House of Cards
Forget the Super Bowl.
The Arizona Cardinals' biggest victory for decades to come will arrive May 18, if Mesa voters approve a $385 million sales-tax hike that will help finance a 67,400-seat football stadium.
For the first time since arriving in the Valley 11 years ago, the Cardinals are displaying the vigor and determination of a champion in their drive for the new stadium, which would be ensconced in a massive real estate project called Rio Salado Crossing.
Their bold march would be impossible if key Mesa government and business leaders weren't running interference for them.
The National Football League team is underwriting a sophisticated campaign to convince voters that it is the public, not the Cardinals, that stands to benefit most from the sales-tax boost, which could last up to 20 years. The Cardinals' high-dollar sales pitch is being delivered to thousands of Mesa voters via 12-minute videos. The tapes, which tout the benefits that would accrue to voters if they approve the stadium, are disingenuous, to say the least.
A reading of the fine print in government documents reveals that if the sales-tax hike is approved, the Cardinals stand to reap a fortune while contributing virtually nothing to the project.
Taxpayers, meanwhile, could end up pumping more than $1 billion into the scheme.
In almost every sense, Rio Salado Crossing is a house of cards.
But the Cardinals and their civic backers have cleverly disguised the stadium inside a real estate project the likes of which Arizona has never seen. Rio Salado Crossing would make the Camelback Esplanade look like a strip mall. Hence, signs pop up all over Mesa urging folks to vote "Yes on Rio Salado Crossing" rather than "Yes on the Cardinals' stadium."
Rio Salado Crossing would be built on 640 acres along the Salt River, southeast of the intersection of the 202 and 101 freeways. Stadium advocates say it would be a new city, complete with two huge luxury hotels and a resort, a retail development four times the size of the Arizona Center and enough office space to contain seven copies of the Bank of America tower, Mesa's tallest building. The futuristic project also will feature the nation's 14th-largest convention center and two 18-hole golf courses.
Oh, and it would have a football stadium that happens to be equipped with a retractable dome and a portable natural grass field that would slide in and out of the stadium like a cookie sheet. The stadium would also contain more than 90 luxury suites that the Cardinals plan to lease annually for more than $100,000 each.
The catalyst for Rio Salado Crossing would be the $507 million Arizona Exposition and Convention Center--of which the stadium is the prominent feature. Most construction costs would come from a $385 million bond issue voters will consider May 18. The Cardinals would contribute $75 million toward the construction--a pledge that sounds generous but is one that the team could recoup in the first year of operation. The balance of construction costs would come from a diversion of state sales taxes that must win legislative approval.
Once this public money is committed, the Cardinals say, private developers are poised to chip in another $1.2 billion to build fabulous hotels, shops, restaurants, office buildings, parks, houses and condos that will surround the stadium.
Private investment is crucial to the success of the stadium and convention center. A host of sales taxes generated by businesses that become part of Rio Salado Crossing would be used to cover projected operating losses from the stadium and convention center. If there's any money left over, it would go to the Cardinals.
The Cardinals and their civic supporters--led most prominently by Mesa Tribune publisher Karen Wittmer and Mesa Mayor Wayne Brown--are reticent to discuss the operating losses the convention center and stadium will rack up.
Instead, they speak of the parks, lakes, recreation areas and vibrant nightlife Rio Salado Crossing promises to finally bring to Mesa. They say Rio Salado Crossing would transform Mesa from a humdrum suburb into a major league city.
"This is a huge economic engine for the City of Mesa, and nothing like it will ever come to us again," Brown enthuses.
There is no guarantee that would happen. What would be guaranteed is that the project would divert unprecedented sums of tax dollars.
A New Times investigation that included review of thousands of government documents and interviews with key officials reveals that Rio Salado Crossing's planners would tap at least seven different tax streams for decades to come to underwrite their vision of Oz.
Other significant but heretofore unreported findings:
* The May 18 special election may be moot. The Mesa City Council is divided on the merits of a key agreement with the Cardinals to build the stadium and convention center. Even if voters approved the sales tax, the council could still kill the project. Currently, a council majority is opposed to the agreement as written.
* If the Rio Salado Crossing project succeeds as its planners envision, taxpayers would actually pay the Cardinals more than $175,000 a year to play in the stadium.
* Taxpayers absorb virtually all of the risk. It is the taxpayers, not the Cardinals, who would pay for the operation and maintenance of the football stadium and convention center. Taxpayers would foot those bills even on days the Cardinals use the stadium. Planners project operating losses of $4 million to $10 million a year.
* A lawyer hired by Rio Salado Crossing's planners to analyze the proposed stadium-use agreement determined that the deal would be dubious for the governments involved. He says it would be among the worst deals cut with an NFL team in recent memory.
* The cost and design of the football stadium continues to change, with price estimates ranging from $250 million to as high as $402 million. The fluctuating estimates raise the specter of significant cost overruns for an untested stadium design.
While the Cardinals have some influential allies--including the Tribune, the Mesa Chamber of Commerce and the business-dominated East Valley Partnership--they still have a tough sell to convince conservative Mesa voters to tax themselves for Rio Salado Crossing.
One retiree recently picked apart the project during a rally designed to drum up support.
"I think we should get down to basics," the gentleman said. "The underlying thing for this is the stadium for Mr. Bidwill. All the other stuff that is attached to it is in order to make it a little bit more palatable. So I think we in Mesa have to be a little careful. I don't think we need this thing. Let Bidwill build his own stadium."
The 150 or so retirees erupted with cheers and applause.
The Cardinals' representative had no response.
If not for the aggressive play of Tribune publisher Karen Wittmer, the stadium sales-tax proposition wouldn't be on the May 18 ballot. In January, negotiations between the Cardinals and the Rio Salado Crossing Multipurpose Facilities District had reached an impasse.
A little background: The Facilities District is a public body created by the municipalities of Mesa, Gilbert and Queen Creek to own and operate the stadium and convention center. Each city has appointed two representatives to the district board. Voters in Gilbert and Queen Creek will decide May 18 whether to allow a portion of state sales taxes collected within the district to be used for construction and operation of the stadium. Voters in Mesa will be asked the same question. But Mesa voters also will act on the proposed sales-tax increase to finance the $385 million bond. Since the district was created last summer, it has worked most closely with Mesa officials--it is, in essence, an extension of that city.
To break the stalemate between the district and the Cardinals, Wittmer summoned Mesa vice mayor John Giles and councilman Keno Hawker. About a dozen merchants who support Rio Salado Crossing were on hand that day--January 7--in Wittmer's office to watch the publisher and Cards' vice president Michael Bidwill strongarm the councilmen.
"She in very blunt terms told us we needed to lean on the district," Giles says.
The vice mayor says Wittmer and Bidwill demanded that he and Hawker convince Facilities District board members to support two provisions in a proposed stadium-use agreement that are potentially worth more than $160 million to the Cardinals.
Just the day before, Giles says, Facilities District director Marty Whalen had told the Mesa City Council that the district would not accede to Cardinals demands that the team be granted two plum provisions--half of the non-game-day parking revenue and the lucrative master development rights to the project.
Michael Bidwill told those gathered at the Tribune that without the two provisions, the stadium deal would be dead, Giles says.
"They appeared to be panic-stricken," Giles says. "They were concerned that the senior Mr. [Bill] Bidwill was going to take his ball and go someplace else."
Despite the pressure, Giles and Hawker declined to lobby Facilities District board members or Whalen.
Giles says he thought the deal the district wanted was equitable and that the non-game-day parking revenues and master development rights should remain with the city.
"The meeting apparently ended in failure because Keno and I were not willing to go and try to influence the district to back down on the use agreement," Giles says.
The next day, Wittmer hosted another meeting, spearheaded this time by Mesa Mayor Wayne Brown. Also attending were assistant city manager Mike Hutchinson, Facilities District director Whalen, Cardinals chief consultant Mike Rushman and Michael Bidwill.
By the end of the day, the Cardinals had their way. Whalen appeared to be pleased.
"My hat goes off to Mayor Wayne Brown and Tribune Publisher Karen Wittmer for bringing the parties together," a Cardinals' press release quoted Whalen as saying. The statement was misleading in that it purported to announce that a final use agreement for the stadium had been reached between the city, the Facilities District and the Cardinals.
Actually, the City Council has never approved the preliminary agreement.
Whalen says the district agreed it would give half of non-game-day parking income to the Cardinals only after the district collected enough money to cover all operating and maintenance expenses for the stadium and convention center.
"That puts the Cardinals behind a whole lot of other priorities," Whalen says.
The master development rights, Whalen says, still require further negotiations, and he expects the City of Mesa to receive a substantial fee for awarding those rights to the Cardinals.
Wittmer says her role in the negotiations was no different from any other "major business operator in the city."
While the Tribune's news analysis of Rio Salado Crossing has been anemic, at best, the paper's editorial support for the project has been effusive--and at times abusive toward those who would ask hard questions.
In a December 31 editorial, the paper berated the Facilities District's lawyer, Bill Sims, whom it blamed for causing the negotiations to stall. The paper was seconding Mayor Brown, who said of Sims' negotiating tactic, "I haven't had the impression he's trying to make a deal and I realize he's supposed to be working for us, but sometimes I wonder."
In the same editorial, the Tribune ridiculed longtime Mesa City Manager Charles Luster, stating, "Luster's penny-pinching could kill a winning municipal project."
The paper then suggested that "if Mayor Brown, who was elected on a promise to lift the city into the municipal big leagues, is frustrated with city management, then it's time for a long-overdue change."
With the Tribune's backing, Brown flexed his muscle during the crucial meeting, leaning on Whalen to accept the Cardinals' demands. Although Brown says he had little to do with the outcome, sources familiar with the meeting say Brown insisted that Whalen accommodate the Cardinals' requests.
Wittmer says she and other members of the Rio Salado Crossing Association, a private group supporting the project, want citizens to have the opportunity to vote on the $385 million sales tax. The association was concerned that the Cardinals and the district were not going to come to terms before January 14, which was the deadline for setting the May 18 special election.
The district already had postponed an election last fall because of questions over terms being proposed by the Cardinals.
"I personally don't want to see it killed by either side without giving the people in Mesa the opportunity to decide," Wittmer says.
The compromise reached that afternoon in Wittmer's office called for the district and the Cardinals to sign a Memorandum of Understanding that outlines the financial commitments by the Cardinals, the Facilities District and the City of Mesa. The Tribune deal also called for the City Council to vote to move forward with the special election--which the council dutifully scheduled the following week.
A key provision left out of the Tribune-brokered agreement, and so far largely ignored by the newspaper, is the requirement that that City Council also must approve the MOU.
In fact, the City Council could still reject the MOU even if voters approve the sales tax.
And at this point, a majority of council members--vice mayor Giles and councilmen Keno Hawker, Dennis Kavanaugh and Bill Jaffa--are opposed to key portions of the MOU.
The renegade councilmen want to debate the MOU in public before the May 18 election, Giles says.
"I think the time for doing it is now," he says. "We need to discuss both the good and bad parts of this project, so we need to have a good, open discussion on the merits of the MOU."
If the council waits until after the election to pass judgment on the MOU, and voters approve the tax, Giles says the council could be criticized for ignoring the voters' will.
"We will look like we are doing what the voters don't want us to do," he says.
Brown and councilman Jim Davidson are opposed to a vote on the MOU before the election.
Hawker, who is exploring a run for mayor next year, is adamantly opposed to Rio Salado Crossing; he doesn't believe the city should subsidize a professional sports team.
The controversy over whether to debate the MOU before the election so far has played out during secret executive sessions. But there is mounting pressure to bring the issue to a council vote, which could occur this week.
Council objections to the MOU stem largely from worries that the economic bonanza envisioned by Rio Salado Crossing backers is grandiose.
"The numbers are a bunch of crap," says Jaffa, a certified public accountant.
Giles is appalled by the Cardinals' unwillingness to share the wealth.
"When you find out how greedy the Cardinals have been, it makes you sick," Giles says. "That's where they lost me. I was on board on this thing all the way until I found out about the details of the MOU."
Buried deep in the fine print of a document mentioned once in the MOU is a stunning chart titled "Rio Salado Crossing Project Recapture Tax Revenues."
The chart outlines how the Facilities District will increase and divert taxes that could steer more than $1.1 billion in public funds into the stadium and convention center project.
Of that total, more than $87 million in tax dollars could end up back in the Cardinals' bank account.
The $1.1 billion in tax funds earmarked for the Rio Salado Crossing project is more than four times the amount of money Maricopa County taxpayers contributed to Bank One Ballpark. That unpopular quarter-cent sales tax, levied by county supervisors in 1995, raised $243 million before expiring in December 1997.
Unlike the baseball stadium project, Mesa taxpayers will be forced to pay interest on $385 million in bonds that would be sold to finance construction of the stadium and convention center. Bank One Ballpark was built on a pay-as-you-go basis, not with long-term financing.
The actual cost to Mesa taxpayers of retiring the bonds at 5.5 percent interest over the projected 16-year repayment period is approximately $654 million. The bond and interest will be repaid through a quarter-cent sales tax hike and extension of the city's quarter-cent "Quality of Life" sales tax that is set to expire in 2006.
This is just the beginning of the public-funding pie that will be consumed by the stadium and convention center.
The Cardinals and the Facilities District are also seeking changes in a state law that would allow the district to keep $63 million in state sales taxes that would be generated over 10 years from construction of the facility and from sales by businesses located within the district. A bill pending is facing stiff opposition in the state Senate--particularly from East Mesa Senator Rusty Bowers, who is opposed to using state sales taxes for such projects.
Just how precarious is the stadium financing plan? If the Legislature refuses to allow the district to collect half of the state's 5 percent sales tax levied during construction (about $18 million) and immediately funnel the money back into the project, there won't be enough money to build the stadium and convention center.
"It won't work without the changes" by the Legislature, says Mesa finance director Larry Woolf.
If the financing plan gets past the sales tax election and the legislative tax break, an additional $423 million in taxes will be collected over 27 years without the approval of Mesa's voters or City Council, says Woolf, who prefers to call most of the taxes "surcharges."
The tax revenue is contingent on construction of two convention hotels totaling 2,250 rooms, a 750-room resort and 450,000 square feet of retail space adjacent to the stadium.
Nearly all of the $423 million will remain within the Facilities District rather than going to Mesa's general fund.
"What is typically being heard in Mesa is that the Crossings project is going to be an economic benefit for all of Mesa," councilman Keno Hawker says. "That's not accurate information. The money doesn't get distributed back into the general fund. It stays within the Rio Salado Crossing project to fund the operating and maintenance expense."
According to the financing plan, more than one-third of the $423 million in tax revenue--$163 million--would go to cover stadium and convention center operating losses, and to build up a capital reserve.
Once that's accomplished, the Arizona Cardinals are next in line to get tax dollars.
The potential payment to the Cardinals is to cover the team's share of half of the non-game-day parking revenue, and compensation for a $650,000-a-year penalty the Cardinals must pay Tempe for breaking their lease at Sun Devil Stadium.
Any additional tax revenue--estimated at $216 million--will be plowed back into Rio Salado Crossing to be spent on projects approved by the district and the Cardinals.
Here's how the Facilities District plans to collect the $423 million in taxes:
* The district would siphon 75 percent of the city's existing 1 percent sales tax on all sales within the district rather than forwarding all the money to the Mesa general fund. Estimated diversion: $90 million.
* The district would siphon 90 percent of the city's existing 2.5 percent bed tax on all sales within the district rather than forwarding all the money to the general fund. Estimated diversion: $94 million.
* The district would divert 100 percent of the money raised from the new citywide quarter-cent sales tax (increasing to one-half-cent in 2006) for district operating expenses and non-game-day parking payments to the Cardinals rather than making payments toward the $385 million bond debt. Estimated diversion: $22.8 million.
* The district would levy and collect a new 3.5 percent bed tax on all sales within the district. None of the money will go to the Mesa general fund. Estimated diversion: $147 million.
* The district would levy and collect a new 2 percent food and beverage tax on sales within the district. None of the money will go to the general fund. Estimated diversion: $68.8 million.
The huge tax net cast by Mesa to finance and operate the stadium and convention center is unprecedented.
"This type of financing has not been done anywhere to this degree in the country," says assistant city manager Mike Hutchinson. "It's pretty innovative."
Councilman Keno Hawker, who holds an MBA from the University of Wisconsin, calls it something else.
"It's an ongoing subsidy forever," he says.
While the Facilities District could grab more than $1.1 billion in taxes to build and keep the stadium and convention center in the black, the Arizona Cardinals could see their bottom line fatten.
Exactly how much the team stands to gain is unclear. The Cardinals refused to respond to a half-dozen requests for interviews. Government officials imply they've asked to see details of the Cardinals' financial health, but none apparently have been turned over.
Under the terms of the MOU, the Cardinals would contribute $75 million to the construction of the stadium and pay $2 million a year in rent and other fees.
But the Cardinals could get most--if not all--of this money back within the first year of operation. Here's how:
The Cardinals' first big payday could come even before construction is completed. Under the terms of the MOU, the Cardinals can sell the naming rights for the stadium--a provision worth anywhere from $50 million to more than $100 million.
The Tampa Bay Buccaneers cut the most recent NFL naming-rights deal and will earn up to $55 million over 18 years. Last year, Staples Office Stores agreed to pay $100 million for the naming rights to the Los Angeles Lakers' new arena. The Arizona Diamondbacks will get $66 million from Bank One for the naming rights to that stadium.
The naming-rights fee would be a significant windfall for the Cardinals, who for 10 years have played in Arizona State University's Sun Devil Stadium, where there is no naming-rights revenue.
Another bonanza lies in interior and exterior signage that would drape the stadium. If the Cardinals match the recent Buccaneers advertising contracts, they could expect another $8.3 million a year.
The team also would receive 100 percent of all tickets sales. If the Cardinals pack the house and sell tickets for an average of $45 apiece for 10 regular-season and exhibition games, that translates into $30.33 million a year.
This doesn't include anticipated revenue of $9 million a year from the leasing of luxury suites, or from sales of 7,000 premium box seats likely to bring in another $5 million a year.
The Cardinals would also be allowed to strike a concessions agreement worth millions of dollars a year. The team would not only get a cut of sales, but also premiums for awarding beverage rights for soft drinks, beer and other name brands.
The Cardinals would pick up 100 percent of game-day parking revenues. With an expected 20,000 parking spaces on district property, at $10 a space, the Cardinals should generate at least another $2 million a year. This would be a sharp increase from Sun Devil Stadium, where the Cardinals only earned $130,000 from parking last year.
Under the terms of the MOU, the Cardinals also stand to reap annual payments for their share of non-game-day parking revenues. The payments aren't guaranteed, but would occur only if the private development is built as planned.
The MOU financing plan shows a $2.175 million payment to the Cardinals in 2004, the stadium's projected first year of operation. The payments are projected to increase, reaching $4.5 million a year by 2028. The district payments to the Cardinals, which come from tax collections from adjacent businesses, are projected to total $87 million by 2028.
The non-game-day parking revenue would more than erase the Cardinals' annual $2 million payment to the district for rent and the district's cut of naming-rights proceeds.
The net result is that the public would pay the Cardinals $175,000 a year, with payments increasing over time, for the team to play in the new stadium.
This would be among the worst deals any government entity has struck with an NFL team in recent years, according to calculations prepared by Bill Sims, the Facilities District attorney and the target of Mayor Brown's wrath.
Finally, the Cardinals would get master development rights to the property surrounding the stadium. The team is expected to convey those rights to SunCor, a private development company that is affiliated with Arizona Public Service Company, the state's largest electric utility.
Larry Woolf, the Mesa finance director, says the development rights may be worth another $80 million.
At the same time the Cardinals boost revenue, the agreement slashes the team's expenses. The Cardinals convinced the Facilities District to cover all game-day expenses, projected at $930,000 the first year.
Moving into the new stadium should increase Cardinals' revenue by $20 million to $40 million a year over what the team collects at Sun Devil Stadium, says councilman Hawker--and this doesn't include non-game-day parking and development rights income.
The Cardinals' deal would make Jerry Colangelo and the Arizona Diamondbacks look like philanthropists in comparison.
"I have a newfound respect for Colangelo," says vice mayor John Giles after comparing the Diamondbacks' stadium deal with the one proposed for the Cardinals.
The Diamondbacks have assumed more than $130 million in ballpark construction expenses and pay about $10 million a year to maintain and operate Bank One Ballpark. The team also pays the district a percentage, albeit only 5 percent, on the sales from luxury suites and club seat premiums.
Colangelo declined to comment on the Cardinals' proposed stadium deal.
The Cardinals' lucrative financial arrangement doesn't seem to bother key Mesa officials.
Assistant city manager Mike Hutchinson, for one, expresses sympathy for the Cardinals.
Hutchinson says because the Cardinals are a "family business," the team is at a disadvantage against many NFL owners, such as the Ford family, which owns the Detroit Lions.
"They don't have that kind of money, and they are pretty up-front about it," Hutchinson says. "They took the position that this is the risk they are willing to take as a family business, which is what they are."
Except there is virtually no risk for the Cardinals.
The Cardinals, Mayor Brown and publisher Wittmer are selling Rio Salado Crossing on the premise that the 600,000-square-foot convention center will attract throngs who will stay at the luxury hotels and resort and run up expense-account tabs in nearby bars, restaurants and shops.
The fact that the Cardinals are refusing to contribute any funds to the operation and maintenance of the convention center and football stadium makes the success of the adjacent development crucial. Taxes generated from the businesses located there will be earmarked to cover operating losses from the convention center and stadium.
If there isn't enough tax revenue generated from the development to cover operating losses, then the Mesa general fund will have to absorb the shortfall.
This is not an outcome that public officials like to discuss.
"Let's say in a worst-case scenario we build the whole damn thing and got all the hotels there and nobody shows up. Then the city has got a white elephant on its hands," Facilities District director Whalen says.
The Cardinals have released a series of optimistic studies that conclude the convention center will draw hundreds of thousands of people each year and will trigger more than $1 billion a year in economic activity. This huge influx of cash would guarantee plenty of tax revenue to cover operating losses.
Few people appear to be taking the Cardinals' rosy estimates seriously.
"You can't have pie-in-the-sky optimism," says councilman Dennis Kavanaugh. "You have to have cold, hard skepticism about this project every step of the way."
"I don't feel very good about what these guys are proposing out there," says Valley convention specialist Richard Warnick. "I don't have a very good sense this is a viable project."
The problem, Warnick says, is that it will take years to develop the hotels and retail businesses required by major conventions. Warnick and other convention experts say Rio Salado Crossing needs at least 5,000 hotel rooms to support the huge convention center it plans.
It's a chicken-and-egg dilemma, he says. Until the convention traffic is established, hotel developers will be hesitant to build that many rooms in an area that has nothing else to attract business.
"They have to create an artificial environment down there, and they have to do it all at once to make it an interesting and attractive place to be," Warnick says.
He predicts an uphill and costly struggle.
"There's going to be a lot of pain felt by the investors in this project, including the city," he says.
It's a mistake to assume that a convention center will guarantee construction of hotel rooms, says David C. Peterson, managing director of the Development Advisory Group for PriceWaterhouse & Coopers.
"The primary support for hotels is office space," Peterson says.
The Rio Salado Crossing plans plenty of office space--two million square feet--but that phase of the project is years down the road.
Peterson says the project backers are wise to link the stadium to a convention center.
"Politically, it is easier to generate support for a stadium if you can show benefits to the region as a result of convention activity," he says.
There is no doubt convention centers can be costly operations. The City of Phoenix is losing more than $12 million a year on the Phoenix Civic Plaza. The city subsidizes losses at the center to attract conventions in the cutthroat national convention market.
Not only has the city poured hundreds of millions of dollars into the convention center, but for decades the city has been unsuccessful in attracting a third major downtown hotel. The failure to land the hotel, Peterson says, lies not with the convention center, but with insufficient office space in Phoenix's central core.
Mesa councilman Keno Hawker points to the losses sustained by the Phoenix Civic Plaza, which is one-third the size of the proposed Crossing Convention Center, and worries that losses in Mesa could run far higher than the estimated $4 million to $10 million.
"We could be looking at losses of $20 million or $30 million a year," Hawker says.
Before the City of Mesa and the Facilities District agree to build and operate the stadium and convention center, there is another significant hurdle the Cardinals must cross.
The MOU requires the Cardinals to provide the city and facilities district with "adequate commitments" from developers to assure generation of enough tax revenues to cover expected operating losses.
"This project will not go forward unless there are construction contracts in place that will support the tax revenue streams we are told we are going to get," says councilman Bill Jaffa.
So far, the Cardinals claim to have more than $500 million in commitments from developers who want to build retail, residential and office buildings. How firm those commitments are, or if any money is on the table, is unknown.
"Developers are expressing interest, but I don't know what's behind the commitment," says Mesa finance director Woolf.
The key to the private development is the 1,250-room convention center headquarters hotel.
The Cardinals have not announced a deal with a developer to build what would be the largest luxury hotel in Arizona. The hotel is seen as the domino that would trigger additional private development, including another 1,000-room hotel and a 750-room resort to be built during the first four years of operation.
Nowhere in Arizona has such robust development ever occurred in such a short period of time.
Officials from Marriott Hotels have been holding discussions with Mayor Brown and the Cardinals for more than a year. Marriott is expected to conduct a feasibility study to determine whether to build a hotel if voters approve the sales-tax hike. Marriott officials did not return phone calls seeking comment.
The hotel feasibility study would be crucial to the project. If a prospective hotel developer finds the project too risky, the stadium deal collapses.
No hotel, no private development. No private development, no sales tax. No sales tax, no stadium.
"There are a lot of assumptions that have to come true for Rio Salado to work," says councilman Dennis Kavanaugh. "The biggest one is the hotel part of it to attract additional development. Will the hotel attract the kind of numbers the Cardinals say it will, and will the people spend the money? That's a very big part of the puzzle."
Marty Whalen slides into a restaurant booth and offers a warm smile and strong handshake.
Whalen was chief counsel for America West Airlines during its early days in the 1980s and is now chairman of the Mesa Planning and Zoning Commission. He's also director of the Rio Salado Crossing Multipurpose Facilities District, and since he was appointed to that post last summer, he's been a bureaucrat without an office--or even a file cabinet. So he uses the Denny's at Main Street and Dobson Road as a de facto office.
"It's amazing how many people conduct business at Denny's," Whalen says during an interview conducted under a din of children crying, dishes crashing and waitresses gossiping.
The district, which would own and operate the stadium and convention center, has no budget. All its expenses, which so far total more than $200,000, are being paid by the City of Mesa.
Given its lack of accouterments--there isn't even a dedicated phone line--it's not too surprising that the district has few details on the design and cost of the centerpiece of the project, the football stadium.
"There's been no value engineering at all," says Whalen. "We are still dealing with concepts."
And the concepts keep changing.
Determining the cost of the stadium would be crucial to the success of the project. There would be $507 million available for construction of the stadium, convention center and supporting infrastructure. The city, with voter approval, would provide $385 million from bond proceeds. The Cardinals would kick in another $75 million toward construction. An additional $47 million would be collected from interest earnings on the bonds and from the hoped-for state sales tax break pending in the Legislature.
If the stadium, convention center and infrastructure cost more than $507 million, somebody has to pick up the tab. But neither the stadium district nor the Cardinals nor the city is taking responsibility for cost overruns, which have plagued two other retractable-dome stadiums. Bank One Ballpark ran more than $90 million over budget, and a retractable-dome stadium in Seattle is $178 million--and counting--over budget.
Rio Salado Crossing's supporters want a private contractor to sign a maximum-price contract and assume responsibility for any cost overruns to build the stadium and convention center. No one knows if a contractor will actually bid on the project under such terms.
The football stadium would hardly be run-of-the-mill. The proposed design calls for a retractable roof and a removable natural-grass field. No stadium anywhere has combined both features.
Reams of Facilities District documents stored inside Mesa City offices reveal a dizzying array of cost estimates for the stadium.
Last summer, Huber Hunt & Nichols, Inc.--a national contractor with vast stadium-building experience, including Bank One Ballpark and the Seattle project--estimated the Cardinals' stadium would cost $352.8 million. HH&N has been providing construction advice to the Cardinals and the Facilities District in the apparent hope of becoming the exclusive builder for the project.
Ever-cautious Mesa City Manager Charles Luster (derided by the Tribune for penny-pinching) requested a second opinion from Bob Williams, who oversaw construction of Bank One Ballpark as director of the Maricopa County Stadium District.
Williams concluded last August that the Cardinals' "stadium cost estimate should be increased to the range of $402 million. . . . It is unlikely the costs will be less than that, and the potential is high for cost increases."
Williams also evaluated the overall cost of the convention center and infrastructure expenses and concluded the project needs a budget of $549.5 million--$42 million more than envisioned.
In the wake of Williams' gloomy assessment, designers have downsized the stadium by nearly 25 percent. Instead of the 2.1 million-square-foot football stadium that was originally proposed, the Cardinals' chief adviser--Vermont developer Michael Rushman--has scaled back the stadium to 1.6 million square feet, comparable in size to the new Tampa football stadium. The compression brings the projected cost to $329 million.
The latest stadium design calls for 67,400 seats, including about 7,000 premium seats. The stadium would also have approximately 90 luxury suites and would be capable of adding 11,000 temporary seats for special events such as bowl games. The retractable roof would be about half the size of the one in Bank One Ballpark. When the grass field is rolled outdoors for sunlight, the stadium would also double as a convention hall with 158,000 square feet of exhibit space if needed.
The main convention center, which will be attached to the stadium, is estimated to include a 350,000-square-foot exhibit hall and 250,000 square feet of meeting rooms and support space. The "no-frills" convention facility is projected to cost $90 million, a number Williams and HHN agreed was reasonable.
The murky cost estimates for the stadium, changing plans and the inherent uncertainties in building the prototype facility raise questions about whether the stadium the team is touting before the May 18 election would be the one actually constructed.
"That's a good question," says Facilities District board member Pat Gilbert.
Mesa assistant city manager Hutchinson says if the cost estimates to build the stadium come in too high, there would be three options: Cancel the project, have the Cardinals kick in more money, or cut back further on the design.
"You don't do the retractable dome. Or you don't do the field that goes in and out," he says.
But wouldn't such alterations in the scope of the project amount to a bait-and-switch on the public?
"Do those changes make it untenable? I don't know. We'll cross that bridge when we come to it," Hutchinson says.
A further wild card in the mix is that very little of the Cardinals' $75 million construction contribution must be forwarded to the district until two years into the project. The stadium is designed to come online first, four months before completion of the convention center.
A likely scenario arises in which construction cost overruns make it clear the contractor won't be able to finish both the stadium and the convention center on budget. Project supporters say that any cost overruns would be the responsibility of the contractor.
Nevertheless, the Cardinals could be in position to insist that their contribution go only toward completion of the stadium.
Mesa vice mayor Giles says cost overruns are inevitable, and a showdown with the Cardinals and the contractor is likely.
"We are looking at a project with a potential for huge cost overruns. Nobody has tried to build one of these before," Giles says.
The vice mayor predicts the Cardinals will play hardball if it appears there won't be enough money to finish both the stadium and the convention center.
"They are not going to be nice guys," Giles says. "It's a very scary deal."
Early on a March Sunday morning, the parking lot at the Riverview Municipal Golf Course is packed. The popular course is one of the most affordable in the Valley, costing only $13.75 to play a round of nine holes.
Nearby, four softball fields host a western regional tournament involving teams from as far away as Oregon.
On another field, a soccer tournament is under way--as it is every week from sunup to sundown. Young, mostly Latino men watch quietly from the sidelines as players bolt up and down the field.
The small fishing pond has attracted a half-dozen folks hoping to land a catfish.
Families unload children from minivans and sedans to celebrate a girl's sixth birthday. Parents push children in swings.
Jets roar overhead.
It's just another day at the park.
Most people randomly surveyed were unaware that the neighborhood park could become the site of the Arizona Cardinals' new stadium.
Asked if they thought it would be a good idea to build the stadium and pay the tax, the majority of folks said they didn't care one way or another, but said they probably wouldn't vote in the May 18 election.
"I don't give a shit," one man says while sitting on a Harley-Davidson motorcycle.
A few thought it would be a great benefit for the city, bringing economic growth and construction of an exciting place to go.
"I think it will help out the economy for Mesa," says Ted Ackerley as he walks to his car with a golf bag slung over his shoulder. "It's time for Mesa to step up to the plate."
Others were firmly opposed to losing the park and the inexpensive municipal golf course to make way for $100-a-round championship courses and the stadium and convention center.
"We like our park," says Nash Jaurejui, who lives across the street. "This is what we use for recreation. We are not too interested in paying taxes for big stadiums so other people can make money."
It appears the May 18 election--arguably the most important day in the Cardinals' team history--will be like most of its home games and attract only a small crowd.
For once, poor attendance may be a blessing for the team.
Contact John Dougherty at his online address: email@example.com
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