Glendale puts $25M into Phoenix Coyotes escrow account

Read this article, this kind of says what others have been saying if no buyer steps up the teams moves. There really isn't a lot of room for error. The city of Glendale had to show proof of funds to cover the teams losses or risk losing the team immediately.

Money earmarked for city services such as water and sewer now sit in an escrow account to cover the $25 million pledge that Glendale made to the National Hockey League to keep the Phoenix Coyotes in town next season.

The NHL demanded Glendale show its proof of funds by last Thursday or risk the team leaving Jobing.com Arena immediately. The NHL owns the team, which it purchased for $140 million out of U.S. Bankruptcy Court last fall. (Emphasis mine)

"The NHL had a buyer on the table willing to pay $170 million for the team," city spokeswoman Julie Frisoni said.

The buyer wanted to relocate the Coyotes to Canada next season, she said.Although Glendale planned to set up a special taxing district or some other funding mechanism to meet the $25 million obligation, the NHL's deadline made that impossible, city officials said.

So the city dipped into its enterprise-fund investment account, which pays for long-term costs not anticipated to come due for several years. The city's enterprise account totaled $415 million for the fiscal year ending in June, according to an annual report.

The money in the enterprise funds comes from fees paid by businesses and residents for public services such as trash, water and sewer, landfill and housing. The fund absorbs revenue shortfalls in enterprise departments such as water and sewer, repays debt for capital projects and covers the cost of regulatory requirements, according to the city.

Art Lynch, the city's former chief financial officer who now consults with the city, insisted this week that tapping into the enterprise fund is not using taxpayer dollars. Rather, it is a fee paid by residents and businesses who use city services.

The city transferred $25 million out of the enterprise account and into an account which the NHL can begin to draw upon in September, under the deal between the league and Glendale signed May 20.The city agreed to pay the NHL for "actual cash losses" for the team and the arena management that could start accruing in July.
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