By Phil Riske
Managing Editor, Rose Law Group Reporter
The Arizona House today gave a do-pass recommendation to a bill that would result in a special audit of the Arizona Sports and Tourism Authority (AZSTA) to decide whether the agency has violated the public trust.
The bill (H2225), sponsored by Gilbert Republican Laurin Hendrix, (photo) calls for an audit to uncover how much money Major League Baseball teams in the Cactus League have spent on spring training stadiums in recent years. The legislation comes at a time when teams in the Valley are objecting to a tax bill that would help fund a new stadium in Mesa for the Chicago Cubs.
Hendrix told Rose Law Group Reporter he has heard accusations from taxpayers against the sports authority.
“Many potentially unfounded accusations have been made by the media and potentially uninformed individuals from the public,” Hendrix said. “However, there appears to be some level of belief by the public that the AZSTA has breached the trust of the taxpayer.”
The AZSTA issued bonds to build two new stadiums during the past year, and Hendrix says his bill would authorize an audit to also decide whether the agency will be able to pay off its
debt and it also calls for the Auditor General’s Office to identify legal recourse of bond holders if the authority can’t make its scheduled debt payments.
A year ago, an audit of AZSTA showed it was coming up short on basic operating revenue for the University of Phoenix stadium in Glendale, which the agency owns. The Auditor General’s Office report said annual deficits ranged from $3.6 million to $7.4 million and are projected through 2014.
The auditor said, however, AZSTA was doing what it could under the law to deal with the deficits, but had made some bad decisions regarding the Arizona Cardinals. The audit specifically cited the authority’s decision to give the football team $154.5 million over 20 years from the naming rights agreement with the University of Phoenix.
After the football stadium and tourism, AZSTA’s third priority is to renovate and build Cactus League ballparks, which received $3.1 million from the authority in 2008.
Everything said, Hendrix added, “I anticipate that the results of the audit will be benign and attract minimal interest.”
Rose Law Group Reporter was unable to get a comment from AZSTA.
The bill will now be scheduled for a final reading in the House.
Bill summary
Special audit; tourism and sports authority; repeal
A. The auditor general shall conduct and complete a special audit, as defined in section 41‑1278, Arizona Revised Statutes, of the tourism and sports authority that is established by title 5, chapter 8, Arizona Revised Statutes.
B. The audit shall review and evaluate:
1. All contracts entered into by the authority during calendar years 2008 and 2009, including contracts with concessionaires and other providers of food, beverage and other services at the multipurpose facility constructed pursuant to section 5-807, Arizona Revised Statutes.
2. All contracts and final memoranda of understandings entered into by the authority to acquire land or construct, finance, furnish, improve, market or promote the use of existing or proposed major league baseball spring training facilities for the purpose of acquiring or retaining major league baseball spring training operations.
3. All contracts and final memoranda of understandings awarded by the authority to acquire land or construct, finance, furnish, maintain, improve, operate, market or promote the use of community youth and amateur sports facilities, recreational facilities and other community facilities or programs.
4. The management agreement with the authority’s facility manager and any potential performance incentives the authority may offer for increased facility revenues and decreased facility expenses.
5. The procurement process used by the authority for soliciting bids from vendors and awarding contracts for acquiring materials, services, construction or construction services, including a description of requirements, selection and solicitation of sources, preparation and award of contracts and all phases of contract administration.
6. Contract monitoring activities conducted by the authority with respect to the facility manager’s performance with respect to financial accountability, event settlements, preventative maintenance, box office services and other areas of performance.
7. The sources of monies to be used, or pledged for use, by the county, city or town to repay its debt obligation as presented in the authority’s contract or final memorandum of understanding for major league baseball spring training facilities under section 5-808, Arizona Revised Statutes, and youth and amateur sports and recreational facilities under section 5-809, Arizona Revised Statutes.
8. The variance, if any, between construction and development costs contained in an authority contract or final memorandum of understanding and actual costs being repaid through bond obligations.
9. Policies and procedures that incorporate the criteria used for, and that expedite the process of, awarding financial assistance for the youth and amateur sports program.
10. The level of financial participation from each major league baseball team using spring training facilities constructed with financial participation by the authority pursuant to section 5-808, Arizona Revised Statutes.
11. A description of the financing assistance provided by the authority pursuant to section 5-808, Arizona Revised Statutes, with respect to each major league baseball spring training facility.
12. The adequacy of the authority’s cash flow projections in accurately describing the authority’s receipts and expenses.
13. The options available to the authority to increase revenues and decrease expenses to address its anticipated deficits and fund its reserve accounts.
14. The source and adequacy of debt service payments by the authority with respect to each facility financed with bonds issued by the authority.
15. The amount of any surplus or deficit in the overall debt capacity of the authority and in the current and projected capability of dedicated revenue sources to meet the authority’s debt service requirements.
16. The legal recourse of holders of the authority’s bonds in the event of the authority’s default in making scheduled debt service payments.
17. The legal recourse of holders of bonds issued by the county, city or town in the event of default by the county, city or town in making scheduled debt service payments.
C. On or before December 31, 2010, the auditor general shall submit a copy of the special audit to the governor, the president of the senate, the speaker of the house of representatives and the secretary of state.
D. This section is repealed from and after December 31, 2010.
Sec. 2. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.”
