Tempe City Council OKs Arizona Coyotes arena development

The fate of a $2.1 billion development that includes a hockey arena for the National Hockey League’s Arizona Coyotes and municipal bond financing will be in the hands of Tempe voters after the project cleared the city council Tuesday night in a series of unanimous votes. 

The mostly privately financed entertainment district includes a 16,000-seat arena, a practice facility, two hotels, 330,000 square feet of office space, up to 1,995 residential units, and at least 315,000 square feet of retail space.

The team has pledged to launch a petition drive to place the project on the May 16 city ballot.

Tempe Mayor Corey Woods said residents will have plenty of time to sort through the details.

“The reality is the vote this evening will give the residents in this city an unprecedented opportunity to weigh in and let us know what their feelings are about this,” he said. “My perspective really is what has been put together here is the best entertainment/arena deal that’s been put together in the history of this state.”

Tempe commenced negotiations in June with Bluebird Development LLC, an affiliate of Meruelo Group and the team, which submitted the only response to a request for proposals for a professional sports entertainment district the city issued last year for a 46-acre landfill site it owns.

To initiate the site’s transformation from a “landfill into a landmark,” the proposal calls for Tempe to create a community facilities district (CFD), a legal entity separate from the city, that would issue $210 million to $230 million of 30-year bonds to fund the removal of 1.5 million tons of garbage and hazardous waste, and pay for public infrastructure.

The bonds would be paid with a portion of sales, property, and hotel tax revenue generated by the development, as well as a surcharge the developer would impose on all sales and taxable activities within the project. To enhance security on the bonds, they would be backed by a priority lien on all of the development’s privately owned land and improvements.

In return for paying at least half of debt service and making other contributions to the city, Bluebird would get a 30-year tax abatement for the arena, music venue, practice facility, and team headquarters, and an eight-year abatement for the residential, retail, and office parts of the development.

Council Member Doreen Garlid, who voted against moving forward with negotiations in June, said she has become comfortable with the proposal. 

“While I still have some reservations about this being the best fit for our last, large chunk of city-owned land, it makes sense for us to give the residents of Tempe the opportunity to weigh in with their vote,” she said.

If Bluebird fails to get the measure on the ballot, the city can rescind the development and disposition agreement the council approved Tuesday. 

Ahead of council voting, speakers during a public hearing included NHL Commissioner Gary Bettman, as well as project opponents, who cited the Coyotes’ troubled past with Glendale, Arizona.

The Coyotes cost the Phoenix suburb tens of millions of dollars and several rating downgrades amid a team bankruptcy filing and multiple changes in the franchise’s ownership. Alex Meruelo became the majority owner and chairman in 2019.

The team currently plays in Arizona State University’s multi-purpose arena in Tempe after its year-to-year lease for the Gila River Arena was not renewed last year by Glendale, which financed the facility with $180 million of debt.