Lost Arcos

Officials suppress documents that say how much developers would profit from a hockey arena and commercial complex that's seeking at least $350 million in public subsidies

Alan Kaufman dissected the Los Arcos financing plan and found nothing to like.

He says developer projections of $16 billion to $32 billion in sales over the next three decades is evidence enough that public money should not be involved.

"They don't need any public money, for God sakes," he says.

Taxpayers will pump more than $352 million into the project, which is expected to generate up to $32 billion in sales over 30 years.
See larger map
Taxpayers will pump more than $352 million into the project, which is expected to generate up to $32 billion in sales over 30 years.

See larger map

Alan Kaufman says the developers want even more public money than the stadium district law requires, and Scottsdale officials appear happy to oblige.

He cites the developer's demand for the $151 million bond, as opposed to collecting public money over 10 years and keeping the public's debt much lower.

"You can't believe these people would do this," he says. "They are unbelievably ballsy here."

Kaufman also takes aim at the planned construction of the state's largest parking garage. An 8,000-plus-space garage would snake across the southern and eastern flank of the development.

The garage would vary from two to four stories in height and be about 110 feet from the closest residential areas, developers say.

The city is promoting the parking garage as a public amenity and promises parking will be free for all events.

Alan Kaufman scoffs at the notion that parking will be free. He notes that taxpayers will pay for the garage.

"Free parking?" Alan Kaufman asks. "Free? I'm paying $100 million to build the son of a bitch."

Kaufman says developers and city officials are ignoring complaints from neighbors who are concerned about their proximity to a massive parking structure that would be used up to 200 nights a year.

"No attention at all is being paid to the thousands of people who live in residential neighborhoods who will be negatively impacted by this," he says.

The neighborhood is one of Scottsdale's oldest and most affordable places to live. The modest tract homes have been generating property taxes for the city for more than 40 years, Kaufman notes.

Alan Kaufman is also incredulous that Scottsdale has failed even to insist on reaching a definitive development agreement prior to the election.

"Throughout the rest of the country, when people have to vote on these stupefying sports packages, at least they know what the deal is," he says.

With the election less than a week away, there is no formal agreement between Scottsdale public officials and developers over a number of crucial issues, including:

• Sharing lucrative revenue streams from naming rights for the arena, which could be worth $50 million.

• Sharing revenue from the sales of luxury suites.

• Sharing revenue from the sale of advertising inside the arena, and proceeds from radio and television deals.

• Obtaining an ironclad agreement protecting taxpayers from any cost overruns.

• Defining who will pay the operating costs of the arena.

Developers and Facilities District officials says all these details and more will be negotiated after the election. They point to pledges by Ellman Companies to cover all cost overruns and promises that the Coyotes will pay all operating expenses.

But nothing is in writing.

"All you have is the Ellman Companies' general agreement that they will take care of all cost overruns," Kaufman says.

Councilman George Zraket says the lack of a development agreement is the project's fatal flaw.

"It's tantamount to me handing you a blank contract with blank spaces on it for all the salient terms and conditions of our deal. Then I ask you to sign it and fill all the blanks later," Zraket says.

Facilities District chairman James Wellington says serious negotiations between the district and the developers would begin immediately after the election, assuming voters approve the tax.

"My feeling is a very positive and sensible package can be hammered out," Wellington says.

Alan Kaufman has his doubts.

The bottom line, he says, is Coyotes owner Richard Burke and his partners, the Ellman Companies, should finance the project privately.

"Richard Burke didn't build my house, I don't want to build Burke's house," he says.

In addition to withholding key financial information from the public, Scottsdale and the Facilities District are being sued over their handling of the November 2 election.

The ballot and the official publicity pamphlet mailed to registered voters earlier this month leaves out crucial information, alleges a lawsuit filed on October 18.

Voters are being asked whether to allow the Facilities District to keep 50 percent of the state sales taxes collected from purchases made on the site for 10 years. The district would use the money to help pay for the project.

If voters approve the measure, state law also requires Scottsdale to contribute an equal amount of money to the project during the same time period.

Neither the ballot nor the publicity pamphlet mention Scottsdale's required contribution.

The publicity pamphlet is supposed to provide voters with nonbiased information, Alan Kaufman says.

This is particularly important in this election because the Coyotes and Ellman Companies have outspent opponents by 167 to 1. Developers have spent more than $350,000 on publicity while opponents have spent about $2,100.

Alan Kaufman's lawsuit demands that voters be provided with new ballots and more accurate information concerning the election.

Kaufman told the court that he is concerned that many votes already have been cast by mail.

If the court rules that election organizers failed to follow state law, "that would then cause us to challenge the election," Kaufman said.

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