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April 14, 2011

Host: Ted Simons

Arizona ArtBeat: Governor’s Arts Awards

  |   Video
  • Rusty Foley, interim executive director of Arizona Citizens/Action for the Arts, shares the results of the 30th annual Governor’s Arts Awards taking place April 12th at the Herberger Theater.
  • Rusty Foley - Interim Executive Director, Arizona Citizens/Action for the Arts
Category: The Arts

View Transcript
Ted Simons: Tonight's "Arizona Artbeat" makes a stop at the Herberger Theater in Phoenix where artists and supporters of the arts were honored this week during the 30th governor's arts awards.

Ted Simons: The governor's arts awards is a major fundraiser for Arizona citizens action for the arts. Joining me is the group's executive director, Rusty Foley. Nice to have you here. Thanks for joining us.

Rusty Foley: Thank you for having us.

Ted Simons: What is recognized at this particular awards ceremony?

Rusty Foley: This awards ceremony recognizes excellence in the arts, the individuals, the artists who create the art, that's so special for Arizona, and individuals who are supportive of the arts either through their own involvement in arts organizations, philanthropy or advocate for the arts.

Rusty Foley: As I say, we just celebrated the 30th anniversary and we like to think of it as celebrating 30 years of excellence in the arts.

Ted Simons: Excellence indeed. The artist award went to a Martin Moreno. Talk to us about his art.

Rusty Foley: Wonderful expansive murals in a Latino style. Evocative of all kinds of religious and southwestern theme, a remarkable individual who not only creates wonderful art but is a humanitarian and works with young people in the inner-city schools and – and has just achieved wonderful things for the community through his work.

Ted Simons: And it has to be more than just Mr. Moreno doing art that you go, “oh hey, that looks good.” There has to be an underlying factor, correct?

Rusty Foley: Absolutely, you can see it in the beauty of the work and the themes of the work. Really, as I say, really, I think he really captures what the southwest is about. And the culture of our community here.

Ted Simons: And we're seeing some of his work right now. Where are these located? Around town?

Rusty Foley: These pieces are really all over the state and all over the valley. Martine, himself, is from Laveen, but you can see this work in Tucson and in Laveen and in downtown Phoenix.

Ted Simons: Other honorees, free arts for abused children. This is a tremendous, tremendous program.

Rusty Foley: Indeed.

Ted Simons: Give us a brief overview.

Rusty Foley: Free arts is really a combination of a social service agency and an arts agency. They use art and art therapy with the children who come from abusive situations, who are perhaps somehow damaged in a way and the art becomes a creative outlet for them to heal themselves and to address the issues they may have in their lives and they've reached thousands and thousands of children since their formation in 1993.

Ted Simons: Fantastic program. Tonto Community Concert Association-- Cox communication of southern Arizona, some other folks as well, but winners got awards but these awards were designed by Arizona artists, correct?

Rusty Foley: Yes, that's a tradition of the governor’s arts awards. Every winner receives an original piece of art created by an Arizona artist and typically every year we adopt a theme. So this year, all of the artists represented were ceramics and stoneware artists.

Ted Simons: We’re looking at some of the awards right now. This is a tradition, huh?

Rusty Foley: Yes.

Ted Simons: Arizona artists get to honor their own with their own.

Rusty Foley: Exactly, that's part. The reason for the governor's arts awards is to celebrate the individuals who create art and support art but also to deliver the message to the community what an incredible value and contribution the arts are to community life here in Arizona. We're trying to send a message too, with this.

Ted Simons: I was going to say, sending a message in these times must be difficult. Talk about the economic climate and what's going on out there in the arts.

Rusty Foley: Times are tough. Times are tough. Arts organizations are experiencing diminished contributions from individuals and corporations and foundations but really what's been devastating is the reduction in public funding for the arts and that's the reason why Arizona citizens action was formed 30 years ago was to support and advocate for public funding for the arts. Unfortunately, we've lost most of the gains we made, certainly in the last 10 years with the budget cutbacks that the Arizona commission for the arts have experienced for the last four years so that our job is really cut out for us going forward. We have to rebuild a coalition of community people, business people, educators, all of us who value the contribution that the arts make to business and -- and -- in our communities. And get that support back.

Ted Simons: Well, good luck with that effort. Congratulations on the 30th awards ceremony. Thank you so much for being here.

Rusty Foley: Thank you, Ted.

Gift Clause of the Arizona Constitution

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  • Phoenix Attorney Scot Claus discusses the section of Arizona’s constitution that prohibits state and local governments from giving financial gifts to private entities.
  • Scot Claus - Attorney
Category: Law

View Transcript

Ted Simons: The gift clause of the Arizona constitution prohibits state and local governments from giving financial gifts to private entities. The language seems pretty clear-cut -- but is it? Here to share his views is attorney Scot Claus, a partner in the Phoenix law firm of Mariscal, weeks. That firm filed an amicus brief on behalf of valley partnership in the City North case, which involved the Goldwater Institute successfully stopping Phoenix from providing tax subsidies to a retail developer. Thank you for joining us tonight on "Horizon." This can get cloudy and we talked to the Goldwater Institute and what they're saying this is not an equitable return for taxpayers. That that breaks the clause in the constitution. I want to get your response on that.

Scot Claus: Well, the gift clause is referred to as the gift clause for a reason. It prohibits municipalities, states or political subdivisions of the state from providing gifts to corporations or persons. It does not prohibit a municipality such as the city of Glendale or any other city in the state of Arizona, does not prevent the municipality from entering into a transaction with an individual or an entity, just like you can buy my car or house, the political subdivisions of the state can enter into transactions with entities or individuals so long as the transaction satisfies the parameters of the gift clause. And fortunately, for all of us and the lawyers and fortunately for the people doing these types of transactions, the Supreme Court articulated 27 years ago a two-pronged test to determine whether or not a transaction violates the gift clause and that's really the issue. The two prongs are easy. The two prongs are, first the transaction has to be for a public purpose and the courts are clear that municipalities, the legislature, the consular bodied of municipalities have to be given wide deference in determining what constitutes a public use.

Ted Simons: The second one is whether or not it's reasonable or rational: That's the second test?

Scot Claus: The second prong is whether or not the consideration given -- and this is the language from the case -- whether the consideration given is roughly proportional to the benefits received. It is not a mathematical equation and can't be -- the answer cannot be arrived at with mathematical precision. That's why the language of the test does not have mathematical precision to it. It requires an analysis of whether there is a rough proportionality between what a municipality is giving and what the other party to the transaction is giving up and what the municipality is receiving.

Ted Simons: So, opponents of this deal, including the Goldwater Institute, what they're saying, when you're giving, selling bonds and I don't want -- I know you don't want to speak specifically to the case. But overall here. When you're selling $100 million plus of bonds just to give to someone to go into an enterprise that already has had problems and been bankrupted -- what the whole nine yards -- that that is not reasonable and that is so far from equitable that it does violate the gift clause. At what point does rational and reasonable stretch too thin?

Scot Claus: I think you have to look at the language you just used in framing the Goldwater Institute's analysis. You said the Goldwater Institute is saying that the city of Glendale wants to give $100 million to an out-of-state investor. If the city of Glendale were giving $100 million to anybody, whether it's in this state, in Chicago, Canada, Timbuktu that, would likely be a violation of the gift clause because it would be giving $100 million. I don't know the details of the transaction and so I’m not going to comment on the details of the transaction, but my understanding is that there's not a gift of $100 million. It's a proposed transaction in which an incentive is being provided and the city of Glendale will receive a benefit roughly proportional to that $100 million that is being provided.

Ted Simons: Roughly proportional if the team survives, if the business stays afloat. If there's not a flee to Canada, two, five, 10 years down the line of a 30-year lease. Again, I know you don't want to get too tight on the details here, but in the grand scheme of things, again, a rationality and reason stretched too thin at times on these deals?

Scot Claus: There's no question that the court is required under the City North decision and the case that preceded it 25 years before the City North decision, that the court is required to analyze whether or not there's a rational basis for the consideration. It does not mean, however, that the consideration is flawed or that the consideration is deficient because one person or one subset of people would not recognize the same benefits that the particular legislative body recognizes. As long as those benefits are flowing from the transaction, and as long as those benefits are roughly proportional to the benefits being given by the municipality, then the consideration prong of the gift clause analysis is likely satisfied.

Ted Simons: Last question: Is -- is this gift clause of the constitution and this case, are these -- does this need to be refined a bit? Do we need better parameters or good the way it is because it gets people talking, thinking and trying to figure out?

Scot Claus: Remember, the gift clause was enacted in the Arizona constitutional convention in 1910, so it's been around for a while. I don't know that there's going to be a change to the Arizona gift clause itself.

Ted Simons: Not the clause itself, but the case law. Do we need to have it more refined.

Scot Claus: I think I disagree with the notion that it hasn't been refined. I disagree with the notion that the Arizona Supreme Court invalidated the particular transaction in the City North case. It didn’t, it actually said that we're not going to apply our decision retroactively even to the transaction issued in this case. We recognize there is some confusion regarding our gift clause jurisprudence and so we are providing clarity. For prong one, there must be a public purpose and you must allow there to be deference given to the legislative body determining public purpose. And for prong two, there has to be consideration and it's a concept that the law knows because it's a concept that's involved in transactions that people are involved in. Not just municipalities. When I enter into a contract did with you, there has to be consideration. So they have actually clarified the analysis. The problem is that it's not the problem with the test. It's the problem with the facts that the test is applied to. Those facts are invariable, and that's -- that's why -- that's where the difficulty lies.

Ted Simons: All right. Thank you so much for joining us. We appreciate it.

Scot Claus: Thank you.

Goldwater Institute – Phoenix Coyotes

  |   Video
  • The Goldwater Institute is fighting a City of Glendale deal to help a businessman buy the Phoenix Coyotes and keep the team in the city. Hear from the Goldwater Institute's President and CEO, Darcy Olsen.
  • Darcy Olsen - President and CEO, Goldwater Institute
Category: Business/Economy

View Transcript
Ted Simons: Good evening and welcome to "Horizon." I'm Ted Simons. Canada or Arizona? The future home of the Phoenix Coyotes has been on thin ice since the team went bankrupt and the NHL assumed ownership back in 2009. The city of Glendale is the team's current home, and city leaders want to keep it that way. That's why the city wants to sell as much as $116 million in bonds so it can give a Chicago businessman $100 million to help him buy the Coyotes. But the Goldwater Institute has threatened to sue the city of Glendale, saying its deal violates the gift clause of the Arizona constitution. Joining us now is Goldwater Institute president and CEO, Darcy Olsen. I should note that the city of Glendale declined our invitation to appear on this program. Good to see you. Thanks for joining us.

Darcy Olsen: Thanks for having me on.

Ted Simons: The gift clause, illegal government subsidies. Why is the Goldwater Institute threatening to sue?

Darcy Olsen: Well, the Arizona constitution is very clear about this. The government cannot single out you, or a company, for a particular subsidy. That it wouldn't give to everybody else. It's illegal under something called the gift clause and in this case, we believe that Glendale is at risk of violating that law.

Ted Simons: Is this different than what we saw with the cardinals, with the Diamondbacks, with the spring training stadiums, with business ventures, with Intel first solar? How does this differ?

Darcy Olsen: The devil is always in the details as you know with any legal situation. In this particular instance, this is very much like the City North case from a couple of years ago where the city of Phoenix tried to give $100 million taxpayer dollars to a Chicago businessman to build a mall north of Phoenix and the Supreme Court said, no, that's a violation, it's a gift. The taxpayers would be giving somebody something and not getting something in exchange. The deals that are valid which many of those may very well be, the taxpayers are getting something in equal proportion to what they've given.

Ted Simons: In equal proportion or is there enough of a reasonable and rational risk to allow some of these ventures to go forward?

Darcy Olsen: It doesn't have anything to do with risk. It has do with whether it's a outright gift. They come over and give you $100 million so you can help buy the team and anybody else and that is the problem here.

Ted Simons: Again, government bonds, city bonds, I should say. $100 million, the owner pays off in part with the parking charges and we can get into that a little bit, but why not the owner wants -- $97 million to manage the arena. A 30 year lease, shared revenue as fees and profits, rents for 30-some odd years. Why isn't that something that not to mention surrounding businesses that would benefit from having the Coyotes there. Why isn't that at least equitable as far as Glendale is concerned?

Darcy Olsen: There are a lot of details and one of those is that the buyer has supposedly put a guarantee on the table. The trouble is it's not a guarantee. He has set up a dummy corporation which has no assets in it. If the Coyotes were to go bankrupt again, the taxpayers would be on the hook for not just $100 million but what could be $350 million plus interest and we're trying to prevent the taxpayers from being on the hook and we've encouraged the buyer to actually put his skin in the game and buy the team with his own resources.

Ted Simons: Have you done that in person? Because you have been criticized for not meeting with the NHL and Glendale, first of all, have you met with them?

Darcy Olsen: We've had literally dozens of meetings and – last month and because we had been criticized, we invited Glendale to meet with us, as long as it could be on the record. In other words, a journalist or somebody could be present to document what handed and we had no response from the city and seems that the city is actually not interested in meeting with us.

Ted Simons: Is that something that the Goldwater Institute does pro forma, is that something you usually do in the sense of asking for a reporter when you meet with a reporter or governments or organizations?

Darcy Olsen: No, it's unfortunate but Glendale has made that necessary. This situation with them is going back a couple of years and they were ordered to release public records to the public to journalists regarding this deal. They didn't, the court had to order them to do that. And they continued to withhold documents, they instructed their staff not to comply with the law and we had so many mis-dealings with them and so many situations where they were not perfectly forthcoming that we said, you know what, no more back-room deals, you need to do this in public, the public has a right to know what's happening and so that's why we put that little provision in there.

Ted Simons: John McCain is on the record saying your refusal to meet with the NHL is disgraceful and he and critics are also questioning your role in the sense that you are in essence deciding the future of this team and the future of this business and it's not necessarily your role. Elected representatives in Glendale were put there by the taxpayers to make these kinds of decisions and you're not an elected organization, it's not your place to do this. How do you respond?

Darcy Olsen: The Goldwater Institute is a taxpayer watchdog and it's our job to watch out for taxpayers in this state. Ultimately, it would be up to a court and judge to determine whether the deal is legal but we're here to stand up for taxpayers and no city and no elected official is above the law. That includes Glendale and senator McCain.

Ted Simons: But again, by threatening the suit, you are in essence affecting the deal. And so what they're saying -- it's -- those folks that are supporting this deal and against your position. What they're saying is you're in a position of influencing city business where the taxpayers are your primary concern. They've already put these folks into office.

Darcy Olsen: You know what, this is America and I think every voter out there tonight, they know they have the right to speak up anytime, anyplace about anything in this country and that's exactly what we're doing here. We sense something very deeply illegal and unconstitutional is going on. We asked for public records, the city did not want to give us those public records and they still haven't disclosed all the information and we're doing the job that taxpayers asked us to do.

Ted Simons: Have you sent letters to bond agencies?

Darcy Olsen: Yes. We did.

Darcy Olsen: We -- as we always do, when we have information on something like this, we share it with any relevant party, we try to get it out to the public, if there are specific policymakers involved, we do that as well.

Ted Simons: NHL says those letters are illegally interfering with the cities business affairs. How do you respond?

Darcy Olsen: We don't think. So just -- the Goldwater Institute is like any other individual. You have a first amendment right to speak out and speak your opinion and we looked at this law, looked at what they were doing and said this violates the law and what they're trying to do is intimidate the Goldwater Institute so we won't proceed with this lawsuit.

Ted Simons: Is -- there's a lot of personal accusations flying. Senator McCain saying disgrace, we had a former owner of the Coyotes saying that the Goldwater Institute -- I think his quote was childish, sophomoric and unprofessional. There are concerns with your board, the wife of a Diamondbacks owner Ken Kendrick, his wife sits on the board of the Goldwater Institute. Are these valid concerns?

Darcy Olsen: Well, what's the old saying in law? If you don't have the facts, pound the table. And I think that's what is going on here. All of that is a distraction from the main issue, which is that the city of Glendale has struck a deal with the NHL and an out of town businessman from Chicago to give $100 million to help somebody buy a team in violation of the Arizona constitution and that is the beginning and the end of the story here.

Ted Simons: If the city uses this enterprise fund, which sounds like there is $400 million to use at its discretion, if the city used that to sweeten the deal or change the parameters of the deal, is that something that would still be unacceptable?

Darcy Olsen: We don't have the parameters of that deal so we'd have to analyze that, what we do know is that if taxpayers are taken off the hook here, we will have a victory. I mean, if Matthew Hulsizer would buy the team with his own money, as he can afford to do. That would be fantastic. We would keep the Coyotes here and taxpayers wouldn't be on the hook for this team.

Ted Simons: Sounds like the bottom line is the team actually leaving and that arena being empty and all of those surrounding business, not having those folks, that's still a better deal for Glendale taxpayers than this particular arrangement?

Darcy Olsen: I don't think it's a case of this arrangement or nothing. The Coyotes play 40 nights a year and the rest of the year you have to fill up the arena with other activities. They used to have road runners and minor teams that could play and a lot of opportunities, I think what we would like to see is what most Arizonans would like to see. A way to keep the Coyotes that is legal. That has the business owner of the team paying for the team and bearing the risk. This is a team in 15 years of being in the valley has lost money every year and is in bankruptcy and this is why it's so important that the buyer take that risk. In the city of Glendale right now, they have a billion dollars in sports-related debt. That is $13,000 per household. Per family, already, without even going into this deal.

Ted Simons: Before I let you go, I got to ask you one more time. You've got taxpayers and you're concerned about taxpayers, but Glendale's been in the pro-sports business for a while now, they seem to like the mayor and council who kind of go in that direction, haven't they already spoken?

Darcy Olsen: Three out of seven councilmen disagreed with that deal, so it certainly was not unanimous. The worst thing you can do in a situation like this is add to the debt and add to the risk when you've already got a debt load that's three times the national -- a national city of its size.

Ted Simons: All right, Darcy, good to see you. Thanks for joining us.

Darcy Olsen: Thank you.