They Hide; We Seek

Tempe hopes the public will see no evil if it sees no records

The Giuliano-led city council pledged to voters that construction on the lake would not begin until there was sufficient private investment along the shoreline to underwrite the cost of building, operating and maintaining the lake. The private investment "trigger" was included in the city's 1995 Rio Salado Financing Plan.

The city signed a tentative development agreement in 1996 with the Peabody Hotel for construction of a 1,000-room luxury hotel on the southeastern shore of the then-unbuilt Town Lake. The city provided the Peabody more than $50 million in incentives to build the hotel -- in exchange for the Peabody providing funds to help defray the cost of building and operating the lake.

But by 1997, it became clear that the Peabody Hotel was having trouble lining up the financing to build the massive hotel because the project just wouldn't pencil out. Arizona didn't need another 1,000 hotel rooms, and the hotel needed a golf course to attract customers, which wasn't going to happen.

The FAA has delayed the release of its findings on the new stadium site, which means the decision will now come after Mayor Neil Giuliano's Sept. 11 recall election.
Kevin Scanlon
The FAA has delayed the release of its findings on the new stadium site, which means the decision will now come after Mayor Neil Giuliano's Sept. 11 recall election.

In addition, other unexpected expenses were adding to the cost of the lake. In February 1997, deputy city manager Pat Flynn gave the city council a sobering report.

Flynn's report -- which was presented to the council during a secret "executive session" and remained confidential until it surfaced last month in a federal law suit between Tempe and Peabody -- provided a bleak financial assessment of the Rio Salado project, of which Town Lake was the centerpiece.

"If the city looked at the Rio Salado project like an investor would look at a similar development project, we would not recommend doing this project because cost outlays far exceed income in the Rio Salado area for the foreseeable future," Flynn's February 13, 1997, report states.

Flynn concludes with a stark warning:

"We are well beyond the city's capacity envisioned in the current finance plan. I believe if we don't establish a certain ceiling we will seriously jeopardize the city's financial condition and, equally important, place an excessive burden on other city programs, thus impacting basic services."

Flynn's warnings were ignored.

Giuliano and the city council dropped their pledge to secure private investment prior to building the lake, and proceeded with construction. The Peabody Hotel never got built and now the city and Peabody are battling in federal court.

The upshot? Tempe taxpayers are financing the full cost of construction of Rio Salado improvements, as well as more than $3 million a year to maintain and operate the lake -- a lake that is useless for swimming, where fishing is banned and boating is limited.

With a such a history of hiding financial details from the public, it's little wonder that Giuliano and Tempe have erected a moat around city records that would shed light on the gritty details of the city's pending deal with the TSA and the Cardinals.

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