Glendale City Council received an update on the costs and history of contracts for Camelback Ranch-Glendale at its Feb. 18 workshop, and the outlook for the city is grim.
Originally estimated to cost $76 million to build when the project was announced in 2007, the city eventually spent close to $152 million on the project. They took out subordinate bonds to build the stadium and after restructuring $200 million in debt in the last year, the city will now be on the hook for payments of $354,413,511.11 over the next 26 years to pay off the project.
Chase Field in Phoenix, home of the Arizona Diamondbacks, was built for $364 million in 1995.
Subordinate bonds are a class is an outstanding loan that, should the borrowing group or company fail or file bankruptcy, will be repaid after all other debt and loans have been settled.
“The reason we are going over the history of the deal is to be prospective and not to criticize the deal,” said City Attorney Michael Bailey. “It is just to understand the deal so that … we can make some strategic decision-making as we move forward with this year’s budget.”
The city entered into an agreement with Arizona Sports and Tourism Authority (AZSTA) Oct. 1, 2009 that identified AZSTA would contribute 66.7 percent of project costs not to exceed $90,022,966.
“On the funding commitment that you are talking about, I understood that there was no commitment,” said Councilmember Norma Alvarez. “I remember a meeting where AZSTA told the council in the past that there was no promise on (Glendale) receiving money. In fact a member of AZSTA said that they voted for this deal but wanted the council to understand that (Glendale) was not going to (receive) any money. Is that correct?”
Bailey said that while they have a contract with AZSTA on this issue, there is no guarantee they will receive any of that money.
“In terms of AZSTA, if there is no money, they don’t have to find new money. They are contractually committed if the money is there,” Bailey said.
Glendale also has a contractual obligation to purchase 14.25 acres of land alongside the property by Oct. 9, 2014, or find an outside buyer for the set price of $3.1 million.
The city has received a contribution of nearly $11 million from the Los Angeles Dodgers and Chicago White Sox, with most of that ($7.3 million) going to field maintenance.
The two teams use the facility free of charge (although at the time of construction completion, the teams paid the city $1 a year for 19 years in advance for a total of $38) and the teams are responsible for maintenance and operation of the stadium.
The team retains all revenues (sales, advertising, naming rights and parking) while the city is responsible for capital maintenance and improvements.
The five-year financial forecast for the stadium shows the city losing approximately $12.6 million a year for a five-year deficit of nearly $64 million.
The city originally had an agreement that Phoenix would pledge 80 percent of the general sales tax revenue, but to date the city has only received a tax pledge of $200,585.60 from Phoenix.
Both teams can leave the stadium in 2028.