DALLAS - The Arizona attorney general's office is looking into fund transfers and open meetings issues rising from the recent sale of the Phoenix Coyotes hockey franchise and the lease of the city-owned Jobing.com arena to the team's new owners, according to news reports.
Assistant attorney general Christopher Munns on Aug. 5 asked acting Glendale city attorney Nick DiPiazza to provide more information about fund transfers and possible violations of the state's open meetings law by Aug. 23, according to The Arizona Republic. The Republic gained access to the letter through a public-records request.
Stephanie Grisham, spokeswoman for Attorney General Tom Horne, declined a Bond Buyer request for comment Tuesday.
Council member Norma Alvarez's questions about possible improper fund transfers among city accounts to cover city payments to the National Hockey League for keeping the team in Glendale prompted the Attorney General's inquiry, according to The Republic. Alvarez also raised questions about transactions involving the arena and businesses in which council members had a stake.
The council was scheduled to be briefed on a recent audit of the fund transfers Tuesday night.
The open meetings investigation involved public statements that members of the city council made regarding issues involved in the arena lease, according to reports. The attorney general's office closed a previous investigation involving the state's open meetings law and the arena on May 28.
After four years and numerous failed attempts, the Coyotes were sold last week for $170 million to a group of investors known as IceArizona Acquisition Co. headed by Canadian businessmen George Gosbee and Anthony LeBlanc.
The sale followed a 15-year arena management agreement between the city and the investors to keep the Coyotes playing at the Jobing.com arena, built with $180 million of tax-supported revenue bonds in 2003.
The council voted 4-3 on July 2 to pay team owners $15 million a year for 15 years to operate the arena. In return, the team will reimburse the city a projected $9 million a year, based on revenue from naming rights, ticket surcharges, parking fees and other sources.
The owners won a five-year exit clause that allows them to bail out of the deal if they lose a cumulative $50 million over that time.
The NHL acquired the team in a 2009 bankruptcy and has sought a new owner since then. Three previous deals never came to fruition.
In order to cover the NHL's losses while keeping the Coyotes in Glendale, the city agreed to provide $25 million annually borrowed from other city funds. To recover the funds, the city raised property taxes amid a steep drop in revenues created by the recession of 2008.
Moody's Investors Service viewed the deal as credit negative for the city's A2 rating in a report last month.
The financial stress of keeping the Coyotes playing in the arena built with 30-year sales-tax supported bonds prompted Moody's to issue its third downgrade in two years last November.
Standard & Poor's lowered Glendale's rating on Dec. 12 to A-minus from A-plus while maintaining a negative outlook.
The downgrade was prompted by a negative fund balance due to payments representing nearly 20% of city general fund expenditures in the previous two years, for management fees related to the arena.