Lawsuit filed against Prescott Valley Event Center
The Prescott Valley multipurpose events center held up as a model for a similar project proposed for Yuma, is now the subject of a lawsuit filed by an investor.
Allstate Life Insurance Co. filed a lawsuit in the U.S. District Court in Arizona in September, the Yuma Sun recently learned.
The lawsuit alleges that the defendants "misrepresented and failed to disclose material factual information that indicated the event center could not generate sufficient operating revenues and sales tax revenues to make the project economically feasible."
Allstate stated in the lawsuit that it invested in the project, based on that "false and misleading" official information which led the company to believe it was buying A- rated investment grade securities. In three transactions, Allstate purchased a total of $26.4 million in face value of the excise revenue bonds in November 2005.
The lawsuit further alleges that the 5,000-seat events center failed to break even from an operational standpoint and didn't meet the projected number of special events and paying attendance. As a result, the center fell "far short" of the revenue needed to pay the debt service on the bonds.
The plaintiff is demanding a jury trial.
A similar multipurpose events center was proposed for Yuma. However, a referendum authorizing the city to proceed was defeated by voters going to the polls Nov. 4, 2008, by a margin of 53.8 percent to 46.2 percent. The proposed 6,000-seat arena was to have been built north of Yuma Palms Regional Center at an estimated cost of $53 million. It would have been owned by the city and operated by Global Entertainment Co., the same company that was managing the Prescott Valley arena.
Leading up to the 2008 election here, proponents said the proposed Yuma multipurpose events center would have contributed to growth and quality of life while opponents were concerned it would end up costing taxpayers.
Thomas G. Kelly, a Yuma attorney, was among those who argued against the project. He said he wasn't opposed to a multipurpose events center, but objected to it being publicly funded. "I don't believe it will be profitable," he said at the time.
When informed about the lawsuit, he remarked: "I felt all along that it was something that could go upside down. It's not a surprise to me that the investor is now seeking compensation. The same kind of situation could have occurred here. The same parties were involved."
Greg Hyland, city of Yuma spokesman, said he didn't know the details of the lawsuit "and I have no basis for comment."
Furthermore, he said, "the voters made a decision and the city has moved on."
Defendants named in the Allstate lawsuit include The Industrial Development Authority of the County of Yavapai; Prescott Valley Event Center; Robert W. Baird & Co.; M.L. Stern & Co.; Edward Jones LP; Prescott Valley Signature Entertainment; Global Entertainment Corp.; Fain Signature Group; Kutak Rock; Stinson, Morrison, Hecker; TL Hocking & Associates; Thomas L. Hocking; W. James Treliving, and Richard Kozuback.
Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853.
