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Joyce Clark Unfiltered

For "the rest of the story"

Jul 13

19

So you want to be a councilmember…Part 1

Posted by Joyce Clark on July 19, 2013
Posted in City of Glendale • Glendale elected officials • Glendale finances  | Tagged With: , , , , | 6 Comments

THE TEASER

This, for those of you not in the media business, is called a “teaser.” Over the coming weeks each councilmember’s budgetary spending will be explored for the past 6 months, from January 15, 2013 when 4 new members took office, to June 30, 2013, the end of Fiscal Year 2013.

greed 1Here is the roster of spending from the highest to the lowest for the last 6 months of Fiscal Year 13:

  • Councilmember Chavira, Yucca district…….$27,748.18
  • Councilmember Alvarez, Ocotillo district ….$26,151.34
  • Councilmember Hugh, Cactus district………$19,711.12
  • Mayor Weiers…………………………………………….$14,041.33
  • Councilmember Sherwood, Sahuaro district..$11,516,89
  • Councilmember Martinez, Cholla district……$  7,717.47
  • Vice Mayor Knaack, Barrel district……………$  3,672.29

Why did Councilmember Chavira spend 7 ½ times the money spent by Vice Mayor Knaack? These are your taxpayer dollars. Is your district representative practicing fiscal restraint at a time when the city has fiscal problems?

Check back over the coming weeks as each councilmember’s budget is reviewed. The answers are revealing.

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Jul 13

5

Norma…Norma…Norma

Posted by Joyce Clark on July 5, 2013
Posted in City Council Actions • City of Glendale • Glendale elected officials • Jobing.com arena  | Tagged With: , , , , , , | 10 Comments

Note: I said that I was taking a hiatus for about a week but this blog begged to be written before my hiatus. It is timely now. See you back here after July 15th.)

Norma Alvarez

Norma Alvarez

There are two words that apparently are not in Councilmember Alvarez’ dictionary — grace and dignity. On July 3, 2013 the Glendale Star published a story entitled Alvarez sets deadline for departure by its Editor, Carolyn Dryer. Here is the link: http://www.glendalestar.com/news/headlines/article_d7f30530-e413-11e2-8882-0019bb2963f4.html.

Norma publicly exploded after the affirmative vote by a majority of council for the RSE arena management deal. She laid the blame for the lease management’s acceptance at the feet of the entire council by saying,“It’s our fault, letting them (Coyotes prospective owners) do what they want to do.”

The city paid approximately $500,000 for an external audit. In the minds of some councilmembers such as Alvarez, it’s purpose is to fix blame. In the story Alvarez claims the audit will reveal all kinds of dastardly deeds performed by ??? and she says, “I’m waiting for the audit. You’re going to be surprised.” She also hinted that she will resign after the results of the audit are made public and said further, “It’s going public. So, I’m going to wait for that.” She claimed that she told the auditors an ear-full and she probably did but how much was hearsay and how much had a factual basis? You can be sure the audit will be fact based and may not include all of Norma’s titillating tales. If that is the case, you may see a second eruption from Mount Norma.

Sherwood

Gary Sherwood

She then went on to trash her fellow councilmembers. She claimed discrimination by her peers because “I have never been included in this council from the first day I’ve been in. I’m not ‘one of the boys.’” She accused Councilmember Sherwood of usurping the Mayor’s role during the month-long Coyotes negotiation process with, “I’m tired of this person walking around and talking like he’s the mayor. Jerry (Mayor Jerry Weiers) has been courteous to him.” Sherwood did take the lead on the Coyotes negotiation and his rubbing elbows with the likes of NHL Commissioner Gary Bettman, Assistant NHL Commissioner Bill Daley, RSE’s Anthony LeBlanc and Daryl Jones and attorneys Grant Woods and Nick Wood (no relation) had to have made Sherwood feel warm and fuzzy all over. I’m sure his ego was stoked as all of these principals whispered sweet nothings.  She also accused Sherwood of inserting himself into the search for the City Manager process by “When Sherwood got the applications, he called her (new city manager hired Tuesday, Brenda Fischer),” Alvarez said. “We didn’t call anybody; that’s why we have HR. He (Sherwood) came back and told us this is the best person.” While not illegal, as far as I know, it is a highly unusual action by a councilmember.

Chavira photo

Sammy Chavira

There were no kind words for Councilmember Chavira either. A little past history is in order. When Sammy ran in 2012 Norma stood “toe to toe” with Sammy’s bid. She funneled money and workers to his campaign and did everything in her power to assure his election.  With regard to Sammy’s positive vote for the Coyotes’ deal she said, “But he’s a disappointment to the people of Glendale. I know people in Glendale who say they are going to make sure he never wins again.” (More about Sammy’s vote in a future blog.) I would think Norma feels betrayed by the very person she was instrumental in getting elected. If nothing else Norma has a long memory and the resources to make good on her promise about Sammy’s future.

There’s more but you will have to read the article for yourself to capture the full flavor of the outrage Norma expresses. Every councilmember, in any community, has at one time or another, experienced back stabbing, betrayal and countless other unpleasant actions from their peers. It’s not usually aired in public because most have a sense of grace and dignity and realize that it’s part of politics. Alas, they are not words in Norma’s vocabulary.

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Jul 13

3

Congratulations !!!

Posted by Joyce Clark on July 3, 2013
Posted in City of Glendale • Jobing.com arena  | Tagged With: , , , | 5 Comments

celebrate 1Congratulations to all who worked so hard to keep the Arizona Coyotes in Glendale. Your tremendous effort has been rewarded. Now the hard work begins…not for the fans but for the principals — RSE and the city — in the deal. I wish them much luck now and in the future. I respect the current council’s decision and can appreciate what it took for them and out of them to arrive at their decision-having been there several times previously.

This 4 year odyssey has taken its toll in friendships and relationships as nerves and tempers frayed. That is my only regret. Just as with many of you, it is time for a brief hiatus — time to recharge and renew. For the next week I will do exactly that and no blogs will appear. When I come back…roaring…there will still be many other Glendale issues — and the pond to write about.

See you back here in a week!

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Jul 13

1

Analysis of the Renaissance Sports and Entertainment bid…Part 3

Posted by Joyce Clark on July 1, 2013
Posted in City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , , , | 7 Comments

words 6bargaining 3I want to commend attorneys for both Glendale and RSE. When I received the original June 26th draft of the Agreement consisting of 93 pages it took me quite a few hours to review it line by line. I ended with 18 pages of notes and they have been quite handy and well worth my time. I had quite a few issues with the original document. In reviewing the latest version dated June 28th I am quite pleased to see that many – not all – but many of my issues have been addressed. One that made me laugh out loud was the provision that Glendale would receive 100% of the Naming Rights for a future theater/stage space to be constructed within the bowl. Further along in the original document it specified that Glendale must pay for its construction or the Arena Manager would receive the proceeds of Naming Rights and apply them as reimbursement for construction costs. That provision, thankfully, has been changed and it is no longer Glendale’s responsibility to fund its construction but it still has the right to receive 100% of the Naming Rights. It appears that cooperation and communication by both sides has gone a long way to resolve many of the issues.

contractHowever, there remain several major, outstanding issues. One of those issues is that of the Noncompetition/Non-Relocation Agreement. The original June 26th agreement refers often and specifically to the dual concepts of non-competition and non-relocation although the document was never provided publicly. So there was no companion document to review. This, in conjunction with the absence of any exhibits accompanying the release of the original version, is troubling but that is for another time. In the new version of the agreement reference is now made solely to a Non-Relocation Agreement. The concept of non-competition has been removed in its entirety. Is this positive or negative? There is no way of knowing since there is nothing with which to compare the current Non-Relocation Agreement.

threaten 1Another major shift from previous deals is the concept of mediation vs. arbitration. In previous deals arbitration was the “Dispute Remedy.” In all versions of the RSE Agreement mediation is the dispute resolution mechanism. There is a difference between the two procedures. In mediation a neutral third party acts as a facilitator but is not a decision maker. Neither party is required to complete the process nor is it legally binding. The mediation resolution can be appealed through the legal system. In arbitration the neutral party acts as judge and jury. The decision is generally binding and cannot be appealed, except under very special circumstances. Mediation can be more expensive because it allows for legal appeal as opposed to arbitration which is legally binding. So the question becomes why RSE’s insistence on mediation for it seems to be upon their insistence and not that of the city.

enter 3We now know that RSE used a figure of 23 non-hockey events with attendance of 15,000 per event. Those numbers are a component of their calculations in determining the revenues from the parking surcharge and ticket/supplemental surcharges. It appears to be over inflated but it is their number, not mine, not the city’s. That goal should be acknowledged within the Agreement by incorporating accompanying performance penalties and incentives. If RSE meets less than its self-proclaimed goal of 23 non-hockey events there should be a monetary penalty. It is a concept only used in the Agreement in conjunction with hockey games. If less than 41 games are played in the arena, there is a $150,000 penalty per game paid to the city. However, if RSE overachieves or underachieves in booking non-hockey events, it should be rewarded/penalized for doing so but there is no mention of such a concept within the Agreement. Fairness dictates that non-performance be penalized and success rewarded.

man moneyAnother interesting concept within the Agreement is language that exempts the Arena Manager from governmentally imposed lease taxes on the property. If, for some reason, the Arena Manager does have to pay them, that amount will be deducted from the City’s total annual revenue to be received. Hmmmm. Should there be lease property taxes imposed that have to be paid the city is required to pay them.

It also appears that instead of allowing the city’s contribution to the Capital Improvement Fund to accumulate year over year, the Capital Improvement Fund is set to “0” every year and the funds within it revert to the Renewal and Replacement Fund that is spent solely at the Arena Manager’s discretion.

The last major change to the document is the city addition of its own opt-out provision. The city views this action as entirely appropriate. Their assumption may be based on the notion that the city has more “skin in the game” than does RSE. $15M for each of 5 years equals $75M. It has been widely reported that RSE’s equity (or “skin”) is $45M. The proposal is that after 5 years, each side should have the option of deciding whether to continue, especially if one side or the other has accumulated over $50M in debt. That option, if it remains in the Agreement, would signal that RSE’s “enhanced revenue streams” did not perform as advertised. The city’s financial shortfall in this deal is of its own making. The current council will either be comfortable in its assumption that it can weather the effects of the shortfall or it will not. Continued insistence by the city on this provision destroys RSE’s ability to secure loans because it nullifies the very element they MUST have, which is a guaranteed $15M from the city.

agenda 1In my notes I have probably identified another two dozen minor issues that require further negotiation. Listing all would turn this blog into a book. I will not inflict that agony on you. It appears that with some further negotiation and communication this Agreement could work but it does not resolve Glendale’s fundamental issue of covering a monetary shortfall of $3M annually.

Many have asked me to reveal my position on this issue. That I will not do. I have provided you with financial information on the “enhanced revenue streams” as well as information on Glendale’s precarious financial position and Agreement points that need further resolution. Many of you reading this blog have expertise in business budgets and corporate negotiating. My role is to offer municipal expertise and to provide context to balance that.  It is up to you to decide if this is a good deal for Glendale.  This is exactly polling 1what every current councilmember is wrestling with. As leaders of this city they have the prime responsibility of insuring the continued financial health of the city. My feeling is that some are now struggling with recent decisions and recent votes and beginning to realize the effects of those decisions.

confusion 3Will this Agreement help or hinder Glendale’s continued financial health? Of course there is the overwhelming element of politics. Some councilmembers’ positions will be taken as a result of ego; others simply wouldn’t say ‘yes’ even if God invited them into the Pearly Gates; still others have only a partial grasp of the entirety of the deal. But it is not my call. I am no longer a sitting councilmember. Whatever their collective decision I will accept it and abide by it, as everyone should reasonably do.

Fasten your seat belts — if past history is any indication we are in for a bumpy ride. I hope that I am wrong but there may very well be challenges to this Agreement.

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Jun 13

30

Analysis of Renaissance Sports and Entertainment bid…Part 2

Posted by Joyce Clark on June 30, 2013
Posted in City of Glendale • Glendale finances • Jobing.com arena  | Tagged With: , , , | 2 Comments

In my last blog $3,109,580 was identified as the shortage Glendale faces with acceptance of the Renaissance Sports and Entertainment (RSE) bid. This requires looking at the city’s overall financial health. A useful measurement is to look at the city’s General Fund “Ending Balance” (it may be called Contingency Fund or Rainy Day Fund). It will be helpful to refer to slides presented at the city council workshop of June 29, 2013. Here is the link:

http://www.glendaleaz.com/Clerk/agendasandminutes/documents/062813CoyotesandArenaMgt.pdf .

coins 1Some historical context is in order. In the early to mid 2000s Glendale’s economy, along with the rest of the nation’s, was robust. The arena had been built, Westgate was taking shape and growing, developers were buying land in the surrounding area and submitting development plans faster than they could be processed. When the national recession first took shape the city had General Fund revenues of $131,807,000 and maintained an Ending Balance of $49,338,000 (well over the city policy of 10%). All “expert” advice, at that time, projected a deep recession of 3-5 years and a slow recovery. Council had the choice of starting to make major budget cuts (including lay-offs) or using its Contingency Fund. It chose to use its Contingency Fund to avoid lay-offs and to weather the recession. Was it the correct decision? Obviously not, but “Hindsight is 20-20.” We now know that budgetary cuts should have been made then, just as municipalities all over the valley did, for cuts are cumulative and can help to alleviate the need for drastic cuts in the future. There were some budgetary cuts made at the time and employee furloughs were instituted but those strategies were not strong or deep enough and came too late to create the desired outcome. Those following the Coyotes saga no doubt recall former Mayor Scruggs complaining bitterly and saying that we were told that Glendale was different and no cuts were necessary. What was done was done but it set up the current fiscal crisis the city now faces. By the end of the decade with the national economy still in recession the previous council had learned a painful lesson and was committed to making budget cuts and began a plan to do so.

We come to the present. The city’s total General Fund revenues for Fiscal Year (FY) 14 are $161,500,000 and projected to increase by a mere $800,000 over the next 5 years (FY 18) to $162,300,000. In the intervening years there are General Fund revenue increases of nearly $18M but they are temporary increases based upon the raised sales tax due to sunset in 5 years. After the 5th year, FY 2018, the sales tax increase sunsets and the General Fund revenue will revert to the level of FY 14. The temporary sales tax increase was designed to do one thing only. That was to provide the city some breathing room while it continued to make budget cuts of $5M a year for 5 years totaling $25M over 5 years AND rebuild its Ending Balance to a minimum of 10% of its General Fund revenues. It WAS a sound plan and a plan that allowed for a hockey lease. It is not the plan of the newly elected council for there are only scheduled cuts of $4.8M in FY15 and $9.5M in FY18 for a total of $14.3M. That is $10M shy of the amount that is needed to replenish the General Fund and will present problems when the sales tax increase disappears—unless this council decides to continue the sales tax increase ad infinitum. I suspect that is exactly what will occur despite its sunset promise included to gain citizen voter support to ratify the increase.

Now add a couple of facts.  First, the Fire Department had a structural deficit of $3.5M this Fiscal Year, FY 14. It was fixed by budget amendments passed by council 6 weeks ago and on June 28th. It solved the problem—for this year only. Next year the Fire Department will face the same structural deficit of $3.5M with no direction given by this council as to where and how this money is to be found. Our contractsecond fact is at the June 25th voting meeting of Council a restructured contract with Southwest Ambulance was approved. (FYI: SW’s Martin Nowakowski, its Public Affairs Director, is a friend of Norma Alvarez and Sammy Chavira and supported both in their election bids) The old contract called for 2 ambulances that were in operation 5 days a week for 9 hours a day. The new contract calls for 3 ambulances in operation 7 days a week for 24 hours a day. It results in an increase of future expense to the city, in this contract of $1M. It is possible that SW may pick up $400,000 of the million dollars but there is still an increased contract cost of $600,000 that is a new city obligation. And it may interest you to know that city personnel assisting on these ambulances are paid overtime pay by Glendale. What a sweet deal. Council was briefed and was made fully aware of the increased cost to the city. Neither example of fact has corresponding cuts in other areas. In particular, the Southwest Ambulance vote passed without a single councilmember question regarding it. These two fiscal examples demonstrate that council still refuses to recognize the serious financial condition of the city.

The city’s Ending Balance for this Fiscal Year, FY 14, is $8M and equals only 5% of the General Fund revenues — not a good position in which the city finds itself. The good news, however, is that it does grow in the next 5 years and by FY 18 is $20.3M (or 12% of General Fund Revenues).

Why is the Ending Balance or Contingency so important? First, it is a measurement that bond raters look to in order to determine a city’s creditworthiness. It’s like an individual’s FICO score. The higher it is the lower the interest rate. It serves a second purpose in that it can be drawn upon in an emergency or when unexpected expenses occur. For instance, the $120,000 paid for a search of a new City Manager and the $500,000 for the audit as well as the Beacon consultancy contract were paid from Contingency as these were new, unbudgeted expenses. Contingency can be used to cover increases in the price of gas for city vehicles and it can be used to cover unplanned increases in medical premium costs. Right now, with only $8M in reserve, the city is living on the edge.

How does acceptance of the RSE bid affect the city’s Ending Balance (Contingency Fund)? Instead of $8M in reserve this year, it drops to $5.7M or 4% of the city’s revenues. By FY 18 instead of a healthy Contingency of $20M it is only $8.6M (in other words, in 5 years, it is exactly the same as today).

How does acceptance of the RSE bid affect the city’s budget? Its revenues do not change but its expenses have increased by $9M as the city goes from paying a $6M a year management fee to a $15M a year management fee. We must factor in the “enhanced revenue streams” and in doing so the city projects a $2.3M shortage for this budget year (FY 14). I have shown a figure of $3.1M which I believe to be more realistic. However, whichever figure is used, there is a shortage that has to be covered.

If the RSE bid is accepted there are only three ways that the shortage can be covered. Some explanation is required to better understand Option #3 offered below. The city established an escrow account by borrowing money from other funds, i.e., Sanitation, Vehicle Replacement, etc. It has $20M in it – not quite the full $25M owed to the NHL for the second year of arena management. If the RSE bid is accepted the NHL has publicly stated that they will accept payment of that $25M in installments of $5M a year for 5 years. The options are:

  1. question 3The city can make further budget cuts in FY 14 by reducing service levels to residents, cutting more employees or trying to find further efficiencies
  2. It can pay the shortage from the  Contingency Fund by drawing down the balance to $2 or $3M instead of the current $5.7
  3. It can use the $20M reserved in its escrow account, earmarked for the second NHL payment of $25M, and bring down the reserved escrow amount by paying the NHL $5M this year and covering only this year’s shortfall of $2-3M

Imagine yourselves as a current councilmember for just a moment—not a Coyotes fan or a Ken Jones aficionado—but as someone charged with sound financial decisions for the city. Would you accept or reject RSE’s bid? If you chose to accept RSE’s bid which of the 3 options would you choose? Would you reexamine this council’s current financial plan to make strategic cuts and perhaps save Westgate and its future or would you make a leap of faith and decide that an anchor tenant is not necessary? It’s in your hands. In my next installment I will review items within the RSE contract that remain problematical for the city and could be resolved with further negotiation.

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Jun 13

29

Analysis of Renaissance Sports and Entertainment bid…Part 1

Posted by Joyce Clark on June 29, 2013
Posted in City of Glendale • Jobing.com arena  | Tagged With: , , , , | 9 Comments

prop 202A number of people have asked me (as a former councilmember) to weigh in, pro or con, regarding the Renaissance Sports and Entertainment bid. It may very well become a moot issue if RSE rejects the city’s latest proposal to have the same 5 year opt-out clause as RSE enjoys. Until now I have instead spent all of my time since the original bid was made public reviewing and analyzing it. Note that a revised version has since been made public. In the newest public version changes that had been discussed at the city council workshop of June 28, 2013 are incorporated. There is now a joint defense clause, removal of all “novation” provisions and the city receives all insurance proceeds in the Casualty and Condemnation provisions. These changes and others make it a better deal for the city. Council gave direction to continue negotiations up until the eleventh hour (Tuesday, July 2nd council meeting at 7 pm). We can hope that RSE and the city will continue in the spirit of cooperation.

numbers 2As for the deal itself let me share my analysis. Let’s look at the numbers. The first premise is that RSE MUST have $15M a year guaranteed by the city. Why? An assumption, that has never been refuted, is that RSE needs $15M a year guaranteed by the city to satisfy the lender’s (Fortress Investment) requirements. The city has an approved budget that allocates $6M a year thereby creating a $9M a year shortfall for the city. RSE has proposed to sweeten the pot and supplant that $9M a year by creating “enhanced revenue streams.” Some are revenue streams whose numbers can be accepted with some sense of surety. The hockey ticket surcharge is based on 41 games with an average attendance of 12, 630. Those are reasonable numbers based on past performance. You may think the average attendance figure is low but it is RSE’s number and to be applauded because of their conservative approach. The “enhanced revenue” produced from this calculation is $1,553,490. It is a number we can accept as valid.

The next number is the team rental of $500,000 a year. That is, of course, a reliable number. One obvious question is why does this number not increase over time? In previous deals the team rental charge escalated over time. Another fairly reliable number is the sales tax generated at hockey games. RSE pegs it at a little over $600,000 a year; the city uses a little over $400,000 a year. I am inclined to accept the RSE number for the sake of argument.

So far, so good. We know the city can rely on these “enhanced revenue streams” of Hockey ticket surcharge, team rental payment and sales taxes generated from hockey games. Those items total $2,690,420 and we can be confident in realizing that revenue.

numbers 1But a look at the rest of the estimated revenue numbers show they appear to be overinflated. Let’s take the easiest one first, Naming Rights for which the city will receive 20%. Typically this fee is paid in installments. For argument’s sake let’s peg the Naming Rights fee at $10M. Generally, this would be paid over a period of years and often it is a 10 year period. That payment would be approximately $1M a year and the city’s portion would be $200,000 a year for 10 years. So instead of the RSE Naming Rights figure of $671,600 a year, a more conservative and reasonable number is $200,000 a year. As a point of comparison, this is similar to the Naming Rights deal at Chase Field and it receives a payment of $1.1M a year.

The parking revenue figure is highly inflated. The presumption is that all 5,500 parking spaces will generate $10.00 a space at every hockey game. Did you know that there are an additional 9,500 parking spaces at Westgate not subject to this surcharge? Hockey fans can park at Tanger, behind the AMC Theater, etc. and it is a short walk to the arena. Sooner or later, the owners of these businesses will become very unhappy to see hockey fans occupying their customer parking and will begin to charge…$5 a car which will be reimbursed to their patrons. I have also been informed that should there be a new parking fee imposed by the city and the team the Cardinals will charge $5 a car for their 6,000 spaces on Maryland Avenue, across the street from Jobing.com arena. There is also a secondary, but an equally important issue, the number of hockey fans parking in the Desert Mirage neighborhood across the street from Jobing.com arena will most surely increase. It is a neighborhood of over 1,200 homes and some hockey fans (although a minimal number) already park in their neighborhood on hockey game days. The RSE number also includes parking for non-hockey events with 23 events a year and 15,000 attending each of those 23 events. In my estimation it is unrealistic. More about that when we review the $5 per ticket surcharge for non-hockey events. RSE, and the city accepts, a figure of over $2M for parking revenues. This is way too optimistic and a more conservative and realistic figure is half that, or about $1M for parking revenues.

The last number RSE offered was revenue generated per year of $1,725,000 for a non-hockey ticket surcharge of $5.00 per ticket for 23 events a year and attendance of 15,000 at each event. I dug out old material I had related to arena event and attendance figures and I also reached out to people knowledgeable in the concert venue business. From 2003 (the year the arena opened) until today the maximum number of events ever held at the arena in one year that generated an attendance of 15,000 or more has been 15 events. Did you know that throughout the entire Phoenix Metro area there are typically 25 major concerts (what is called in the business, Type “A,” such as a Justin Bieber) a year? 4 of them were held in Jobing.com Arena this year. RSE’s estimate of 23 such concerts drawing 15,000 or better is wishful thinking. A more realistic revenue number for the non-hockey ticket surcharge would be under $1M a year. For the sake of argument, we will use $1M a year. How do these numbers add up? $200,000 a year for Naming Rights; $1M a year for Parking Revenue; and $1M a year for the ticket surcharge for non-hockey events totaling $2,200,000.

question 3Let’s add our reliable, take-it-to-the bank number of $2,690,420 and our far more conservative number of $2,200,000. The total is $4,890,420 and the magic number in “enhanced revenue streams” that must be achieved to make the city whole is $9M. Oh wait, there’s still the Supplemental Ticket surcharge of $1.50 on every ticket. RSE’s number is $1,294,245. It is an overestimate because it is based on that same pesky non-hockey event estimate of 23 events with 15,000 or greater attendees. A more realistic estimate would be no more than $1M a year. So add another million dollars to our $4,890,420 and our final total of “enhanced revenue streams” is $5,890,420 – not the $6.7M used by the city or the $7.3 used by RSE.  Yet we need $9M a year. We are short $3,109,580. How can that shortage of a little over $3M a year be covered by the city? Where will the money come from? In my next blog we’ll look at the city’s budget and its overall financial health.

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Jun 13

26

Troubling times

Posted by Joyce Clark on June 26, 2013
Posted in City Council Actions • Jobing.com arena  | Tagged With: , , , , , , | 9 Comments

A disclaimer: I have not made a decision on the Renaissance Sports and Entertainment bid to manage the city’s arena. It is not possible until I have read the document. To date it is not available to the public.

I don’t usually post 3 blogs in one day but this appears to be one of those days that demands it.

On June 25, 2013, Paul Giblin, a reporter for the Arizona Republic issued the following story online, Glendale still unsure about Phoenix Coyotes deal. Here is the link: http://www.azcentral.com/community/glendale/articles/20130625glendale-unsure-phoenix-coyotes-deal.html . Several aspects of his story are troubling. One issue is that a vote is still scheduled for hidden agendaTuesday, July 2, 2013. It is my understanding that the council has requested another Executive Session for Thursday, June 27, 2013. The city had better made sure that notice of another Esession on June 27th is properly posted 24 hours in advance. Which means that the meeting notice has to be posted on Wednesday, June 26th…today. However, even more worrisome is that with an Esession scheduled for June 27 the very earliest the deal points could be posted publicly would be on Friday, June 28th or even as late as on Monday, July 1st. Could the city post as late as 24 hours before a scheduled vote? Yes, they could but would they? I hope not as suspicions will shoot through the roof if the public is given one day to review and understand any deal between Renaissance Sports and Entertainment (RSE) and the city.

city hall 2

Glendale City Hall Complex

Now, about that second $25M the NHL has offered (at the 11th hour) to take payments on of $5M over each of the next 5 years. Great…too little, too late and it doesn’t solve the city’s problems. The $30M leaseback of City Hall was designed to replenish the city’s Enterprise Funds, Vehicle Replacement Fund and Technology Replacement Fund.  Glendale staff crafted a brilliant strategy. Now that strategy has been tabled by council until after the scheduled Coyotes vote on July 2nd… Hmmmm…The $20M the city has held in an escrow account for the NHL payment simply isn’t enough to cover all of the city’s needs. It will pay back some of the loans leaving $5M still outstanding.  While a generous offer on the part of the NHL, it could have been done a long time ago and in fact, I and several former councilmembers called for just such an arrangement. Why now? I suspect it is in reaction to what they perceive as a very negative story about the city planning to enter a leaseback of City Hall to pay back loans directly related to the $50M partially paid and partially still owed to the NHL.

To discover that councilmembers are not on top of the revenues derived from either the Westgate area (remember those revenues are already being used to pay off the original construction debt on the arena and are NOT new found money) or the arena is disturbing to say the least. At least one of them has touted himself as an expert on the entire RSE deal.

Norma Alvarez

Norma Alvarez

Lastly, good old Councilmember Alvarez and her statements have got to have you snapping your heads in double-take mode. Alvarez said, “I called them knuckleheads, because they don’t get it. They don’t get it. They don’t get it. They’re going to continue discussions. Discussions of what? We’re selling City Hall because of paying $50 million. C’mon. C’mon.” Factually she is incorrect. The city is proposing a leaseback arrangement not an outright sale of City Hall with visions of employees moving out after a sale. As for continuing discussions, they should continue but they don’t have to result in acceptance of the deal…not if RSE cannot or will not guarantee “enhanced revenue streams” for the city.

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Jun 13

26

Stick to baseball, Ms. Dozer

Posted by Joyce Clark on June 26, 2013
Posted in City of Glendale  | Tagged With: , , , , | 2 Comments

A disclaimer is in order. I neither support nor reject the current RSE bid to manage Jobing.com Arena. I cannot make an informed decision until I have had the opportunity to review the proposed lease management agreement and that document is not yet publicly available.

Boy, thanks to SRP, leave a person without power…or the Internet…or air conditioning… for not just a day but 5 hours on the first day and 10 hours on the second day can make a person very grumpy and very testy. In an effort to play “catch-up” on today’s Coyotes’ news I was sent a link to KTAR radio’s Karie Dozer opinion piece entitled Final Word: Phoenix Coyotes aren’t the economic engine Glendale needs posted on June 25, 2013. Here’s the link: http://ktar.com/100/1644653/Final-Word-Phoenix-Coyotes-arent-the-economic-engine-Glendale-needs?fb_action_ids=566353163423827&fb_action_types=og.recommends&fb_source=other_multiline&action_object_map=%5B504510449622426%5D&action_type_map=%5B%22og.recommends%22%5D&action_ref_map=%5B%5D#

baseball 1hockey 1Dozer, Dozer, mmmm, that name sounds awfully familiar. Is Karie Dozer the wife of Rich Dozer, one of the Arizona Diamondbacks’ former Presidents?? I think so. I am sure Ms. Dozer is an expert on baseball, especially the Arizona Diamondbacks but an expert on anything hockey related?? I don’t think so. She made some amazing statements that certainly warrant comment. One was, “Look, I like hockey. What great fun, especially in Phoenix, IN JUNE, to go into an ice palace for sports. But I don’t like it enough to pay for it.” Of course she wouldn’t like hockey enough to pay for it. It is a sport in direct competition for your sports entertainment dollar with her husband’s business, the Arizona Diamondbacks.  If she were to attend any sports event you can bet it would be baseball. Does she get the best seats in the house? Are they free of charge? Could there be a conflict of interest on her part?

In an effort to show genuine concern for the residents of Glendale and her perception of the drastic loss of services because of hockey she goes on to say, “This in a city where 911 service was at risk last year.” What bunk. As a councilmember until January of 2013 I can tell you that the city’s 911 service has NEVER been at risk. Chief Black spoke at several council meetings in the past few months reassuring everyone that police service and most specifically, 911 service (especially Priority One calls involving imminent bodily danger or loss of life), would remain at the same level of service that Glendale’s residents have enjoyed for years.

She then opines, “I know, a lot of people’s jobs depend on the Coyotes. Shops at Westage (sic) and security jobs all could go away if the Coyotes leave.” First, it’s WESTGATE, not Westage. Second, how about a minimum of 1600 jobs in the immediate Westgate area (restaurants, hotels and retail)…and that does not include the almost 2,000 jobs at Tanger Outlet Mall, Cabela’s or Humana. Throwing 1600 jobs out the window doesn’t seem to bother her but what the heck, she’s got a radio hosting job.

Lastly, she said, “I think sports teams CAN be a great economic engine. This one just isn’t.” Really, Ms. Dozer? Of course she thinks sports teams are a “great economic engine.” She appears to enjoy the financial benefits of one of those “great economic engines.” To say that the Coyotes are not  shows her lack of history or knowledge about the Coyotes since they came to Glendale in 2003. For she would know that the team, through circumstances not of its own making, has never had the opportunity to demonstrate its ability to become a “great economic engine.” Stick to baseball, Ms. Dozer.

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Jun 13

25

City Council workshop, meeting and special meetings…Whew!

Posted by Joyce Clark on June 25, 2013
Posted in City of Glendale  | Tagged With: , , , , , , , | 13 Comments

hidden agendaThis week, June 24-28, 2013 there are 3 city council meetings scheduled. First up is a Special workshop meeting at 1:30 PM today. It consists of Executive session (Esession) items only, meaning a secret session. We all know the topic of discussion is the Renaissance Sports and Entertainment (RSE) bid for arena management. It has been reported that the details of the bid may be released on Wednesday, June 25th. The only reason for this meeting is because RSE and the city (COG) are still negotiating the terms of the deal. There would only be two outcomes: 1. the council has accepted the terms and is comfortable with them or 2. the council still has issues with the final terms. Either way, this council has signaled that it is ready to put this issue to bed and vote on it on July 2nd. Keep in mind that just because the RSE bid has finally made it to a voting meeting does not insure a positive outcome. What it does signal is that the council is ready to vote, up or down, RSE’s bid and be done with the issue.

gambling 2The evening meeting (voting meeting) of July 25, 2013 has 3 financial items of interest. The first, Item #8 is prepayment of $5.6M of General Obligation bonds (usually paid for from the city’s secondary property tax collection) by the Water and Sewer Enterprise Fund. This is an interesting strategy and may free up General Obligation bond capacity for future bonding…on what? We can only wait and see.

man moneyThe second item, Item #26 is Authorization for Lease Financing of the City Hall Complex. In 2010, the city had to pay the NHL $25M to run the arena. This $25M has been paid to the NHL. Here’s where the money came from:

  • $21M loan from the city’s Landfill Fund
  • $4M loan from the city’s Sanitation Fund

In 2011, with the Coyotes ownership issue still not resolved, the city agreed to pay the NHL a second $25 to operate the arena. This $25M is still being held in a city escrow account. Here’s where that money came from:

  • $15M loan from the city’s Water and Sewer Fund
  • $2M from the city’s Technology Replacement Fund
  • $3M from the city’s Vehicle Replacement Fund
  • $5M to be paid with an unidentified source to NHL

This lease-back deal will replace:

  • $15M loan to the City’s Water and Sewer Fund
  • $4M to the city’s Sanitation Fund
  • $2M to the city’s Technology Replacement Fund
  • $3M to the city’s Vehicle Replacement Fund
  • $5M whose source had been unidentified and unfunded to pay the last of the NHL’s second $25M
  • $1M as a new project to upgrade the city’s Human Resources software

As you can see, that leaves 1 loan payment outstanding and that is the $21M loan from the city’s Landfill fund. That $21M is part of a reserve account to cover landfill closure. Since the landfill is not anticipated to close for 30 years, the city can afford to repay this reserve account over the next 30 years. Is this a good strategy? Yes, it is. It replenishes those Funds so that they can once again operate effectively and gives the city some breathing room to pay back those costs associated with the NHL’s operation of the arena for 2 years. It is a strategy that hopefully this council will approve.

The last item, Item #27 is an increase in rates, primarily to commercial customers for roll-off bins and disposal rates. The rental cost of a roll-off bin increases from $160 to $175 and the disposal fee per ton increases from $18 to $20. These are fees that have not been adjusted in quite some time. As usual, when there are rate increases, it becomes a double-edged sword. As the rates go up, the number of customers may decrease dependent on market competition by private sanitation companies. Nevertheless it is an increase long overdue.

budget 3The third and Special Meeting is scheduled for June 28, 2013. Do not look for a vote on the Coyotes unless this meeting agenda is changed and posted by 5 PM on Wednesday, June 26th. . The city, by law, must have its tax increasefinal adoption of Fiscal Year 2012-13 Budget Amendments and the Fiscal Year 2013-14 Property Tax Levy before July 1, 2013. These items satisfy that legal prescription and will be largely unnoticed by Glendale residents due to its final adoption on a Friday morning at 9 AM. The other two items, fire-related for strength training and medical transport, were added simply because they could be at this meeting.

There you have it. Three meetings scheduled. Only one of which is the Coyotes ownership issue and we are not privy to its goings on. The other two meetings deal with financial issues created by or related to arena management.

deadline 1The finale of the Coyotes ownership RSE bid is still scheduled for July 2, 2013. Are there 4 affirmative votes? Only the councilmembers know or think they know. If RSE still wants $15M a year as the management fee and cannot or will not guarantee a minimum of $9M in “enhanced revenue streams” to the city this council may find it a difficult deal to swallow. Are we about to experience deju vu? The very mechanics of the deal could cause the Goldwater Institute to reappear. I suspect they are watching very, very closely. Then there is Ken Jones and his ilk who absolutely hate anything Coyote related. Could they mount another referendum drive? Yes, they could and would just to stall the deal. After all, how long will Fortress Investment Group leave an open-ended loan available to RSE?

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Jun 13

20

Hockey fans…check your tickets

Posted by Joyce Clark on June 20, 2013
Posted in City of Glendale  | Tagged With: , , , | 5 Comments

When the original Arena Management docs were signed and recorded in November, 2002 I made sure to keep them. After all, one did not know if and when they would come in handy for reference or review.

Part of the RSE deal is rumored to include a parking fee. Did you know that you already pay a parking fee and a base recovery fee? If you look at the fine print on your ticket it says, “Included in the face value of this Ticket is a $2.80 City Parking Fee, a $1.55 Base Recovery Fee, and other fees when applicable. Fees are subject to change without notice.”

The original 2002 Arena Management docs had established these fees for the city and currently every ticket purchaser pays a total of $4.35 in fees. Under Article 7. Arena Accounts. Section 7.7 City Parking Fee Account it states the following: “The Arena Manager shall, prior to the Operations Start Date, establish and maintain (for the benefit of the City) one or more trust accounts (requiring the signature of only the City for withdrawals) at a federally-insured institution(s) having offices in the State of Arizona for the deposit and disbursement of City Parking Fees ( the “City Parking Fee Account”), and shall make deposits into the City Parking Fee Account as required by Section 8.1. Interest earned on amounts held in the City Parking Fee Account shall not be Operating Revenues and shall be the property of the City. The City may make withdrawals from the City Parking Fee Account at any time and from time to time in the City’s sole discretion.”

Article 7. Arena Accounts. Section 7.8 Arena Recovery Fee Account is also established.

In Article 8. Parking: Arena Recovery Fees. Section 8.1.2 (e) states in part, “The City Parking Fee shall be in the amount of Two Dollars and Forty-Five Cents ($2.45) per Qualified Ticket with respect to each Fee Activity (for which the City has not waived the City Parking Fee) That occurs during the Fiscal Year in which the Operations Start Date occurs or the first full Fiscal Year thereafter, and shall be increased by Five Cents ($0.05) for each and every Fiscal Year thereafter, beginning with the second full Fiscal Year after the Fiscal Year in which the Operations Start Date occurs, $2.55 during the third full Fiscal Year after the Fiscal Year in which the Operations Start Date occurs, and so forth).”

Article 8. Parking: Arena Recovery Fees. Section 8.2.(d) states in part, “The Base Recovery Fee shall be in the following amounts:

(i)                  For the first sixty (60) months after the Operations Start Date, $1.00 per Qualified Ticket;

(ii)                For the 61st through 120th months after the Operations Start Date, $1.50 per Qualified Ticket; and

(iii)              Commencing with the 121st month after the Operations Start Date and continuing for each month thereafter until the last month of the 30th Full Hockey Season after the Home Game Obligation Effective Date, $2.00 per Qualified Ticket.”

Until I left office on January 15, 2013 neither I or the rest of council were ever told by staff that the city is no longer collecting those fees. To the best of my knowledge ticket holders are paying $4.35 in fees on tickets. Just thought you’d like to know the facts.

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