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June 8, 2012 — GLENDALE, AZ — The City of Glendale is calling a vote for Thursday AM over what it calls an “emergency” measure: The Greg Jamison lease agreement for the ownership and operation of the Phoenix Coyotes and city-owned Jobing.com Arena.
Not so fast, says the Goldwater Institute, the taxpayer watchdog group that halted a 2011 sale of the team to Chicago businessman Mathew Hulsizer by threatening to sue over its interpretation of the State’s “Gift Clause” as defined in the Arizona constitution.
With the Arizona City Council set to vote on the Jamison lease, which could keep the club in Glendale for at least 20 years, Goldwater has sent a letter to city officials requesting a postponement of the vote, scheduled for arguing that citizens would be denied their right to review the agreement and related documents.
“This process should be slowed down,” Glendale Mayor Elaine Scruggs said. “I think the public expects an open dialogue.”
Scruggs has been blunt,expressing her dismay over the absence of a new owner just two months ago. Just days later, the NHL rolled out Jamison as the club’s potential owner (or at least head of an ownership group, which has yet to be fully identified).
“This is absolutely deplorably terrible,” councilman Phil Lieberman told the Arizona Republic, adding, according to the newspaper, that the meeting times would make it difficult for most Glendale residents to weigh in before the city’s council votes.
The paper reports that at least four other councilmembers (of seven total, including the Mayor) are planning to vote in favor of the agreement today.
“We cannot afford to let that arena sit vacant,” said councilwoman Joyce Clark, who supports the agreement with Jamison.
The city’s expert, economist Jill Welch, pegged the city’s potential savings over the 20-year agreement at $17.8M.
In the deal, the city would be obligated to pay Jamison almost $325M over the 20 years so that he can operate the arena and make improvements. Glendale is the owner of the arena.
The city will receive a ticket surcharge on each ticket sold, which it estimates at $60M by lease’s end. Glendale would receive 15 percent of the naming rights, and sales tax revenues as well. This could add another $34-40M.
Jamison has an option to purchase the arena. He is also obligated to pay the city $250M to $350M if he decides to leave the city. Jamison is also bound by the agreement to change the team’s name to Arizona Coyotes.
Goldwater’s letter warns the city that “If the agreement is challenged under the Gift Clause, a court will look into the difference between actual management costs and the amount the City is obligated to pay to determine whether the agreement is a subsidy.”
The taxpayer watchdog group also wants more information about the value of parking revenues, and whether the city has considered proposals to infuse revenue from the Tohono O’odham Nation, a tribe which, Goldwater contends, “Has offered once again to partner with the City…we are not aware that there has been any formal analysis of alternative Arena uses or a request for competitive bids for Arena management.”
At the heart of its request for a restraining order sits the timing of the vote.
“The terms of the 100-page proposal were released to the public for the first time on Monday,” contends the letter’s author, Darcy Olson, “And not all the exhibits and associated documents have been released yet.”
Attorney Gary Birnbaum, hired by the city to review whether the agreement amounts to a subsidy, says that the financial rewards to the city outweigh the expenditures.
Welch’s firm, Elliott D. Pollock & Co., pegs the cost to Glendale at $7.9M per annum. With no deal, says the firm, the city will pay an annual cost of $8.8M to manage its arena. The firm places the “savings” over the 20-year pact with Jamison at $17.8M.