Goldwater Institute Attempts to Intervene in Coyotes' Bankruptcy

Saying that bankruptcy court might be the only place to stop a deal that forces taxpayers into subsidizing the Phoenix Coyotes, the Goldwater Institute filed a motion this afternoon asking to the judge to allow them to intervene in the case.

The motion is filed on behalf of eight Glendale taxpayers.

This isn't the first interest the Goldwater Institute has shown in the Coyotes' bankruptcy, but it's the first clear indication that a subsidy from the city to the team might face a lawsuit from the influential think tank.

The team's current owners filed for bankruptcy after losing millions of dollars on the team;  they hope to sell to an owner who would move the franchise to Canada. Meanwhile, internal records from the city suggest that it's prepared to offer some sort of incentives to an ownership group that would keep the Coyotes in Glendale -- likely Chicago Bulls/White Sox owner Jerry Reinsdorf and local lobbyist John Kaites. 

Maricopa County Superior Court Judge Edward Burke had initially granted the Institute access to hundreds pages of city documents, but today Burke denied the think tank access to more detailed documents.

That appears to have triggered the request to intervene, which would leave the door open to the Institute objecting to a deal when more details become public.

"Despite a public records request and a lawsuit whose outcome was to require the City to produce documents pertaining to proposed deals, the Institute has been unable to access any public records of subsidy negotiations or possible deals involving city funds, though it is clear that such discussions are taking," attorney Carrie Ann Sitren wrote on the Institute's behalf.

As Sitren explains, the bankruptcy judge set to choose a new team owner on Wednesday. Yet despite the looming deadline, no one really knows what's being offered by Glendale. "The city should have to vote [on any incentive package] before the bankruptcy judge decides who the new owner will be," she says. "But it's not clear that the city will have public notice before that takes place."

Being allowed to file an amicus brief would let the Institute make it clear that "the taxpayers have a significant interest in the use of any taxpayer funds for a bidder" -- and also that certain forms of subsidy might ultimately prove unconstitutional, as Sitren warns.

"We want to the court know that this might be an issue," she says.

Last year, the Institute successfully persuaded the Arizona Court of Appeals to strike down a massive subsidy that the the city of Phoenix attempted to give the CityNorth shopping center.

We'll have more on this story as it develops ...

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Sarah Fenske
Contact: Sarah Fenske