While it will wait until the minutes from the Glendale, Ariz., council meeting are available before proceeding officially, the Goldwater Institute plans to intercept the city's plans to hand over as much as $25-million (all currency U.S.) to the NHL.
Carrie Ann Sitren, a lawyer for the conservative watchdog group which monitors public spending, said Wednesday that it is illegal for a city to hand over complete authority to a city manager, as Glendale did, to cut a deal without public discussion or a final vote of approval from council. On Tuesday night, Glendale council voted 7-0 to give city manager Ed Beasley the authority to forge and agreement with the NHL to pay up to $25-million of the Phoenix Coyotes' operating losses for the 2010-11 season if the league is unable to sell the team.
"By delegating the power and responsibility of [council]to the city manager, the city has violated the law," Sitren said.
However, the Goldwater Institute, which has successfully overturned public subsidies by taking communities to court, will not take Glendale to court until the minutes of the meeting Tuesday are published. While no mention was made of another vote on any deal Beasley makes with the NHL, Sitren said a court will not act unless this can be shown in writing.
At this point, Sitren said, Goldwater also cannot launch legal action over the actual subsidy itself as excessive because Beasley has not finished negotiating one with the NHL.
"Court is not going to look at what a city might do or what the city is talking about doing," she said. "It will only look at what the city actually committed to do."
But it was clear at the meeting Tuesday that city council was handing over complete authority to Beasley. While an amendment was made to the original proposal, that was to cap the subsidy for the Coyotes' operating losses at $25-million.
The proposal asked council "to grant the city manager authority to sign the agreements and secure the financial mechanisms that are reasonably necessary to satisfy the NHL's requirements in order for the Phoenix Coyotes to remain in Glendale during the NHL 2010-11 season."
Sitren said in the view of the Goldwater Institute, "The city gave away all its power and responsibility to the city manager to come up with a deal. That does not fly under the laws here."
Julie Frisoni, Glendale's assistant deputy city manager of communications, did not respond to a request for comment.
Both NHL deputy commissioner Bill Daly and Beasley assured council that the agreement was only an insurance policy. They said it was unlikely to be used because the league expects to conclude negotiations to sell the Coyotes to one of two interested suitors by the end of June.
The most likely buyer at this point is Chicago White Sox owner Jerry Reinsdorf. Also looking to buy is a group of Canadian and U.S. investors known as Ice Edge Holdings LLC, but Reinsdorf and his partners - local lawyer John Kaites and Tony Tavares, the former president of the Anaheim Ducks - appear to have the upper hand.
Daly did not respond to a request for comment.
The NHL's money will probably come from ticket surcharges at Jobing.com Arena and other levies in a "community facilities district" (CFD) that will be created around the arena. That is supposed to avoid violating Arizona laws against public subsidies for private businesses. But revenue from the CFD has also been demanded by both Reinsdorf and Ice Edge.
Reinsdorf wants up to $47-million a year from the CFD to pay for the purchase price and the operating costs of the Coyotes. He also wants an escape clause in the arena lease after five years that would force the city to find a buyer or buy the team itself for a guaranteed price that would bring him a substantial profit.
Sitren said she is not sure when Goldwater will launch its legal action. But it will be as soon as possible after the official resolution is published, probably in several days. She vowed that Glendale, which is already entangled in a legal fight with Goldwater over access to public records in the Coyotes' bankruptcy case, has not heard the last of the group.
"No, far from it," she said.