There are plans afoot for Glendale to build a $46 million Westgate parking garage. Critics of the parking garage project abound, after all that’s a bunch of money being spent in an area where a bunch of money has already been spent.
Many of the critics aren’t aware of or choose to ignore the history of the area and the blown chance to have a $25 million parking garage already in place.
History Repeats Itself
The project represents yet another large expenditure for sports related expenses in a city that’s rapidly becoming an international laughingstock for an extended series of flubs related to the tenancy of professional football, hockey, and baseball teams.
Inarguably, most of the damage was done during the Beasley years with sweetheart deals struck and ratified during his tenure.
What’s ironic is that the City had somebody on the hook for a $25 million dollar promised parking garage at Westgate years ago. There was $25M sitting in an escrow account to build a garage.
What happened to THAT garage?
It went away for a one-time $12.5 million dollar payday.
Ellman On The Hook
As part of the 2001 Mixed-Use Development Agreement (MUDA), Steve Ellman promised Glendale he’d provide sufficient parking for his Westgate center and for Coyotes games at the city owned arena. The replacement parking spaces were to be:
…in a location no further from the exterior face of the Arena Facility than the furthest parking space from the exterior face of the Arena Facility included in the first 5,500 parking spaces constructed as the original Parking Improvements.
Feel free to peruse the legalese in the MUDA at your leisure, for now let’s assume that the city and media contentions about the parking garage promise are correct.
In that agreement, Ellman also agreed to minimum square footage of qualified space (retail and restaurants) be developed within specific time periods.
Ellman hadn’t built the promised parking by 2008 and a “Temporary Parking Agreement” between Ellman, the Coyotes, and the City was forged.
$25 million was placed into an escrow fund so the city would have the funds to build the parking garage when it became necessary. Ellman’s “CCD” entity was responsible for the entirety of the funding because the bankruptcy proceedings removed all the other parties to the original temporary parking agreement.
Time Passes, Still No Garage
By 2011, the garage still wasn’t built. There was an argument that the area hadn’t yet developed (due to an economic downturn) to the point where additional parking was necessary.
Since the money was “just sitting there”, Ellman and his creditor, Credit Suisse, figured they’d see if they could work a deal with the City to get off the hook for the promised parking garage and get that money back out of escrow.
Somehow, a deal was struck and passed 5-2 at the January 25, 2011 City Council meeting.
Credit Suisse got half, Ellman got the “Lot 4” lake, and Glendale got $12.5M. Click here for the complete agreement.
The money went into the Glendale general fund and is now gone. The lake is also drained to transform into a new Dave and Busters.
Representatives of the city and Ellman characterized it as a great deal for all. According to an AZ Central story at the time:
(CM) Clark said it was a “coup” for Glendale to negotiate to keep half of it.
“That wasn’t our money. It was someone else’s money,” she said.
Tim Wright, executive vice president of The Ellman Cos., said in a statement that liquidating the parking fund was a “solid plan” for everyone.
Mayor Scruggs, according to the minutes of the council meeting:
She stated the city has the opportunity to secure half of $25 million that never belonged to the city in the first place and never had a claim to. The money had been set aside to build a parking garage, which is not needed at the moment.
Assuming a parking garage never had to be built, it looked like a decent deal for Glendale, even if it was essentially a bet for the continued failure of the Westgate project. The phrase “at the moment” came back to bite the City sooner rather than later.
Foresight Not A Strong Point
The City Council figured they’d never actually have to BUILD the garage within the seven years they gave themselves to actually need the minimum 1,440 space garage. There was still plenty of vacant land around Westgate to park vehicles and Bidwill was in a good mood.
The catch was that the city would be on the hook to come up with a parking structure (or equivalent parking) if, at any time within seven years, there were less than 5,500 parking spaces remaining because of expansion.
With development stalled at the time, the Council laid their bet and took the “found money” and spent it like a 13 year old with enough birthday money to buy an Xbox.
But… they all knew Tanger Outlet Mall was on the horizon, opening their doors a year and a half after the $12.5M hit Glendale’s bank account. Tanger had the option to expand their position by 80,000 square feet. The lake the city handed over to Westgate could eventually be developed.
Those voting to accept the $12.5M counted on the area remaining stagnant. Or, they figured it would be nice to have the money now and let some other future council worry about the expense of a garage.
The Council finally approved the creation of a Community Facilities District (CFD) for the Westgate area that, they hoped, could be used as a mechanism for funding localized expenditures. As far as I could discover with very limited research, the CFD only encompasses the same city-owned land as it did upon inception and is of no real financial benefit to the city.
The problem with a short term outlook in a long term world is that early mistakes are compounded. City managers have a difficult task balancing providing services RIGHT NOW for their taxpayers while simultaneously planning for future growth.
Glendale put themselves on the hook to provide parking for UOP Stadium in a 2003 contract with the Cardinals and the owner of the stadium, the Arizona Sports and Tourism Authority (AZSTA). Glendale is obligated to provide 11,000 parking spaces for events at the stadium, with 6,000 of them near Westgate.
The Cardinals and the Arizona Sports and Tourism Authority (AZSTA) filed a $67M suit a little over a year after the city snagged the $12.5M, complaining that Tanger Outlets and a condo project consumed some of the 6,000 nearby parking spots contractually promised to them by Glendale.
To remedy the situation, Glendale spent about $1 million to build new parking spaces and roads and to lease some others in time for the Cardinals’ season.
The city has, since, been forced to resort to leasing parking spots from Westgate and, ironically, from the CARDINALS to satisfy the needs of UOP stadium events. Had the council resisted the batting eyelashes of Ellman and his $12.5M, a $25M (or more) parking garage would have already been under construction if not completed.
All the money wasted on leasing parking spaces to fulfill promises made could have been spent on more worthwhile pursuits had the council had the foresight to plan for a successful growth pattern around Westgate instead of relying on continued stagnation.
Price Is Higher
Prices are higher in 2015. The cost of a new garage to satisfy the promised parking needs has risen to an estimated $46 million, although for a larger 4,000 space structure.
Don’t forget the $2.5M or so for a consultant to study how many spaces are actually needed and to decide where the garage should be built. Feel free to browse the budget to determine if that’s included in the $46M.
If the city had used the escrow money to build a $25M garage two or three years ago, it’s entirely possible there would be no parking problems in the area at all. Besides offering a solution to football (and soccer) parking, the hockey parking revenue problem would also be ameliorated.
If an easily expandable parking structure had been built with the FULL $25M available for that pursuit, the loss of additional parking because of Tanger and a condo project could have easily been absorbed for significantly less than the current $46M allocated to build a garage.
Ellman was also relieved of his responsibility to pay performance fines for Westgate in lieu of an agreement to develop at least 100,000 square feet by 2016 or pay a $2M fine. Since making the agreement, iStar repossessed most of Westgate from Ellman, so he’s likely off the hook for that fine.
So, if one is asking the question why don’t the Bidwills pay for their own garage? The answer is simple, because Glendale promised them enough parking spaces on their dime. Simple.
Glendale can continue to lease parking spaces to satisfy the requirements of the agreement they signed, or they can bite the bullet and finally build the parking garage they were obligated by earlier regimes to build.
It’s just too bad they don’t have that $25M for the garage (or a garage) that a previous council let escape.
It would be another ironic happenstance if the actions of the current council resulted in the Coyotes packing up just in time for the ribbon cutting on the new parking structure, thus relieving enough parking space pressure to make the brand new, beautiful, empty parking garage another testament to shortsightedness.