The city of Glendale reportedly is threatening a $500 million lawsuit against the Goldwater Institute for bringing sunshine to its deal with the Phoenix Coyotes.
Two years ago, the Goldwater Institute filed a public records request to make sure the public knew what was going on. Glendale has balked at its court-ordered obligations at every turn, in one instance instructing an attorney to “ignore” or “play with” the institute’s requests.
If the city files a lawsuit against the institute, it will be frivolous and unsuccessful. The Goldwater Institute’s efforts to determine the constitutionality of the Coyotes deal advance the public interest and are fully protected by the First Amendment.
The fulcrum of the deal has the city sending $100 million to Matthew Hulsizer (the potential Coyotes buyer), ostensibly in return for the right to charge for parking. Trouble is, it appears the city already owns much of the parking area, so essentially it’s selling parking to itself.
Such a sham is illegal under the gift clause of the Arizona Constitution, which forbids payments or loans to private interests by subsidy or otherwise. Much as the city wishes differently, there is no “we got ourselves into a serious mess” exception to the gift clause.
Glendale, already in massive debt from building Jobing.com Arena, plans to borrow $100 million more to pay Hulsizer. Parking revenue appears insufficient to repay the bonds, so the city has pledged sales and excise taxes to cover any shortfall. If the team fails and the revenue stream ends, taxpayers will be on the hook for the entire cost. That amounts to playing Russian roulette with taxpayer money — precisely what the gift clause was meant to prevent.
Suspecting the deal was legally dubious, we wrote bond-rating companies to alert them to the possibility that we might challenge it. The bonds apparently ended up with a high interest rate, surely owing in no small measure to Glendale’s debt being three times that of other cities its size. Prospective bond purchasers must not be kept in the dark about potential legal risks, which would be akin to the seller of a home failing to disclose serious construction defects.
For months, we have been wading through 10 years of documents relevant to this deal. We will decide whether to file a lawsuit when we are confident we have all the facts.
In the meantime, there is a simple solution: If the parties to the deal are certain of its success, the buyer should be responsible for guaranteeing the $100 million, not the taxpayers.
We’d all love to see the Coyotes stay in Glendale, but not at taxpayer expense. The Goldwater Institute’s mission is to protect taxpayers and enforce the Constitution. Glendale is not above the law.