$2,362,000 of Your Tax Dollars and Counting

In yesterday’s post, I told you about how Goodyear City Council (GCC) is planning another property tax increase in order to pay for all the goodies that they are planning to use to pay off their election based political debts to city employees and others. You can read that post under category ‘Understanding the City of Goodyear Budget’ to the left of this post.

Today I’m going to tell you how GCC have been giving your money away to developers who, as we already know, contribute to incumbent city council candidates’ re-election campaigns.  I emailed a copy of this post to city council members and John Fischbach at 9:17 am Tuesday, June 14 (yesterday) and asked if any of them had any comments on it before I posted it.  Their comments are printed at the end of this post.

$2.362 million.

That’s how many of your Goodyear retail sales tax dollars have been paid to Westcor since 2007 when they started receiving 50% of all City of Goodyear sales tax collected from merchants at the “soon to be developed” Estrella Falls Mall and also Centerpoint. Centerpoint was not developed by Westcor but by a company named Evergreen.  But Westcor’s deal with Goodyear is so sweet, that they get half of your sales tax dollars paid at Centerpoint businesses too.

Keep in mind, these payments to Westcor are IN ADDITION to the $47 mil in City of Goodyear bonds (which with interest  go to $78 million) that were issued to reimburse Westcor for all the infrastructure for the mall which YOU paid for, not Westcor.

In 2010 Westcor was paid about one million of the $2.362 million dollars of your sales tax money so the payments are ramping up.  Here is the calculation from Goodyear on the $2.362 mil. There are two pages to it, you have to add them together, one page for Westcor retailers, one page for Centerpoint. Jan 2011 Sales Tax Pmts to Westcor0001   (See my blog post of April 27 for copies of all the other documents like the various development agreements and amendments that I reference in this post.  Just click on the category Westcor Regional Mall to the left of this post and find the documents at the very bottom of that post).

Westcor is being paid your sales tax dollars even though they did not live up to their end of the original agreement and complete the “Minimum Retail Improvements” (MRI) called for in the contract which included two anchor stores and hundreds of thousands of other sq ft of retail space around them no later than December 2012.  That is because John Fishbach, with GCC approval, signed an amended agreement with Westcor in December of 2009 extending the MRI FOUR YEARS until December 2016. John and your city council agreed to extend the date of the MRI so that Westcor would not be in breach of the agreement.

Why would GCC do that?

They will tell you that in return they got a $1.3 mil one time payment from Westcor (which would now be included in any ‘surplus’ or ‘available money’ revenue that might have carried over into the 2011 budget) for an extension until December 2014 and an agreement to be paid another one time $1.25 mil if the MRIs are not complete for a further extension until December 2016.

But that would not be completely true.  That’s because BOTH of these payments are in the form of CREDITS to Westcor which Westcor can spend on any permits and fees charged by the city for further developing the site.

A calculation of 2009’s sales tax payments to Westcor show that sales tax payments to Westcor were running at near $1 million per year.  A four year extension of the MRIs would put nearly $4 mil in sales tax payments in Westcor’s pocket for doing nothing. Why didn’t Goodyear insist on Westcor returning each year’s sales tax payments to the city for each year that Westcor was in arrears for the MRIs and why didn’t Goodyear insist on keeping the money instead of just making it a credit to Westcor?  Instead, GCC agreed to give Westcor a FOUR YEAR extension for a mere $1.3 to $2.5 million ALL of which is like MONOPOLY money that Westcor can spend to pay their bills with the city.

Would Westcor have agreed to the tougher terms I suggest?

As I showed in my previous blog on this topic, I estimate that Westcor has between $13 and $22 mil in accrued liabilities in this project so far according to their most recent annual report.  Even though Westcor is a $7 BILLION company, tens of millions of dollars is big money to a publicly held company like Westcor and there is no way they’d want to have to tell their shareholders that they had to write that off because they “breached” a development agreement.

Goodyear, on the other hand, is (was) in a great negotiating position. According to GCC the interest payments on the $47 mil in bonds GCC approved for the Westcor deal are “no risk” debt because the Improvement District collections cover it (I don’t agree they’re no risk but Goodyear says they are). So why wouldn’t they negotiate for all the sales tax money that Westcor might be owed for each year of delay and certainly not give it back as credits?

But there is more.

John Fishbach, just a few weeks before our recent election, announced to the local newspapers (who wrote feature articles) that Westcor had confirmed that they were going to be starting construction on the mall by the end of this year.  (That was a lot different from the tiny little notice GCC put in the paper last Friday announcing their intentions to raise property taxes.  And no feature articles either.)  If Westcor was so sure of starting construction just 15 months after signing the contract amendment delaying the MRI, then why did they need to move the “Minimum Retail Improvements” date back FOUR YEARS?

Could it be that Westcor is not so sure they’ll start construction by the end of 2012?  Let’s take a closer look.

The original agreement anticipates that the entire project will only take 3 years from scratch. (Agreement says Westcor will begin construction no later than December 31, 2009 and the MRI date was December 31, 2012).   Today, many or all of the roads and ($47 million of taxpayer paid for) improvements are already in place and about a third of the site is in place.  Yet Westcor asked for and got a FOUR YEAR extension.

It appears to be a good assumption that Westcor is uncertain about when they will start building.  Fishbach didn’t mention anything about that in his announcements to the newspapers did he?  And neither did any of the incumbent candidates in the election (all of whom are now elected).  In my opinion, this was just a “timed” speculative announcement in the middle of a close election.

But the announcement was prominently published as a featured article by your local newspapers the AZ Republic and the West Valley View.

Wouldn’t it make sense for a reportedly unbiased newspaper to ask a few questions before printing speculative announcements in the middle of an election campaign so that they avoid being either manipulated or worse, accused of shilling for certain candidates?  All the either newspaper had to do was ask, “if Westcor is so certain they’ll start construction by the end of this year, why did they need a 4 year extension to their development agreement instead of the 3 year start to finish time frame anticipated in the original agreement?”

Still don’t believe me? Check out Laurie Roberts’ column in today’s AZ Rep. The finance chairman for Peggy Neely’s run for Phoenix mayor is Paul Gilbert, Westcor’s zoning attorney.  http://www.azcentral.com/members/Blog/LaurieRoberts/.

These Westcor guys are wired and along with city employees, they own your town.

One last item. Here is the reply I got from GCC and/or Fischbach asking for comments on my post;   “_______________________” .


5 Responses

  1. In your blog, you said:
    “One last item. Here is the reply I got from GCC and/or Fischbach asking for comments on my post; “_______________________” .”

    I guess that means that not one of them replied. Correct?

    • That would be correct, I received no reply. In fact, more often than not when I ask a question anymore of anyone in the City of Goodyear, including city council members, the response I have been getting lately is, “please submit a Freedom of Information Act request for information if you would like to get a reply”. I noticed that started happening since Georgia Lord took over as mayor.

      I think this developer/elected official washing each others’ hands has been going on for so long in Goodyear and other Arizona towns, that this is just considered normal to elected officials who already know how the system works.

      Just look at the financial numbers. Who runs for a $23,000 per year salary mayor job in a 65,000 population town where only 8,000 people vote, pays an outside professional political consultant $17,200 to help her win and raises $31,000 in the process? The political consultant alone should sound alarm bells.

  2. Interesting and revealing information.

    I say that because the issue of trustworthiness is a critical personal quality for public officials. Elected representatives must live up to this expectation – no matter their personal or political bias.

    As a component of trustworthiness, forthright communication and information sharing in ways that are transparent to members of the community (even if the information is viewed as a negative reflection on the elected members’ performance) is mandatory.

    Speaking for myself, I want that honest information, including the politics and back-room deals, to be shared openly and in a timely manner. Let’s hope the Goodyear City Council members and City staff performance can rise to meet expectations.

  3. Not surprised and just about every developer in Goodyear is getting a Gooddeal – even the housing developers have “agreements”.

  4. […] thing.  Just change the numbers and references above. See my previous article for the details. https://howardsgoodyearblog.com/2011/06/15/2362000-of-your-tax-dollars-and-counting/  No more sales tax revenue to Westcor.  That money (running at more than $1 mil per year) comes […]

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