It’s a familiar story: a sports team convinces a city to issue millions in bonds, with promises that parking revenues will be sufficient to pay back the debt. Parking prices increase, while the lots fill to only 60 percent capacity even on game day.
This is happening right now in New York City, where taxpayers financed $102 million in bonds at the demand of the Yankees. Glendale could suffer the same fate if it closes on its proposed deal to finance $116 million in bonds with parking fees for the Coyotes hockey team, leaving taxpayers on the hook if the fees aren’t enough to pay the bond.
Yankee Stadium parking revenue is 40 percent below projections even though the team continues to lead the league in attendance. The ball club didn’t even bring in $1.5 million to cover the $7 million debt payment for the parking bonds, and the firm that operates the parking owes the city $17 million in back rent and taxes.
Prospects for Glendale taxpayers could be far worse. In addition to floating bonds backed by parking revenues--and sales tax if parking fees fall short--the city would pay the Coyotes $97 million over five years for the team to operate the city-owned hockey arena. This is all on top of the $180 million bond debt the city is still paying from building the arena in 2003. The Coyotes, whose attendance rates are among the worst in the league, could leave Glendale taxpayers in debt to the tune of $340 million, according to the Arizona Republic.
The deal has not yet closed, and the city still has time to restructure it so taxpayers don’t end up footing the bill. New York’s investment has proven unwise. Glendale officials should not repeat history.
Carrie Ann Sitren is an attorney for the Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute.
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