Arizona senators push to give Coyotes, Suns, D-Backs up to $1.1b for new arenas and stadium

Arizona Coyotes owner Anthony LeBlanc may not have any idea where he wants to build a new hockey arena now that Arizona State University pulled out of a planned venue in Tempe, but that’s not going to stop members of the Arizona state senate from pushing legislation to give him $170 million in sales- and hotel-tax kickbacks to help build one. And hey, while we’re at it, let’s make it easier for the Diamondbacks and Phoenix Suns to get state subsidies, too:

The bill would allow creation of “community engagement” districts of up to 30 acres. Within them, up to half of the state’s share of sales taxes generated from retail sales and hotel stays would be dedicated to paying the bond debt for new sports or entertainment facilities. It also would allow an additional 2 percent district sales tax to be applied to all purchases within the district, with those revenues also dedicated to defraying the cost of facility construction.

In the case of the Coyotes, the plan envisions public funding covering 57 percent of a new arena’s cost, with new sales taxes covering $170 million and the host city contributing $55 million. The Coyotes said the team’s portion would be $170 million, amounting to a 43 percent contribution toward the $395 million total cost.

This is a bit of a hybrid bill, combining super-TIFs (where half of existing sales and hotel taxes would be kicked back to pay teams’ construction costs) with a new sales tax surcharge in the area around the new sports venue. The math on how much of a subsidy this amounts to gets dicey — virtually all of a TIF would be cannibalized from sales and hotel tax receipts elsewhere in the state, but a slice of a sales tax surcharge could come out of a team owner’s pockets, depending on how big the surcharge area is — but the vast majority of it would be a straight-up gift to team owners, all to allow cities in one part of Arizona to steal teams from cities in another.

You’ll note that I said “teams,” not just the Coyotes. That’s because the new super-TIF districts could be applied to help build any new sports and entertainment facilities. The only limit is that state money would only be allowed to pay for half of construction costs up to $750 million — meaning that if the Coyotes, Suns, and Diamondbacks all availed themselves of the legislation, as you know they would love to do, Arizona taxpayers could potentially be on the hook for $1.125 billion. (If the Coyotes stick to their $170 million demand, the max would be only $920 million, but as we’ve seen before, sports construction costs only tend to go up, and there’s nothing stopping LeBlanc from revising his ask as time goes on.)

Now, the bill has so far only passed one committee in one branch of the Arizona legislature — Sen. Bob Worsley of Mesa used one of those “gut an unrelated bill and insert your own language” tricks to get it on the agenda of his own transportation and technology committee — and none of the teams involved have identified places where they’d like to build new facilities, or how to pay for their halves. Still, it’s a pretty remarkable response to a “crisis” started by the Coyotes’ need to leave their nearly-new arena in Glendale because … hey, Coyotes ownership, why do you need to leave again?

“It does not work in Glendale,” Ahron Cohen,the team’s general counsel, told the Senate panel. “In 2013, our ownership group bought the team. The previous ownership chose to go out there.”

Oh. Well, if it “doesn’t work,” then it doesn’t work. I thought you were going to say something about how you couldn’t bear to be forced to compete for the rights to operate the arena instead of just being handed $8 million a year by Glendale in a no-bid contract. Good thing it’s not that, because asking the state of Arizona to pay you a couple hundred mil to get you out of that pickle would be chutzpah in the Nth degree, and only complete morons in state government would actually consider it.

Coyotes owner now OK with staying in Glendale while he waits to be gifted with a new arena

Arizona Coyotes owner Anthony LeBlance said yesterday that he’s still “pretty confident” he’ll get a new arena somewhere, and blah blah blah whatever, of course he’ll say that, but — hey, what’s that?

The Coyotes still have no intention of calling Gila River Arena home for any longer than they have to.

“We’re okay staying in Glendale if we know that there’s certainty of a new facility coming online and shovels in the ground,” said LeBlanc.

Well, that’s new. Admittedly, LeBlanc doesn’t have much of a choice but to stay in Glendale for a while if he wants to stay in the Phoenix area and has to wait on a new arena, but previously he’d made noise about getting out of Glendale “as soon as practicable,” and … okay, I guess this isn’t technically any different, but it does put more of an emphasis on being willing to stay put for a while if necessary. Though only if he can smell those shovels in the ground. Otherwise … he’s not saying, but you don’t wanna cross him, man, there’s no telling what he’ll do. Just not move to Portland or Seattle, because he wouldn’t do that. Is this threat working yet?

Glendale legislator: Wait, why exactly should we pay for another city to steal the Coyotes?

Hey, here’s a question you don’t see asked nearly often enough: Why the heck should a state government pay to help a pro sports team leave one part of the state for another? The state is Arizona, where even after Coyotes owner Anthony LeBlanc’s Tempe arena plans crashed and burned last week, state senator Bob Worsley (who represents Mesa, in the East Valley) is still pushing for $200 million in state sales tax kickbacks that LeBlanc could use for a new arena elsewhere in the state. State representative Anthony Kern (who represents Glendale, in the West Valley), meanwhile, is having none of that:

“This legislation comes down to a simple public-policy question: Should taxpayers be asked to pay for a new arena that will directly compete with already existing facilities that taxpayers are still paying off?” Kern said…

“We want the Coyotes to be successful on and off the ice and to do so in the publicly-funded Gila River Arena that the public built — Glendale taxpayers built — for them to play in.”

While I’m not sure “taxpayers are still paying off” is the most sensible argument — would it be okay for the state to subsidize one Arizona city stealing a team from another if Glendale’s arena were already paid for? — Kern has a point with the rest of it. The only thing stopping the Coyotes from playing in Glendale, after all, is that LeBlanc is refusing to do so unless he gets to manage the arena and get paid by the city for it, which isn’t exactly the kind of crisis that the state needs to run in and solve. Unless you think that he’s going to move the team out of state if his demands aren’t met, which he hasn’t threatened to do yet—

According to officials in Seattle and Portland, members of the Arizona Coyotes have toured arenas in both locations in the past three months. The destinations appear to have been the KeyArena in Seattle and the Moda Center in Portland, Ore...

Arizona Coyotes Executive Vice President of Communications Rich Nairn denied the rumors, when asked about the reports of members touring the two arenas.

“That is false,” Nairn said via email.

So, either this is a rumor that Seattle and Portland are spreading for unknown reasons, or it’s a non-threat threat by LeBlanc. Either way, a whole lot of sabers are being rattled, which is to be expected, but that’s no reason to panic just yet and start throwing sales tax money around.

Arizona State bails on Coyotes arena, everything goes back to drawing board (yet again)

So it turns out announcing an arena partnership without telling your proposed partner about it isn’t actually the best idea in the world, as Arizona State University has pulled out of a plan for an Arizona Coyotes arena in Tempe, effectively killing it:

Arizona State University said in an email Friday evening that the university “has no intention of proceeding to sign a development agreement or an option to lease or any other agreement with the Coyotes.”

ASU was negotiating with the Coyotes owners up until now, but bailed after a bill to create a “community engagement district” — i.e., an area where half of all sales taxes collected by the state would be kicked back to pay off $200 million in arena construction, i.e, a sales tax increment financing district, i.e., a STIF — hit opposition in the state legislature. As well it should, since the vast majority of sales taxes on arena spending would be collected elsewhere in the state anyway if Arizonans spent their money on other things, so it’s not really “new revenue.” But as KPNX notes, there were political obstacles to the deal as well:

The Coyotes’ Glendale arena is in the conservative West Valley. The ASU site’s in Democratic Tempe. There was no plausible scenario in which Republicans ship a team to the East Valley and stick their Glendale voters with an empty arena, $150 million mortgage and no way to pay it off.

Coyotes owner Anthony LeBlanc can, and no doubt will, pursue other arena sites now, like maybe that Salt River Indian reservation land in Scottsdale that he rejected last summer. He still doesn’t have any money to build it with, though — other than his own money, which would defeat the purpose of leaving Glendale so he can get somebody else to gift him an arena — so this is likely to take a while. This being the Coyotes, taking a while is something they should be familiar with.

Coyotes get developers to drop opposition to tax-kickback plan by promising not to do it again

An Arizona commercial real estate group has dropped its opposition to the Arizona Coyotes‘ demand for $200 million in tax kickbacks for a new arena because, apparently, the team is promising not to do it more than once:

“We were initially opposed,” [NAIOP Arizona president Tim] Lawless said.

But now the group is neutral.

That comes after meetings with Coyotes President, CEO and co-owner Anthony LeBlanc and assurances an arena tax district would not be applied to other projects and sports developments.

I guess technically this means that LeBlanc gave the commercial real estate developers assurances that any authorizing legislation would be narrowly written to just give him a giant whopping tax break, and not all sports team owners, which would have potentially drained an even large share of funds from the state treasury and left existing real estate owners holding more of the bag. That’s not likely to make the owners of the Diamondbacks and Suns happy if they’re hoping to ask for tax kickbacks for their own projects, but LeBlanc can worry about fighting with them later.

Anyway, none of this immediately changes the fact that top state officials sound cool to the LeBlanc plan, and supposed partners Arizona State University still haven’t actually signed on, and so on. But getting one less semi-powerful group hating on him has to be seen as progress of a sort for LeBlanc, anyway.

Top Arizona officials not really into this whole “give Coyotes another $200m in tax money” thing

Let’s check in on how the Arizona Coyotes owners’ proposal for a $400 million Tempe arena, half paid for by tax kickbacks, is going over with the state officials who’d need to approve it:

“I’m a big fan of the Coyotes but I haven’t heard anything about that,” Gov. Ducey told Welch.

“They’ve not talked to you?” Welch asked the governor, who replied, “No.”

Mmhm. Anyone else?

The newly-elected speaker of the House and a senior lawmaker who formerly chaired the House Appropriations Committee said they would be resistant to a TIF or a tax rebate.

“We care about the Coyotes, we also care about the taxpayers of the state,” said Speaker-elect J.D. Mesnard, R-Chandler.

Sen. John Kavanagh, R-Fountain Hills, the former chair of the House Appropriations Committee, said there just isn’t enough money to go around, especially at a time when the public is calling for more money for education.

“They’re not asking for a tax rebate, they’re asking for us to go into a budget deficit or to take on debt to build their private stadium,” Kavanagh said.

I’m going to go out on a limb and classify this as “not well.” While it’s still early and there’s obviously much haggling to go, perhaps this whole “announce an arena plan without telling anyone about it in advance, including the state university that you’re supposed to be partnering with” thing wasn’t the best idea. Though maybe the Coyotes owners are just really committed to transparency and not negotiating behind closed doors, in which case, kudos to them!

Coyotes arena plan continues to look less like a plan than like a way to get media attention

Recent developments in the Arizona Coyotes‘ Tempe arena plan kerfuffle, as I was making my way back yesterday from talking to folks at UConn about stadiums and development and journalism and other matters:

  • The Coyotes, as noted previously, would build the Tempe arena on property controlled by Arizona State University, which would get to use the pro team’s attached 4,000-seat practice facility for its own hockey games. (Don’t click on the link unless you really have to, it launches an awful autoplay ad with audio.) But hockey games only — ASU would still be renovating its own 12,000-seat arena for other sports, leaving the Phoenix area with these two arenas, plus the Suns‘ existing Phoenix arena and maybe the new one that they want to build, plus the Coyotes’ old arena in Glendale, and … you know, one of the things I did in Connecticut was a attend a class that was talking about reducing the environmental impact of new sports venues — you think maybe not building a different one for each and every sports team in a metro area would be a start?
  • Speaking of Glendale, that city just settled a longstanding lawsuit by the Cardinals over the city’s previous promise to build more parking spaces by agreeing to pay $17 million, instead of the $36 million the team was demanding. So that’s either a $19 million savings, or another $17 million down the drain of the old Glendale administration’s money-losing sports spending spree, depending how you want to count.
  • Laurie Roberts of the Arizona Republic wrote a good column (no autoplay ads on this one, yay!) laying out how stupid and awful this whole mess is. Sample: “For a brief shining moment on Monday, I actually thought that the Coyotes honchos had figured out there was a reason why their proposal to high-jack tax revenues to build yet another hockey arena was DOA at the Legislature last spring. Boy, was I ever wrong.”

Roberts also noted that no actual city or state elected officials or ASU administrators were on hand for Monday’s press conference, which is looking more and more like an attempt at jump-starting momentum for this arena project than an actual announcement of anything. And I’ve now written about it four times this week already, so apparently it’s working!

Coyotes owner demands $200m in tax kickbacks for arena, says this isn’t asking for government money

So apparently Arizona Coyotes owner Anthony LeBlanc did say something about how he planned to pay for a new hockey arena in Tempe yesterday. And it was: Give us great gobs of tax money.

The Arizona Coyotes will ask the state Legislature to divert up to $200 million in tax dollars to help pay for the team’s planned $400 million arena in Tempe, Coyotes executives said at a news conference Monday.

The team would contribute the other $200 million to a project that “pays for itself,” said Anthony LeBlanc, the Coyotes’ chief executive officer.

“There’s no question that we’re going to have some form of public-private partnership to make this work,” LeBlanc told reporters.

“That is a very typical model. We are not going in and asking for government to build us an arena.”

The state money would come in the form of rebates to the team on sales tax and other tax revenue generated by the arena.

Well, yes, actually you are asking for government to build you an arena — or to build you half an arena, anyway. There’s a longstanding gambit among sports team owners to consider “tax rebates” as different from straight-up cash, but this is nonsense: Money is money, and if I’m running a business, it doesn’t matter to me whether I get it in the form of a check to the construction company or as a check from the state tax agency that I can then use to pay the construction company. (There’s a reason the term “tax expenditures” exists.)

While “sales tax and other tax revenue generated by the arena” is a bit vague, it seems clear that what LeBlanc is talking about here is tax increment financing, or a TIF; or, really, a STIF in this case, since it would kick back sales taxes from money spent at the arena (and maybe team employee income taxes, too?) instead of the more typical property taxes. I’ve gone on about TIFs before and how they cannibalize money that would otherwise go to the public treasury — Good Jobs First has an excellent primer on them as well — but suffice to say that when you’re talking about state money, they’re especially ludicrous, since there’s no way that the state of Arizona will bring in significantly more sales tax revenue just because the Coyotes move from Glendale to Tempe.

Anyway, this appears to be the opening salvo in LeBlanc reopening the TIF discussion that he started last spring. There’s no reason to assume that this will be the final subsidy figure he arrives at — there’s still the matter of operating and maintenance costs to be decided on, and remember Judith Grant Long‘s figure that the average stadium costs taxpayers 40% more than the announced subsidy figure. But at least we know his initial ransom demands, even if we don’t know what he’s willing to settle for.

Coyotes don’t really have an arena deal in place, everybody stand down

Well, that was yet another Arizona Coyotes anticlimax:

The Coyotes and Arizona State University announced that the Coyotes have entered into an exclusive negotiation agreement with Catellus Development Corp., ASU’s athletic facilities district developer, to work towards the finalization of a new arena and commercial development project within the 330-acre district along Tempe Town Lake. The team would have until June 30, 2017 to review the land and get the political, development, architectural and financial plans required to build it in order.

In other words, Coyotes owner Anthony LeBlanc still has no idea who’s going to pay for a new arena. He does know where he wants to build it — Tempe, not Scottsdale — only four months after saying he knew where he wanted to build it, and has agreed to exclusively talk to that city about building there, at least until he doesn’t.

As for the actual money, here’s what LeBlanc had to say today:

“There will be several tranches of money that will be utilized to build the arena of which the Coyotes will be the largest tranche,” he said. “The Coyotes will be the lead investor in this facility and ASU also has a financial commitment toward the project.

“We’re not looking for general funds from any governmental organization, but we need to form a very strong partnership with the State of Arizona and the City of Tempe. We also have to work with a variety of stakeholder groups such as Goldwater Institute and others so they understand what it is we’re trying to do. These projects have a process.”

Ignore the fancy language like “tranche” and you have: We’re going to put in some money, Arizona State University is going to put in some money, and the city and state will put in some money, but we have to run all this up the flagpole and see who salutes, so go away for now and don’t bother us.

There was talk back in the spring of LeBlanc asking for massive sales tax kickbacks to help fund an arena and surrounding development, but he’s maintained radio silence on this and all other funding questions since then. So, either he’s biding his time and working behind the scenes for subsidies, or he has a secret plan to pay for an arena out of his own pocket but doesn’t want to spoil the surprise. You make the call which seems more likely.

Coyotes schedule East Valley arena announcement for 1 pm ET, no further details available

I have to get on a train in a few hours to go talk in Connecticut tomorrow, so I really don’t have time for this breaking news:

After years of looking for a new home in the desert the Arizona Coyotes will announce Monday afternoon they have completed a deal for a new arena in the East Valley area south and east of Phoenix and Scottsdale that includes Tempe and Mesa, sources close to the deal told ESPN.com Monday.

Further details of a new 16,000-plus seat arena that is expected to be ready for the start of the 2019-20 National Hockey League season will be revealed at a news conference set for 1 p.m. EST.

“The East Valley area south and east of Phoenix and Scottsdale” sounds like it’s not this plan, which is sort of in Scottsdale, though it’s also just barely south and east of Scottsdale, so maybe? Either way, as of just a couple of weeks ago nobody had any idea how to actually pay for that plan yet, so one hopes that somebody at that news conference will ask tough questions about where the money will come from.

I’ll try to post a followup once details are available, though I may be hampered if there’s no WiFi on the train. If necessary, feel free to post updates in comments, and I’ll join back in when I can.