This may be the last time as a sitting Councilmember that I am afforded the opportunity to speak to this issue. So I
ask you to please bear with me as I make the case one last time for this lease management agreement. It took 3 years to get here today and it will take me some time to explain my reasoning. There are some who feel that I am blindly advocating for the Coyotes. That is not the case. In the 9 years that the team has been here I have attended less than a dozen games. Most of those were in conjunction with the marketing or economic development departments use of the Glendale suite to meet with potential business locates in Glendale.
My passionate belief that this is the right course of action comes from my knowledge and experience of the facts of the situation. I, as others on council, was here when we made the decision in the early 2000’s to embark upon a vision for Westgate.
There is historical precedence for our action. In the early 80’s vast tracts of north Glendale were purchased and owned by the Hunt Brothers. They went bankrupt. But the city had a vision for north Glendale so it made the bold decision to invest millions and millions of dollars to insure that it developed and grew according to that vision. It took guts, determination and faith on the part of the then City Manager, Dr. Vanacour, the former Mayor
George Renner and the council, to follow through knowing that precious city resources would be targeted exclusively in north Glendale.
In 2002 the council embraced its vision for west Glendale as the city’s next major economic engine with the development of Westgate and the building of the hockey arena. The arena was always intended to have an anchor tenant and that anchor tenant was to be hockey. It is no different than Phoenix’s US Airways Center and its
anchor tenant, the Phoenix Suns basketball team or any other city throughout the country that has a stadium or arena with a major anchor tenant.
At that time the mayor said, “This project came down to a business decision that represented an incredible economic development engine for the western area of our city. This is a huge victory for the city of Glendale, Glendale residents and for hockey fans throughout Arizona. The arena and surrounding development will positively
impact Glendale and will eventually become the heart of the West Valley.”
Westgate was envisioned as a three-legged stool. To make it work it needed sports, which we have with an arena anchor, the Coyotes; entertainment, which we have in the restaurants and bars; and retail, which has never substantially been there until a week ago with the opening of Tanger Outlets Mall.
Finally Westgate now has all the components to make it a stable and viable economic entity within the region. All three of these elements create permanence to the vision of Westgate.
It sends a signal that Westgate is stable and will be so for the next 20 years. Businesses that have been waiting to locate within Westgate can do so with renewed confidence. Owners and developers of the dozen, already zoned, tracts of land comprising over 1,000 acres surrounding Westgate can now pursue tangible development knowing that Westgate will not die. It also creates another major effect. It saves jobs and creates new ones. It saves 680 full and part time jobs that support the anchor tenant. This does number not include the arena’s vendors and their employees. It attracted 900 new jobs when Tanger opened as well as the 750 Humana jobs and the 550 Bechtel jobs in the immediate area.
It is no different than the city’s previous commitment to north Glendale. By reallocating city resources and pouring millions of dollars into that area to maintain its vision it sent a strong signal and made it attractive for the developers of Arrowhead Mall to locate there creating the city’s first major economic engine. Now to the contract that is before us today.
Since 2009 we have seen a parade of possible contracts from the Reinsdorf Group, Ice Edge, Matthew Hulsizer, and the Kaites Group to Greg Jamison. I believe Jamison is the best fit for the City of Glendale. He has demonstrated
his experience and success in turning the San Jose Sharks around. He has a subsidiary entertainment group with the experience and knowledge to book non-hockey events. There are those who say he doesn’t have the money and there are others, such as myself, that say that he does. Neither side knows the real story but the NHL is convinced that he does have the resources or they would not have entertained his proposal and would have shown him the door a long time ago.
There are those who say that Mr. Jamison has not been visible in our community. Mr. Jamison appears to be a quiet, confident and competent person who deliberately chose a path less visible so as to not create media speculation,
often erroneous, about his bid for the lease management contract.
The contract before us is a good one. Mr. Jamison has demonstrated his willingness to work with the City by agreeing to the amendments that were presented today. The first year’s management fee drops from $17 million to $11 million; There is a provision allowing Mr. Jamison to buy the arena at any time which would relieve the city, at some future date, of its annual construction bond debt payments of $9 million a year and remove the management fee entirely; there is a provision to revenue share for 15% of the naming rights and 15% of the parking advertising; there are also performance penalties and for every game not played Mr. Jamison loses $30,000.
Can Glendale afford this contract? I say yes.
Glendale cannot afford to lose its anchor tenant. In a recent news article, McFadden’s restaurant manager stated that they are losing $18,000 to $20,000 per game not played. How long can McFadden’s and the others hang on if the anchor tenant is gone permanently? How long before the entertainment component vanishes because the sports component is gone? Westgate sales tax plus $1M in Northern Crossing sales tax paid the annual arena construction bond debt of $9M. With Westgate failing the city will have to find all or a portion of that annual $9M. Add that amount to the annual cuts of $5M a year the city must make over the next 5 years.
From personal research I have discovered that it takes about $500,000 a month or $6M a year just to keep the lights on and the doors of the arena open. It is a verifiable figure should anyone else take the time to do some research. Now add a management fee on top of $6M a year to keep the doors open and the $11M figure does not look so unreasonable.
There are those who say we cannot afford it and have pointed to the recent discoveries of loss associated with our Risk Management Trust Fund, our Workman’s Comp Fund and our Benefits Fund. Keep in mind that these funds remain sound and do meet the minimum actuarial required by law. The cost to rebuild these funds is in the
$2.5M to $3M range. It is a substantial figure. I believe we can better accomplish these shortages with a stable, healthy Westgate contributing substantial sales tax revenues into the General Fund.
I see light at the end of the tunnel. Glendale is beginning to recover. We saw that today from the first quarter sales tax numbers.
Lastly, 19 months ago the mayor said, “There is no question that taxpayers are better off if the arena can continue to produces revenue both from the Coyotes and for surrounding businesses. It will continue to help create jobs, increase Glendale’s tax base and stimulate additional development opportunities in the region.”
Those declarations of the anchor tenant’s worth to Glendale were true then and remain true today.