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06-02-2013, 03:11 PM
  #55
CasualFan
Tortious Beadicus
 
Join Date: Nov 2009
Location: Bay Area, CA
Country: United States
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Quote:
Originally Posted by "Major4Boarding"

For anyone interested in some light reading over the weekend

http://www.glendaleaz.com/Clerk/docu...ySchedules.pdf
I make no apologies, I'm a junkie for this type of stuff so thanks for the link. It took me on an interesting path and yielded even more interesting anecdotal evidence.

City of Glendale Expenditures/Expenses by Department Fiscal Year 2014 @ SCHEDULE F (PDF Pg 14) FUND 1282 - Arena Event Operations (via M4B link above)

- ADOPTED BUDGETED EXPENDITURES/EXPENSES FY13: $17,000,000
That's the legacy budget figure from the previous counsel and the JIG lease.

- ACTUAL EXPENDITURES/EXPENSES FY13: $1,844,296
JIG did not complete a transaction, so the adopted budget figure of $17MM never had to be paid. Instead, the actual was $1.8MM. That figure represents the repayment of the NHL AMF $50MM.

Sidebar: It's important to understand that Glendale didn't have $50MM in cash to drop into an escrow account. What the city did is kite cash from other funds in order to give money to the NHL. The hilarious conclusion of that adventure is documented in the Follow Your Money Revenue figures for FY11 and FY12. Fund 1780 generated less than $5MM per year, meaning the city took a relaxing $40MM bath on the deal. I guess the Money-Making-Machine was Out-Of-Order for those two years.

- BUDGETED EXPENDITURES/EXPENSES FY14: $9,500,000
This is not a $9.5MM AMF. It's a roll up of three different elements 1. AMF ($6MM) 2. Arena Cap Repair Set Aside ($500k) 3. Payback of the NHL AMF $50MM ($3MM) The interesting part, to me, was following Element 3.

Via April 26, 2013 Budget Workshop (PDF Pg. 11-14)
The FY 2013 budget includes $1.8M for the debt service on the inter-fund loans. The current inter-fund repayment terms are 25 years and an interest rate of 3.245% - 3.9%. The FY 2014 draft GF budget includes $3.0M for repayment of inter-fund loans. This is an increase from the $1.8M in the FY 2013 GF budget because it assumes an accelerated payment plan for the water-sewer portion through a lease financing mechanism.
The city staff recommended, and the majority of the council approved, accelerating repayment of the NHL AMF $50MM. But, that was not the only option. In fact, it seems there was discussion on alternate options:
Two possible alternatives exist related to the interfund loans and the additional funding needed for the public safety and health insurance issues discussed above. 1. There is the alternative of forgiving all or a portion of the inter-fund loans. 2. There is the alternative of continuing the $1.8M in annual debt service payments on the inter-fund loans and forgoing the accelerated repayment plan for the water-sewer portion of the inter-fund loan. This alternative would make $1.2M in GF ongoing funds available.

Both alternatives of this option result in a rate impact for the city’s water/sewer operations and sanitation/landfill operations. The rate updates that the Water Services and Public Works Departments completed in preparation for the FY 2014 budget assume repayment of the interfund loans. If the inter-fund loan is not repaid, rate increases will be sooner and of a greater magnitude in order to cover operating and capital costs for future years.
Put simply, that means the city council contemplated bailing on their obligation to repay the NHL AMF $50. Instead, they would have raised the rates so citizens paid more for water, sewer, sanitation, landfill. That would have freed up $3MM per year that the city could have added to the Team Gosbee AMF, taking it from $6MM to $9MM. This alternative is not attributed and it would be unfair of me to pin it on Sherwood absent any evidence that it was his idea. However, when terms like "bridge the gap" and "identify other revenue streams" are mentioned, these are the types of things they are talking about.

The anecdotal conclusion that may be drawn is that the previous administration and council majority would have had no problem foisting the NHL AMF $50MM debt onto the citizens so they could throw even more money into the Coyotes blackhole. The current administration and majority was not interested in that approach. In fact, they opted to accelerate repayment of the debt instead. Has fiscal responsibility come to Glendale?

Note: NHL AMF $50MM is used for convenience. It is technically $45MM as the final installment of $5MM has not been identified in any budget documents on the city website.

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