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Joyce Clark Unfiltered

For "the rest of the story"

On Tuesday, October 18, 2016 the city council had only one item on its workshop agenda…the performance of its Civic Center. The Civic Center opened in 1999 and is now 17 years old. It is a beautiful building. Former Mayor Scruggs wanted it and sold it under the guise of becoming a destination location in downtown Glendale. Has this facility performed up to its expectations? Let’s take a look.

City personnel made their Tuesday presentation based on figures for the last 5 years of the Civic Center’s operation. I have taken staff’s 5 year average and derived estimates that reflect the entire 17 years of its operation. My figures could be a little too high or a little too low as I did not look up the figures in 17 years of budget books. Hence the estimated were arrived at by multiplying the average annual figures times 17 years.

Over the 17 year life of the facility the General Fund Budget allocation was an estimated $11,422,000.00 and there had been an additional General Fund Subsidy over those 17 years of another $4,400,000. The 17 year total of budget allocations and subsidies is an estimated $15,822,000 or an average of $930,000.00 per year. Not included in this amount are the costs of maintenance and repair that have been expended over the 17 year period as staff did not provide any figures relative to this expense.

What kind of revenue does the Civic Center generate to offset its expenses? Over 17 years an estimated $850,000 had been earned from the catering contract and during the same period the Civic Center had earned an additional $6,800,000.  The total estimated revenues over the 17 year period is approximately $7,650,000.

The Civic Center had earned an estimated $7,650,000 over its life span and had cost the city an estimated $15,822,000. It has cost the city an estimated $8,172,000 to keep the doors of the Civic Center open for the past 17 years.

According to the staff presentation over the last 5 years the Civic Center had drawn an annual average of 51,888 patrons or for the past 17 years an estimated total of 882,096 patrons. That averages about 141 patrons per day. However, there are days when the Civic Center has no business and days when it is booked for large gatherings. It should be mentioned that the Center has very little, if any business, in December due to Glendale Glitters. There simply is not enough parking during that period for Civic Center patrons and over the years patrons have not wanted to deal with the traffic generated by Glendale Glitters.

Has this facility fulfilled its promise? Everyone, even staff, says no.  In their presentation staff offered a plan with a new growth goal of an increase of 5% in patronage per year. Since the average annual patronage is 51,888 patrons, their goal is to increase that number by 2, 594 additional patrons this year. They believe they can accomplish that goal because new funding has been allocated to market the Center; there will be enhanced collaboration with the Glendale Convention and Visitor’s Bureau; their absorption into a new department will create new synergy; and there will be an enhanced building maintenance and repair fund. Staff has also asked for authorization for up to 6 community events at no charge; consideration of rental fee adjustments as part of the Fiscal Year 2017-18 budget; and the flexibility to negotiate rental fee packages.

Will all of this work? Everyone hopes so. The jury is still out. City council is willing to give the Center more time.  Staff’s first annual performance report is due in a year. Make no mistake. Challenges remain. Not having a major hotel nearby as well as inadequate parking space during downtown events will have to be overcome, if possible. Add to this equation the Convention Center space owned by the city and managed by the Renaissance Hotel at Westgate is a direct competitor for the same business.

If staff cannot turn the Civic Center around then it may be time for council to consider whether it will ever meet its purpose financially and philosophically. Perhaps repurposing will become its fate. It was originally designed to be a draw for downtown Glendale. A true destination place is exactly what downtown Glendale desperately needs to become more robust and to grow to its potential.

© Joyce Clark, 2016          

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Joyce Clark,

2014  

FAIR USE NOTICE  

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

 

Norma Alvarez

Norma Alvarez

At the May 7, 2013 City Council workshop during Council Comments and Suggestions, Councilmember Alvarez stepped up to the political plate once again. Her first suggestion was regarding the recruitment of a new City Attorney. She feels council should not recruit for a City Attorney but rather promote from within. She doesn’t want to spend the money. She remarked that Acting City Attorney Nick DiPiazza was doing “a good job” and that the City “should use him.” Now it appears that the city’s Human Resources department will take the lead on this search. Not a good idea. Agendas are rife within the city and will seep into the search parameters. I’ve seen it before. It’s also a bit like asking the fox to guard the hen house. This city needs a set of fresh eyes just as is needed for the City Manager’s position. Her initial thought seemed to spend all of her energy and she drifted off briefly – but wait! She wasn’t quite finished.

PMG 1In one final burst she opened the barn door for the Phoenix Monarch Group (PMG) horse. She has promoted PMG as willingly as her promotion of the Tohono O’odham. If you recall, she brokered a meeting in June, 2012 between this group and former Mayor Scruggs and former Councilmember Lieberman. At that meeting PMG made a pitch to manage Jobing.com for $7M a year while promising to bring 25 events (tractor pulls??). This time she wants council to look at outsourcing special events, marketing and the Civic Center. Obviously the criteria used in selection of a marketing and special events company will determine the Phoenix Monarch Group’s fate. It has been no secret that Alvarez thinks the money spent by the Marketing and Communications Department is wasteful and unnecessary. If there would be one department slated for oblivion it would be this one. After struggling to release her thoughts she mercifully slumped back into somnolence.

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