News

Stick It to 'Em!

Page 3 of 4

The city could claim to the public that it could build and own the hotel, and it wouldn't cost voters a dime. By last December, city staff, led by Assistant City Manager Sheryl Sculley, began touting a plan that would require the city to sell $300 million in tax-exempt bonds that would supposedly be repaid by revenue generated by the hotel.

But the fine print revealed that taxpayers would be liable for up to 40 percent of the projected $21 million a year in debt service if, for some reason, the hotel failed to generate enough revenue to repay the bonds.

Over the first six months of 2004, the city met on a regular basis with prospective hotel operators and owners of downtown real estate. The city refused to provide public records related to these meetings, despite my repeated requests under the Arizona Public Records Law. Then, less than a week before the City Council voted to approve the hotel project, the cost jumped from $300 million to $350 million.

City-owned hotels across the country are finding real world finances a lot more difficult than the numbers projected on paper by economists aiming to please the municipal officials who pay their fat consulting fees. The city-owned hotel project in Myrtle Beach, South Carolina, defaulted on its bond. Projects in St. Louis; Overland Park, Kansas; and Sacramento have performed far below expectations.

Academics such as Heywood Sanders, a professor of public administration at the University of Texas at San Antonio, have long been critical of city-owned convention hotels.

"The failure of optimistic hotel performance forecasts to materialize carries a number of risks for cities and their balance sheets," Sanders says in an article in the June issue of Government Finance Review, the magazine of the Government Finance Officers Association.

Those risks, according to Sanders, include injecting more cash for money-losing hotels, creating an oversupply of new hotel rooms that could reduce occupancy rates, decrease daily room rates and reduce sales tax collections.

It's obvious that the Phoenix City Council is ignoring these dangers in a bullheaded rush to own and build a hotel project that private analysts reject as unprofitable.

It is exactly this type of arrogant behavior by elected officials that led to the passage of Proposition 200 nearly 15 years ago.

Now is the time for the public to assert its rights, file a lawsuit and hopefully obtain a court order that will force a public vote on the convention facility/hotel.

That thud you just heard was Mayor Gordon falling out of his chair.


Sheriff Joe Arpaio's real estate empire continues to expand. Maricopa County records show that Cash 'n' Go Joe plowed $100,000 in cash on May 3 into a vacant lot in Fountain Hills. The property is adjacent to a two-story office building he and his wife, Ava, purchased in 2002 for $440,000 in cash.

The latest investment continues Arpaio's real estate strategy of purchasing commercial property for cash rather than leveraging his real estate investments by borrowing money at historically low interest rates.

Arpaio's now invested $790,000 in cash into three real estate deals since 1995. Not bad for a guy who makes $78,000 a year and collects another $65,000 from his federal pension as a retired DEA agent.

As I reported last week, we don't know how much more money Arpaio has invested in another half-dozen commercial and residential real estate properties in the Valley because he has requested that the County Recorder's office seal his records from public inspection.

The records were redacted because Arpaio, the self-proclaimed "toughest sheriff in America," says he's worried that someone might want to kill him. What a wuss! Especially since he bragged to me recently that he's never really felt threatened.

I asked Arpaio in a June 22 letter to voluntarily release his real estate records -- with his personal address redacted. But he refuses to do so. Instead, Arpaio's media mistress, Lisa Allen MacPherson, called up KTAR radio host David Leibowitz on July 2 and lied about which records have been provided to me.

Leibowitz asked MacPherson if the sheriff has provided copies of all of his real estate records to New Times, and MacPherson responded with a doozy: "Yes, we have."

Wrong! She must think the citizens of Maricopa County are idiots. Guess so. They keep re-electing her elderly boss.

Arpaio had some of his property records with him during my June 1 interview. I asked at the time if I could copy the records, and MacPherson and Arpaio both said yes. But when I requested them in writing on June 22, the sheriff's office clammed up.

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John Dougherty
Contact: John Dougherty