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Goldwater calls Scruggs on Coyotes blame game
By: Gary Lawless

03/3/2011

Glendale Mayor Elaine Scruggs continues to blame the Goldwater Institute for the city's inablity to close a deal with Matthew Hulsizer for the sale of the Phoenix Coyotes.

Scruggs called a news conference, although she did not field questions, on Thursday morning to discuss the lack of progress on the sale.

Scruggs urged Goldwater to step down saying the institute's opposition to the deal is "significantly hindering," the sale.


Glendale has structured a deal whereby they would give Hulsizer $100 million for parking rights at Jobing.com Arena. Goldwater contends the parking receipts will not meet the debt burden attached to that $100 million, to be raised by a bond issue, and therefore contravenes Arizona's constitutional gift clause.

Goldwater was contacted by the Free Press immediately following Scruggs' press conference and communications staff forwarded the following letter, written by Goldwater CEO Darcy Olsen and addressed to Scruggs.

Dear Mayor Scruggs:

Thank you for your interest in meeting with the Goldwater Institute.

We have discussed our concerns and met repeatedly and at length with Jordan Rose and the city of Glendale's attorneys. Our concerns have not changed since these discussions and meetings were held, except when the City decided to pledge sales tax revenues to repay the bonds. That places the taxpayers in the position of having massive liability if the team fails again. We also shared this concern with the city.

As you know, the Gift Clause requires a tangible quid pro quo for payments made to a private company or individual. The crux of the deal is the City obtaining parking rights in exchange for giving a payment of $100 million to the purchaser. We believe the City already owns the parking rights. We have examined all of the documents the City contends prove the opposite, and those documents fortify our conclusion. If the City owns the parking rights, then there is no consideration and the deal is unquestionably invalid.

Even if the team owns the parking rights, they must be worth the $100 million the City is paying. We believe the revenues will be insufficient to repay the debt. If they are insufficient or if the team fails, the taxpayers, not the purchaser, is liable. That is where we believe the deal should be restructured to avoid an illegal gift. If the parking rights are as valuable as the City apparently believes, then the purchaser should borrow the money necessary to make the purchase, not the City.

We continue waiting on the City to provide us with the remaining documents that are relevant to this arrangement, per the Court order. Once we have those documents, we will review them. At that time, we would be glad to offer additional analysis. At this point, however, we have no new analysis to offer. If the City chooses to restructure the deal, we will also be pleased to review it.




Sincerely,

Darcy Olsen

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