Avoiding a multi-million tax dollar ‘emergency’ in Glendale

by Carrie Ann Sitren
Goldwater Institute

Months after cries of “emergency,” the City of Glendale will be given another season to try to keep the Phoenix Coyotes hockey team playing in the desert.

Last year, the Glendale City Council approved a contract with Chicago millionaire Matthew Hulsizer to buy the team with the help of $116 million in municipal bonds backed by taxpayer dollars. The council declared that the bonds were an “emergency,” which took away the taxpayers’ right to petition for a public vote on the deal.

Four months later, the bonds still haven’t sold and the deal hasn’t closed. The council members themselves said they were rushed and misinformed when they voted last year. One city economic analysis showing that the taxpayers could lose on the deal wasn’t released until after the emergency vote. The deal committed the city’s hockey arena (previously funded by $180 million in taxpayer bonds) to the Coyotes for another 30 years, and required the city to pay a $97 million management fee over the first five years, on top of the $116 million in new bonds. This certainly was not the kind of decision to be made quickly.

Scottsdale Mayor Jim Lane has written that he is glad his city isn’t in Glendale’s shoes, after having lost the bidding war a decade ago to lure the hockey team. The New York Times reported in September 2010, “With more than four decades of evidence to back them up, economists almost uniformly agree that publicly financed stadiums rarely pay for themselves.” Glendale has already racked up more than $3,000 per person in sports-related debt—not including what might be required to keep the Coyotes.

Tonight’s decision before the City Council would commit Glendale to spend another $25 million, for a second year in a row, to keep the Coyotes playing at Jobing.com Arena while a deal is made to sell the team to a new owner. If approved, Glendale will have another year for those negotiations. So there would be no reason to cut the time down to the wire. The city should take the time to study the economics and make all the information public, and it should not cut off any avenues for voter participation. This should not be another multi-million-dollar emergency.

Carrie Ann Sitren is an attorney with the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

Learn More:

Goldwater Institute: Consultant in Phoenix Coyotes arena deal named in fraud lawsuit

Goldwater Institute v. City of Glendale: A challenge for taxpayers to see public records

Arizona Republic: Phoenix Coyotes deal with Glendale raises concern

Goldwater offers solutions to Coyotes quandary

by Nick Dranias
Goldwater Institute

The Goldwater Institute has repeatedly met and talked with Glendale officials, including Mayor Elaine Scruggs, to try to resolve the constitutional conundrum raised by the city’s effort to subsidize the sale of the Phoenix Coyotes. But the Goldwater Institute will not turn a blind eye to Glendale’s plan to spend hundreds of millions of taxpayer dollars to prop up the Coyotes in violation of the state constitution.

The deal hinges on two main components. First is that the city proposes borrowing up to $100 million to purchase arena parking rights from the future team owner. This is a charade meant to hide a $100 million handout to the new owner because the city already owns the parking rights. The second component is the $97 million arena management fee. That fee would directly subsidize the Coyotes by reimbursing its future owner for operating expenses that only benefit the team. However laudable the goal of keeping the Coyotes in Glendale, it does not merit back-room negotiations, abuse of taxpayer money, and violation of the law.

It is not too late for Glendale to keep the Coyotes in town legally. The city should pursue more private investment in the deal by having the NHL reduce its upfront sales price for the team and spread any balance out over the 30 year arena lease term. It should also demand that the NHL promise not to relocate the Coyotes over the term of the lease. The city should reduce the management fee so that it does not reimburse the future owner of the Coyotes for operating expenses that only benefit the team. And if the future owner of the Coyotes really believes he can turn the bankrupt team around, Glendale should demand a 100% asset-backed guarantee of all revenues that have been promised to the city.

There are legal ways to keep the Coyotes in town and protect taxpayers; Glendale should choose one.

Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.

Learn More:

Goldwater Institute: Frequently Asked Questions about Glendale/Phoenix Coyotes deal

Maricopa County Recorder’s Office: Glendale Parking Agreement (Jan. 25, 2011)

Forbes: A Critical Battle Over The Sports Economic Model

Washington Post: George Will: An Arizona city’s sports mania encounters a hard check

Getting taxpayers off a dangerous hook

by Clint Bolick
Goldwater Institute

The City of Glendale, Ariz. is planning to borrow $100 million so it can send a check for that amount to Chicago businessman Matthew Hulsizer to help him buy the Phoenix Coyotes. That type of transaction is exactly what the Gift Clause of the Arizona Constitution was designed to prevent: furnishing public debt or providing public funds to a private individual or corporation for personal gain.

The deal has the team selling parking rights to the City, which the dealmakers say will provide sufficient revenues to repay the bonds. But there are two problems with that. First, the City may already own some or all of the parking rights. Second, it’s quite clear the revenues will not come close to repaying the bonds.

So the City pledged sales and excise taxes as collateral for the loan. That means if the team goes bankrupt again, or if parking revenues fall short, taxpayers are on the hook for potentially hundreds of millions of dollars–on top of the $180 million the City borrowed to build the hockey arena in the first place.

The solution is simple: take the taxpayers off the hook, and place responsibility where it belongs: with the new owner.

The City and Hulsizer share two dubious beliefs. First, although the Coyotes have lost $25-$40 million every year and already have plunged into bankruptcy, they think Hulsizer can make the team profitable with “a few tweaks”. Second, they say parking revenues will suffice to repay the bonds.

If they truly believe those things, then there should be no problem with Hulsizer, rather than the taxpayers, borrowing the money. That way, if the shaky premises on which the deal depends prove faulty, Glendale taxpayers will not have to pay for another costly blunder by the City of Glendale.

If the City truly wants to keep the Coyotes, it should act within the law and stop playing Russian roulette with taxpayer money. If Hulsizer is willing to skate up to the puck, the Coyotes’ endearing mascot Howler need not be an endangered species.

Clint Bolick is director of the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

Learn More:

Goldwater Institute: Glendale, the Phoenix Coyotes, and the Hulsizer Deal

Goldwater Institute: Goldwater Institute v. City of Glendale (public records in Coyotes negotiations case)

Glendale has a $197 million moving target for the Phoenix Coyotes

by Carrie Ann Sitren
Goldwater Institute

After months of secret negotiations, the city finally released a $197 million proposal in December 2010 to pay the Phoenix Coyotes to keep playing at the city-owned hockey arena. A few days later, the Glendale City Council voted 5-2 to approve the deal. Or did it?

First off, if the deal sounds backwards, that’s because it is: Under the approved agreement, the city agreed to pay a Chicago businessman $197 million to lease the city’s own arena. Apparently, that’s what it takes to keep the team playing in the desert after it filed for bankruptcy in 2009. That’s also why the Goldwater Institute has been monitoring the deal. The Gift Clause of the Arizona Constitution prohibits cities from subsidizing businesses, and we will soon release a formal evaluation of Glendale’s proposed payments.
Since December, the city appears to have been taking steps to move forward, including plans to issue $116 million in bonds to pay the Coyotes. Moody’s Investor Services reported the Coyotes bonds would go on sale this week, and downgraded the city’s bond rating in response. City taxpayers will be on the hook if the team fails again or if revenues fall short of projections.

On Friday afternoon, the city came out with a new proposed hockey agreement, which it calls “the latest version,” to be voted on by the Council this afternoon. Will this be the final version? Will the Council approve it before the bonds are issued? Will Council members be given the time and information necessary to make an informed decision? The Goldwater Institute will continue to monitor the saga closely to make sure the Coyotes do not skate away with taxpayer money.

Carrie Ann Sitren is an attorney for the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

Learn More:

Goldwater Institute: Goldwater Institute v. City of Glendale

Goldwater Institute: Goldwater Institute Statement on Bond Issuance

Arizona Republic: Glendale to vote Tuesday on Changes in Coyotes sale

Cost for taxpayer-funded Cubs’ stadium must be capped

by Carrie Ann Sitren
Goldwater Institute

Last week in the Arizona Republic, I urged Mesa to provide details of its plan to pay for a new spring training stadium for the Chicago Cubs. A day later, the city released a page and a half of bullet points outlining those “details.” Unfortunately, that list raises even more red flags.

The city has signed a non-binding agreement to build a new $84 million stadium for the Chicago baseball team. In Mesa, voter approval is needed before the city can spend more than $1.5 million, so Proposition 420, which would authorize this spending, is on the Nov. 2 election ballot. But neither Prop. 420, nor the city’s agreement, spell out what a new stadium will actually cost Mesa residents, or what Mesa taxpayers will get from the Cubs in exchange.

The bullet points issued last week outline Mesa’s costs at around $100 million. The list confirms expected construction costs for the stadium and training fields at $84 million, and estimates another $15 million will be needed for parking and other infrastructure. On top of that, the city will help to pay for future, unnamed improvements to the training complex. In exchange, the Cubs would provide “benefits to be determined” and pay rent in some unknown amount.

Mesa residents should demand to know more, including a firm limit to all of the costs and specific commitments from the team that will directly benefit the public. The New York Times reported on Sept. 7, 2010, “With more than four decades of evidence to back them up, economists almost uniformly agree that publicly financed stadiums rarely pay for themselves.” Arizona cities are no strangers to the prospect of money-losing sports stadiums. Glendale officials still haven’t figured out what to do with the $180 million taxpayer-funded arena built for the Phoenix Coyotes hockey team which, like the Cubs, has threatened to move out of state.

Mesa voters are in control of the game with Proposition 420 for Cubs baseball. They should refuse to play blindfolded.

Carrie Ann Sitren is an attorney with the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

Learn More:

Goldwater Institute: Proposals to fund new Cubs stadium risk constitutional violations

Arizona Republic: Cubs plan needs more specifics before voters say yes

City of Mesa: Prop. 420

Proposals to fund new Cubs stadium risk constitutional violations

by Clint Bolick
Goldwater Institute
Efforts to keep the Chicago Cubs in Mesa present the first opportunity to see if Arizona elected officials were paying attention to the Arizona Supreme Court decision striking down government subsidies to individual businesses. A city can construct and own a baseball stadium. (We’ll leave aside for now the question of whether that’s good public policy.) However, the funds being considered by the Legislature are problematic: a new tax on all tickets to Cactus League spring training games for the benefit of the Cubs and an increase to the already hefty car rental tax. Adopting these taxes to benefit a single sports franchise may constitute an illegal special law under the Arizona Constitution. The proposed bill would confer to a sports authority such unbounded power that it may be an improper delegation of legislative authority, which also presents constitutional problems.

The potential deal between Mesa, which will own the facility, and the Cubs also raises serious issues. Under the proposed deal, the Cubs reap all of the financial benefits and have to do little more than show up. Under the CityNorth decision, the beneficiary of a government incentive must produce roughly comparable direct, tangible benefits. The best way to achieve this is fair market rent, which the Cubs are apparently unwilling to pay. A deal probably could be constructed that complies with the constitution, but it will require the Cubs to make far greater commitments than they have appeared willing to do.

Any baseball fan would want to have the Cubs here. And certainly the Cactus League is a valuable asset. But at some point, incentives become illegal subsidies, and taxpayers are asked to do too much. We hope our elected officials will heed the wisdom of the Arizona Supreme Court in the CityNorth decision and honor their constitutional limits.

Clint Bolick is director of the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

No Better Place than the Super Bowl

The latest leftist assault is the condemnation of Tim and Pam Tebow for their audacity to be part of a pro-life commercial scheduled to air during the Super Bowl.  Sports pundits, political talking-heads, and news reporters are all over this story.   Liberal “women’ s groups” have asked CBS to deny Focus on the Family the right to buy air time to broadcast the ad and sports analysts are denouncing the Tebow  effort as damaging to his career.  One writer likened Tim Tebow to a full-time evangelist moonlighting as a football player.  Did he think that was insulting?

I could go on and on about what sort of false religion and destructive values are being exploited every day in pro-sports…. But I digress.

Apparently that writer has no idea the call on the life of the Tebow family and has no understanding of service to something greater than you.  Tim Tebow could no more turn his back on the opportunity to tell the world the miraculous truth of his healthy birth than a sports writer could turn away the scoop of a lifetime.   It is what he was put here to do.  And he knows it. On Florida game days, the most frequent Google search is for whatever scripture Tebow has on his eye black.

With that said, all the hyperbole about this being a sporting event and not a religious venue is a distortion of the truth.  The faulty premise is in the concept that the sanctity of life should be viewed only as a religious cause; it should be a humanitarian cause.  Protecting the life of the unborn, giving hope to women and families who are facing odds they see as insurmountable, and telling the truth where a lie has been accepted is not religious. If there were a call for aid to the people of The Sudan, or any region were genocide is practiced, would it be religious or humanitarian? It may be the love of Christ that empowers them but since when is love a religious act not to be confused with the real world?

An unborn child is a life, a real person with a real soul.  Life does not spontaneously occur and that which is not alive cannot become alive; it is formed and developed just as the unborn child is within the womb of the mother.  We all grow, change and have different stages of our being.  Such is the reality of life…and it starts at conception.

What are Glendale officials cooking up for Coyotes?

by Carrie Ann Sitren
Goldwater Institute
At a restaurant, you expect to see a menu before you order–after all, you’re the one paying the bill. The City of Glendale, however, doesn’t care to follow that logic. Instead, City officials are refusing to disclose what deals they’re cooking up during closed negotiations for the sale of the Phoenix Coyotes, or what will ultimately be put on the table for Glendale residents to eat–and pay for.

Rumors have been circulating for weeks that Glendale officials are discussing offering concessions and annual subsidies of up to $20 million to potential buyers of the Phoenix Coyotes hockey team who would be willing to keep the team in Glendale. They need the team to stay because of the 30-year lease the Coyotes hold to play in Jobing.com arena, a venue built with $180 million provided by Glendale taxpayers. But since the team’s owner filed for bankruptcy and potential buyers have discussed moving the team to Canada, taxpayers could be left with an expensive, vacant hockey arena, and no team.

This is why the Goldwater Institute filed a public records request for documents showing what Glendale officials are offering potential buyers of the Coyotes. Surprisingly, the City denied the request. The Goldwater Institute promptly filed a lawsuit demanding that the City release the records.

When taxpayers are footing the bill, they have a right to know where the money is going and what their elected officials are doing. At a time when families are pinching pennies, Glendale officials cannot be allowed to give away millions in secrecy.  The judge is expected to decide within two weeks what records the City must disclose. At the very least, Glendale’s taxpayers have a right to see what’s on the menu before they pay the bill.
Carrie Ann Sitren is an attorney with the Goldwater Institute.

Rejected! NBC Says “No” to Pro-Life Super Bowl Ad

Why am I not surprised that the paranoid-of-controversy big wigs over at NBC have rejected the incredible pro-life ad created by CatholicVote.com? Apparently the ad involves “political advocacy or issues.” At the same time, NBC rejected an ad by People for the Ethical Treatment of Animals (PETA) because it depicted “a level of sexuality exceeding our standards.” Yet PETA is probably one of the most controversial advocacy organizations today. Remember when PETA compared the killing of chickens to the Holocaust?

While we would agree with NBC’s assessment that the PETA ad is clearly sexually explicit, we’re surprised that they said nothing about the ad being “political advocacy or issues.”

The big question is whether one can honestly criticize the beautiful ad put together by CatholicVote.com. It is a positive and inspiring ad that criticizes no one and affirms a comittment to perserverence and overcoming odds.

I’m just waiting for the folks over at NBC to bleep out Kurt Warner’s victory speech.

The Decline of Detroit

Looks like Detroit’s auto teams are not the only teams in decline.

The Detroit Lions finished their season 0-16 today losing to the Green Bay Packers, 31-21, and making it the only NFL team to lose the greatest number of games in a season. They have also been outscored 551-281.

What this says about Detroit is only symbolic but it may inspire the owner of the Lions to ask Congress for a bailout.