The Goldwater Institute, a government watchdog group, warned Glendale city council Tuesday morning it is opposed to a proposed arena lease for the Phoenix Coyotes.
The conservative public policy research organization says the $197-million (U.S.) Glendale is offering Matthew Hulsizer, the prospective buyer of the NHL franchise, "appears to grant an unconstitutional subsidy for the Coyotes."
Glendale council was expected to approve the lease Tuesday night.
In the past, the Goldwater Institute successfully sued Arizona municipalities under the state's gift-clause law for handing over too much public money to private enterprises.
"My background is not in arena management or pro hockey teams," said Carrie Ann Sitren, a Goldwater lawyer. "We want to find experts, talk to them, get their opinions and crunch numbers. If this thing turns out to be what it looks like, we're prepared to follow through."
"This thing" is a 30-year lease for Jobing.com Arena that will give Hulsizer, a Chicago businessman, $100-million up front for the parking rights around the arena, and $97-million over 5 1/2 years to manage the facility.
In return, the suburban Phoenix city would receive rights to the revenue from 5,500 parking spaces, nominal rent payments that would grow to more than $5-million annually - only if the team is profitable - and surcharges of $4.80 per ticket.
Sitren noted a letter to city council that the $97-million contract to manage the arena will not be put up for bids, nor does it appear to be fair market value. She also said the value of the $100-million for parking rights is questionable.
"This appears to be grossly disproportionate to the fair market value of the management rights and obligations, creating the potential for a violation of the gift clause," Sitren wrote. She cited an Arizona Supreme Court ruling in another case that bolstered her argument.
Sitren also noted "in addition to the arena management fee, there are other aspects of the proposal that could implicate the gift clause, such as special tax treatment, waiver of the team's previous obligations, and the value of the parking rights when it is unclear both in terms of likely revenues and to what extent the city already owns those rights."
Craig Tindall, a lawyer for the City of Glendale, said in a statement that the lease proposal "was drafted consistent with Arizona law, including the recent interpretation of the Arizona gift clause."
There is nothing wrong with the Coyotes receiving subsidies, Sitren said. It's just that they should come directly from hockey fans, not Glendale taxpayers.
"First of all, this is taxpayers' money and the city can't just spend it however the city council members or hockey fans or Mr. Hulsizer wants," Sitren said in an interview. "It's not their money. It's held in trust for the taxpayers. Arizona prohibits [excessive]taxpayer subsidies.
"Nothing, of course, would forbid hockey fans who live in Glendale from getting out their personal chequebooks and writing a check to a person