Monthly Archives: July 2015

Yesterday it was announced that the City of Glendale and the Arizona Coyotes have reached an agreement that substantially reduces the payments being made to the team. The new deal is a victory for city, the Coyotes and most importantly, Glendale taxpayers.

For those not familiar with the dispute, Glendale entered into an agreement in 2013 with the owners of the Coyotes that would pay the team $15 Million dollars each year for 15 years to “manage” Gila River Arena. This is in addition to the $9 Million the city pays each year in debt service for the construction costs of the arena.

That is a lot of money for hockey, and taxpayers have been paying the price. Since the agreement went into effect in 2013, Glendale has approved 3 property tax increases and also dropped the sunset on the “temporary” sales tax increase. At 2.9%, Glendale has one of the highest sales tax rates in the region:

Without a substantial change to the management agreement, high taxes and cuts in city services were going to be a fact of life for Glendale. That is why the widely criticized decision by 5 members of the city council to cancel the management agreement last month was a bold yet necessary move. It didn’t matter that the city had a very good legal case to terminate the agreement, the public relations deck was stacked against the council. Yet they did not blink from the scrutiny and held firm in trying to protect Glendale taxpayers.

As a result, the city was able to renegotiate a new agreement with the Coyotes that cuts the management fee by more than half, reduces the length of the contract to two years and makes what was a clearly a one-sided agreement a bit more equitable.

And while it is questionable as to why any fee should be paid to manage the arena (most similar management deals involve little to no fees), it was not a sure thing that the city would prevail on their conflict of interest claim. It is better to get some relief than risk getting nothing.

Glendale is not out of the woods. Even with the millions saved under the new agreement, the city is still bleeding red ink on other questionable ventures such as Camelback Ranch.  Additionally, the council should not ignore Glendale’s sky high tax rates and see if some much needed reductions can be made.

There is still a lot of work to be done, but today’s agreement goes a long way in getting Glendale back on the right path.

The Arizona Free Enterprise Club today has released its comprehensive analysis of the Phoenix Transportation Plan, also known as Proposition 104. The initiative proposes to nearly double the transit sales tax to fund a multi-billion dollar transportation plan over the next 35 years.

Written by the renowned transportation expert Randal O’Toole, the paper conducts an in-depth review of the proposed transit plan and also investigates many of the claims made about the benefits of light rail in the Phoenix Metro area. The paper can be viewed online by clicking here. 

Some of the key findings in the paper include:

  • The oft-repeated claim that light rail has generated $7 Billion dollars in economic development is simply untrue. In fact, many of the projects included in this claim have never been built (like the Sycamore Station development) or involve projects that have nothing to do with light rail (such as the $600 million Convention Center Expansion, which was funded largely by state tax dollars).
  • The main beneficiaries of the transit plan appear to be contractors and developers who have projects near rail stations. The tax revenue from the plan combined with the generous subsidies offered to select developments ensures that this plan will benefit a few contractors and developers at the expense of others.
  • The plan is unbalanced and ignores vehicle street improvements. Despite the fact that only 3% of the population uses transit (less than 1% use light rail), 95% of the funding in the plan goes toward expanded bus and rail service. Only 3% goes toward vehicle street improvements.
  • Transit ridership actually fell after the light rail opened. From when light rail opened in 2009 through 2014, any gains in light rail ridership were offset by the loss of more than one bus rider. Ridership is still 1.2 million less per year than it was in 2009.
  • The transit plan as proposed will increase traffic congestion, energy usage and greenhouse gas emissions. In fact, the transit plan will use more energy and emit more pollution per passenger mile than the average SUV.

“Randal O’Toole does an excellent job in his analysis of debunking many of the claims made by supporters the Phoenix Transportation plan,” Free Enterprise Club President Scot Mussi said.

“Additionally, when considering the near doubling of the transit sales tax and the lack of accountability with how the money would be spent, this amounts to being a very bad investment for Phoenix taxpayers.”

In case you missed it, be sure to check out my op-ed in the Arizona Capitol Times in which I argue that Prop 104 is designed to benefit insiders at taxpayers’ expense. In addition to fact that over 90% of the funding goes toward light rail and buses (less than 8% to streets), the initiative is so poorly written that it is essentially a blank check for City Hall.

Phoenix can ill afford this multi-billion dollar tax increase. If Prop 104 passes (nearly doubling the transportation sales tax rate), Phoenix will have one of the highest sales tax rates in the region:

And now, as was reported in the Arizona Republic last week, an array of large companies that stand to financially benefit from the initiative are pouring big money into the YES campaign.

Higher taxes, no accountability, and a poorly drafted plan designed to benefit a few politically connected insiders. That is all you need to know about Prop 104.

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The Arizona Free Enterprise Club is a free market policy and advocacy group dedicated to promoting a strong and vibrant Arizona economy.