If any Arizona city is going to declare Chapter 9 bankruptcy, it's likely to be the city of Glendale. The Arizona Republic reports that this West Valley suburb is now in about $500 million of debt from borrowing a significant amount of money for the sports district to pay for a hockey arena, spring-training ballpark, conference center, parking garage and media center. By the time the city pays interest over 30 years, Glendale will have spent close to $1 billion.
The $500 million debt means that the city of Glendale owes about $3,230 for every Glendale resident. The main problem is that the various sports facilities in the city have not made Glendale nearly as profitable as analysts predicted. Glendale Mayor Elaine Scruggs said that the reason for the investments in sporting facilities was not for the entertainment value, but for the financial rewards.
"The reason we got into this business in the first place was because of the number of people who come into the community because of these events," Elaine Scruggs said in the Arizona Republic.
If the Phoenix Coyotes move out of Glendale, then even more serious financial troubles would emerge. The team filed for bankruptcy in May 2009 and it looks like the team could realistically move to a new location in the future. Mayor Elaine Scruggs admitted that there is no backup plan if this occurs.
While it's rare for a municipality to declare bankruptcy, Phoenix bankruptcy attorneys might not be too surprised at this point if Glendale files for Chapter 9 bankruptcy protection. This type of bankruptcy would allow the city to come out of debt and rebuild credit.
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