listened to her interview. She is minimizing her power by saying she was just a Public Information Officer. She had more power as the Director of Communications than people are aware and I can se her involved in the negotiations or at a minimum review of how it would impact Glendale. She would dictate how things were to be handled to minimize or maximize exposure for the city.
The most important piece is what’s on her website. She lists “◦Crisis communications, including NHL Coyotes negotiations and the near bankruptcy of a city” under the “who we are” category. So she outright admits she was a significant part of negotiations… which is something ARS38-511 covers. She basically unknowingly buried IceArizona.
Joyce – You obviously have quite a bit of firsthand knowledge about this contract. In addition to the claims the City is making regarding Tindall and the use of the $15m to pay down debt rather than use it for operations, wouldn’t the Coyotes also have breached the contract by not completing their financial audit on time and not disclosing it to the City, as required?
Also, as I look back on the sordid history of this debacle, I still do not understand why the City was on the hook for two $25 million payments to the NHL while the team was being operated by the league. Maybe you can enlighten me!
My point. Your comment acknowledged. Will answer tomorrow. My brain is fried!
The simple answer about where the 15M payment was directed was in the deal. The Deal gave the Yotes the right to assign that to anyone they choose to. Another Glendale gaffe. Vice Mayor Hugh was not even knowledgible on the deal when he made that claim.
The end came sooner than we thought…I doubt very seriously that LeBlanc will come back to the table…too many other options than to deal with this circus anymore. Glendale cooked it’s goose tonight. Really sad for the businesses and the potential development around Westgate. Hey, look on the bright side…maybe the TO’s won’t think this is such a great place for a casino now!!!
Or wait until Gila River sues since it’s name is on a soon to be worthless arena. Best solution. IceArizona buy the arena at a loss to Glendale. Glendale can then focus on their next fiasco, Camelback Ranch (the REAL BIG ELEPHANT in the room.)
It seems to me there are two BIG things still outstanding. Firstly the City owes the NHL a substantial sum of money (plus I would assume interest), putting this puck on their sticks. I would demand the COG to back down or your bill is due tomorrow. Lastly, wasn’t it IceArizona that said they would make the city whole over the first five years if the deal didn’t work out? Guess that’s now out the window.
What I took away from all of this… Contracts, deals don’t matter as no one has the intent on honoring them. I am not paying the extra sales tax that I voted yes on for five years, and last council chose to make it permanent. I don’t agree, so I’m not paying. You see, you do learn something everyday.
Why speculate on why the reference to ARS38-511 in the contract, the statute explicitly states “this statute shall be included in every contract. . .” and I certainly hope it is. I just wonder why it took so long to act on this. Hopefully they were gathering information that will prove beyond a shadow of a doubt that Tindall was involved.
The Coyotes aren’t the only game in town and there’s no reason to think Westgate will fold up without them. This was a smart move on the part of the City Council; just a shame it took them 2 years to figure it out.
The City Council’s track record on negotiating contracts leaves a lot to be desired, so let’s hope there’s no renegotiating.
They could have acted on it whenever they wanted to…they just needed to have the council votes to make it so. They only got that after the recent elections turned the tide anti agreement.
I agree with mypoint02’s statement “the sordid history of this debacle.” So many bad acts and events from this long story of the arena. And a few questions in my mind, such as how does this decision to cancel the agreement fit in with the sudden resignation of the assistant auditor who was reviewing it? Could it be that the Coyotes won’t negotiate because they NEED the $15MM each year to survive financially? And we will never know how many Coyotes supporters are also Glendale taxpayers that are willing to spend $15MM of their tax dollars to watch hockey.
After watching this embarrassing demise of Glendale last night, I couldn’t help but see the irony in a representative of the TO casino infer that putting Glendale’s money into the casino would be so much better for the citizens than losing money on the Coyotes. I hope everyone involved remembers this as our children and grandchildren are brought up with the atmosphere of gambling and drinking is a better way to live in a community than good sports. The Coyotes supported many kid friendly activities and parks to get involved with on a healthy basis. I don’t think casino sponsored community activities sends much of a message for our youth. Shame on our Council to send these messages!
Really? So no hockey in the area and a single casino on the fringe of the city brings about the ruination of our grandchildren? PLUS, any evens would be TO sponsored events not “casino” sponsored events. Did the council do the right thing for the city? For their own political careers (who’s up for re-election soon)? Only time will tell. But even if the team leaves, I doubt WestGate will crumble into the earth. I say we have the fans pony up and buy the arena from the city. Problem solved.
Just so you know, there is alcohol served at hockey games, and I’m pretty sure people are gambling on those games too. The major difference is that the City of Glendale loses money on hockey. Lots of it.
My comment here sure didn’t take long to get lambasted by a few people. I guess I should re-think, but not on your life. I didn’t live over 7 decades to not have an opinion and not to stick to it, even when someone picks points that had nothing to do with my view. Okay, I am not a hockey fan, have never been to a game and don’t usually watch that much on tv. Football and baseball are my games. Not a point of contention. My whole opinion, and yes, that all it is, is that Glendale broke every rule of trust and honor by not sticking with whatever was decided and signed into contract by whoever was on the Council or in charge at the time. I have taught my kids their whole life, you made your bed, now you sleep in it. Just because there is so called new and big time information that citizens know nothing about, (and why don’t they?) does not give a City the right to break contracts and trusts in entities that they have signed, sealed and if they had been prosperous would not have been even questioned. The casino will bring masses to Glendale. Yes. But some people just do not understand that these masses are not going to turn out to be healthy and give the right message of what Glendale is (or I should say used to be) is about. Yes, I know they serve alcohol at Coyote games. Gambling off site I have no idea about. I love casinos. And I think driving an hour is the best way to really enjoy them. When you have a little extra cash and just like to enjoy the atmosphere. Not In the middle of our schools and churches locally. I think a few of the Council people have a much bigger hand in this than we will ever know. (because we are not privy to that info either). My point is Glendale is in the news for all the wrong reasons. Glendale’s contracts will be few and far between for any sports or businesses in the future. We are not honorable. Don’t know if this will get posted or not but like I said, it is only my opinion. And that is something I take time to research and feel informed about,
Is this the cancellation of the both the lease and the arena management or one or the other?
AZNATYVE, It is a cancellation of the Lease Management Agreement which includes the lease and management of the arena.
It is -an attempted- cancellation of the Lease Management Agreement which includes the lease and management of the arena.
Remains to be seen how successful or unsuccessful of an attempt it will be. But if the opinions I’ve been reading from legal talking heads are any indication of how things will go in court, Glendale might be in for a very rough ride indeed.
Fishbert, My only thought at this time is in reviewing Attorney Bailey’s comments at the start of the meeting he referred to EMPLOYEES who had caused a violation of ARS 38-511. I no longer believe that former Attorney Tindal is the trigger for the events that unfolded.
During the most recent election Bart Turner, Lauren Tolmachoff, and Jamie Aldama all ran as pro casino and anti Coyote Contract. Please note I said contract, not anti Coyote. We all know that in the past, Mayor Weiers, Vice Mayor Hugh, and Councilwoman Alvarez all at various times voiced their dissatisfaction with the contract. The citizens of Glendale voted those three new council members in. Why are you now surprised that they did exactly what they campaigned to do?