Glendale Faces Cutbacks

Facing a dramatic downturn in property valuations, the Phoenix suburb of Glendale is considering restructuring some of its debt to ease growing fiscal stress.

Under its proposed budget for the 2011-12 fiscal year beginning July 1, the city is trimming its capital improvement program after years of aggressive growth.

The $49.6 million plan covers mostly upgrades and maintenance of existing facilities.

One project begun in 2008, a $44.7 million court building, has stalled due to lack of funding, officials said.

Revenue from the secondary property tax that is used for debt service is $3.1 million short of what is needed, according to city officials.

Next year, the gap is expected to grow to $6.4 million. Glendale is tapping its rainy-day fund to cover the spending shortfall.

Declining property values have hit the city hard. Secondary assessed values used for debt service are expected to fall nearly 50% next year to an estimated $1.1 billion from a high of $2.2 billion in fiscal 2008-09.

Glendale’s secondary tax revenue has dropped to a projected $15.5 million for fiscal 2013 from $29 million in fiscal 2010.

Meanwhile, the city is struggling to keep the Phoenix Coyotes of the National Hockey League playing in the city-owned Jobing.com arena.

Plans to issue debt to finance the team’s sale have been stymied by threats of a lawsuit from the Goldwater Institute, a conservative taxpayer advocacy group.

Loss of the Coyotes franchise would leave the arena vacant for much of the year, costing the city more sales tax ­revenue.

Standard & Poor’s in February put Glendale’s certificates of participation on negative watch as the city prepared to issue $100 million of debt to help a private investor buy the Coyotes.

Glendale’s COPs remain at AA-plus on the Standard & Poor’s scale, but the negative watch indicates a possible downgrade in the future.

The agency’s action followed a downgrade by Moody’s Investors Service to Aa2 from Aa1 on Glendale’s general obligation rating.

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