FINALLY! We finally have the basis of the city of Glendale’s argument as to why it is canceling the arena lease agreement with the Arizona Coyotes.
According to what it provided in a Wednesday motion, Glendale’s position appears much stronger and more legitimate than it did earlier this week.
The Professional Management Services and Arena Lease Agreement between the city of Glendale and the owners of the Coyotes requires the city pay $15 million per year in quarterly payments of $3.75 million to the organization. The next payment under that agreement is due on July 1.
The court issued the temporary restraining order on July 12, 2015 requiring, in part, “the city of Glendale to continue to perform and comply with all of the city’s obligations under the agreement.”
This meant the city would be required to make the payment; however, the city does not want to. It wants the court to relieve it of this requirement, or alternatively, allow the city to place the payment into an escrow account to keep it safe. If the court isn’t willing to do that, as a last request, the city is requesting the bond (required to be paid by the Coyotes) be increased by $3.75 million to protect the city (if the city wins it wants to be able to get that money back and if it’s handed to the Coyotes it may never recover it.)
Glendale’s position is that it does not have to make this payment at all, and, in fact, can recoup all payments previously made to the Coyotes under the agreement since there was a violation of Arizona Revised Statute 38-511 (affectionately called the “Self-Dealing Statute”).
Quick background: On June 10, the City Council voted to direct its city attorney to cancel the agreement because Craig Tindall and Julie Frisoni left Glendale and went to work for the Coyotes, thus triggering the remedies under the state law. Glendale argued in its motion that Tindall and Frisoni were “significantly involved in initiating, negotiating, securing, drafting or creating” the agreement on the city’s behalf and, since they went to work for the Coyotes within three years, it has the right to cancel the agreement and recover any consideration it has paid under the agreement. Since it has the right to recover any consideration, then it should not have to pay the $3.75 million due on July 1.
In its motion, the city refers to and attaches several email strings between Craig Tindall (who was Glendale’s city attorney until April 2013 and then became special counsel) and Anthony LeBlanc from 2010-2013; emails between Tindall and the city of Glendale regarding the Coyotes after Tindall resigned from the city (but still remained an employee of the city under a severance agreement); and emails between Julie Frisoni (who at the time was the communications director and later the assistant city manager of Glendale until April 2015) and the city in June 2013.
The city also explains its belief that:
“It was Tindall’s ardent support for the agreement in the face of opposition by the then-city manager, the then-acting city attorney, and the city’s outside counsel which is believed to have influenced and helped to secure the city council’s approval of the agreement in July 2013.”
Remember, according to counsel for the Coyotes, the negotiations for the agreement occurred in June and July of 2013.
The motion further points out Frisoni was employed with the city until April 22, 2015 and while she was the city’s assistant city manager she was “significantly involved in securing the agreement’s approval, including providing information to city council members in support of the agreement just days before the Council voted on the agreement.”
Glendale pointed out in the motion the situation with Tindall and Frisoni is exactly what the law is there to prevent: self-dealing by government employees. It insightfully explains that this “conflict” cannot be waived under the law because to allow a self-dealing employee to waive their own conflict would defeat the entire purpose of the law. Well stated, Glendale.
Glendale explained that “as a political subdivision of the state of Arizona, [it] is entrusted with preserving and protecting public funds.”
That is why it is canceling the agreement and asking the court to order it doesn’t have to make any further payments.
Remember, this law does not require that Tindall or Frisoni did anything wrong or that they defrauded anyone, it just requires that they were “significantly involved in initiating, negotiating, securing, drafting or creating” the agreement. That is where the fight will focus when the team and city meet in court June 29.