Winnipeg Free Press - PRINT EDITION
Coyotes purchase no closer to closing
Goldwater's threat of lawsuit stands
THE Goldwater Institute called Matthew Hulsizer's bluff on Monday and no imminent resolution appears upcoming in the ongoing saga of the Phoenix Coyotes sale.
Hulsizer said Sunday he's ready to close the sale of the National Hockey League franchise but would first like Goldwater to drop talk of a lawsuit against the City of Glendale. Goldwater objects to a Glendale bond issue that would pay more than half of Hulsizer's price for the Coyotes. A possible lawsuit could hike the bonds' interest rate.
"I can tell you that we are prepared to close (the deal) right now. We have everything we need to close," Hulsizer said in a television interview. "There is one thing, which is that the rate that the city would have to pay on the bond is unnecessarily high. To the tune of as much as $100 million in increased interest over the next 30 years and this is due to questions from the Goldwater Institute."
Any issue with the bond falls on the City of Glendale, and not Goldwater, said Darcy Olsen, the CEO of the Arizona taxpayer watchdog.
"Moody's and S&P both already downgraded Glendale's general bonds due to excessively high levels of debt. Any investor with a head on his shoulders should be nervous about buying bonds to back a corporate subsidy that appears to be an illegal deal in violation of the Arizona constitution," said Olsen, in an email to the Free Press.
Hulsizer has negotiated a lease with Glendale that would see the city pay him $100 million for parking rights at Jobing.com Arena, which he would then use to fund his $170-million purchase of the Coyotes from the NHL.
"It's unnecessary money that would have to be paid by the city and it's something that if we can resolve some of their questions and get some clarity, I think everybody will be better off and we'll save $100 million for the city," said Hulsizer, who will also receive $97 million from Glendale for management fees at the arena.
It's unknown if Glendale is willing or in the postion to go along with Hulsizer with the extra cost of $100 million added to the city's expense. Glendale gave its city manager a cap of nine per cent for yield on the bonds. Anything above nine per cent in interest payments would have to be approved by council.
The NHL has put no deadline on the sale of the Coyotes but the transaction has dragged on and reports suggest the league is losing patience. According to Goldwater lawyer Carrie Ann Sitren, Glendale hired lawyer Jordan Rose last week to tell the institute the NHL would kill the transaction unless Goldwater agreed not to file suit.
Goldwater has been probing the Glendale-Hulsizer deal and has intimated it will sue if the deal is consummated on the grounds it contravenes Arizona's constitutional gift clause, which prevents governments from propping up businesses with taxpayer money.
Glendale and Hulsizer contend the deal is legal because the revenue generated by 5,500 parking stalls at Jobing.com Arena would service the debt and principal payments on the $116-million bond issue the city has been unsuccessfully attempting to sell for weeks.
Glendale had used the yield rate of six per cent in council meetings but Hulsizer's comments would indicate the rate will be higher -- adding $3.3 million per year in interest payments. It is unclear how the parking receipts would meet this extra burden.
Olsen says Goldwater is still in need of information in order to come to a conclusion on the deal.
"We are not in any hurry and continue waiting on yet more documents. In the meantime, Glendale has the opportunity to spare taxpayers a protracted legal battle and follow the law of its own accord," said Olsen.
Republished from the Winnipeg Free Press print edition March 1, 2011 D1
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