The Goldwater Institute refused to back down on its vow to file a lawsuit to block the municipal bond sale that is to finance the purchase of the Phoenix Coyotes despite a $75-million (all currency U.S.) guarantee from buyer Matthew Hulsizer and some arm twisting by John McCain.
After a long day of silence, the conservative public watchdog issued a statement Monday night saying it still considers the deal between Hulsizer and the suburban City of Glendale illegal. Goldwater claims the upfront payment of $100-million to Hulsizer from the bond sale violates Arizona's laws against excessive public subsidies.
"[Hulsizer's]offer recognizes the significant risk to taxpayers under the current deal and to that extent is a positive development," said Goldwater Institute president Darcy Olsen. "Regrettably, however, the proposal fails to remedy the core legal violation at issue, leaving the expensive taxpayer gamble intact."
In its statement, Goldwater said despite Hulsizer's offer, Glendale taxpayers are still on the hook if the bond deal fails and if the Coyotes again go bankrupt. The group also repeated its stand that Glendale may already own some of the parking rights it is buying from Hulsizer in the agreement.
Goldwater said recently it will file a lawsuit if the bonds go on sale. Glendale and NHL officials say they have buyers lined up but a lawsuit will scuttle the sale, clearing the way for the Coyotes to move to Winnipeg.
McCain, once a presidential candidate and one of the most influential Republicans in Arizona, said on the weekend he wants the Coyotes to stay in Arizona and Goldwater should find other battles to fight. The presence of Arizona Republican heavyweights Grant Wood and John Kaites as consultants for Glendale and the NHL gave rise to thoughts they had a hand in McCain's intervention. But a source said McCain got involved on his own.
Goldwater is also opposed to the proposed fee of $97-million over the first 5½ years of the lease that Hulsizer is to receive for managing Jobing.com Arena.
Hulsizer outlined his guarantee in a letter to Goldwater last Friday. In addition to the $25-million Glendale put up with the NHL to cover part of this season's losses by the Coyotes, which Hulsizer previously promised to return out of his $100-million payment from the bond sale, the Chicago businessman also pledged to guarantee the city will receive an additional $75-million in revenue over the 30-year lease agreement.
Hulsizer did not offer to guarantee $75-million of the proposed $116-million bond sale.
But just where that $75-million guarantee will apply is not clear. Hulsizer said in his letter to Goldwater it would come from the "Coyotes, arena and parking" revenue.
Phoenix television station 12News cited a source that said Hulsizer offered to review the parking revenue every five years. If there is a shortfall, he would make up the difference to a maximum of $75-million.
Goldwater said even taking the guarantee into account, the fees to be paid to Hulsizer plus the cost of borrowing to make the bond sale "would still leave taxpayers on the hook for as much as $362-million, which Mr. Hulsizer is not guaranteeing."
There is a difference between Glendale's and Hulsizer's assessments of the parking revenue over the lease's 30 years. The city lists it as $100-million, the same amount it will pay Hulsizer upfront for the parking rights. Hulsizer declined to comment Monday, but sources have said he maintains the city should not expect more than $80-million from parking, with the $25-million refund plus other rights and fees in the deal making up the difference in the city's $100-million investment.
Under the agreement between Hulsizer and Glendale, the city will get revenue from at least eight sources connected to Jobing.com Arena, including parking revenue, arena rent, something called an "arena recovery fee," a surcharge on each parking space, sales taxes related to Coyotes games and a fee for additional uses for the arena aside from Coyotes games. The revenue guaranteed by Hulsizer could come from any or all of those sources.
There is also what the city calls a "put" that it says is a potential benefit of $40-million. That represents what the city could make Hulsizer pay for the arena at the end of the 30-year lease. But Hulsizer also has the option to buy the arena for a maximum of $130-million after the first 5½ years of the lease.