Coyotes arena in Tempe could get tons of subsidies or none at all, depending

On Friday when I wrote about the $70 million that Tempe, Arizona, is considering spending on a development project to possibly include an Arizona Coyotes arena, I was going entirely by a Phoenix Business Journal article that didn’t have a ton of details. I’ve since tracked down the hard-paywalled Arizona Republic article that first reported on the plan, as well as the city’s request for proposals package, and things are becoming a little more clear, or a little less clear, as the case may be:

  • The $70 million is the city’s estimated cost of cleaning up the site, which is currently a city composting site, so that it can be developed as a “mixed-use Sports and Entertainment District” with housing, retail, parking, and a sports facility of some kind.
  • The RFP states that “it will be respondent’s financial responsibility to remediate the land,” but also that “the exact terms of any financial incentives provided by the City will be considered during the negotiation of the Development and Disposition Agreement.”
  • The arena and retail space would be funded by “private investors,” according to an unidentified source cited by the Republic.

That leaves out quite a lot: How much if anything Coyotes owner Alex Meruelo (or another developer) would pay for the cleaned-up land, whether he would pay property taxes on it, and of course those murky “financial incentives” that are yet to be negotiated. The PBJ also reported over the weekend that Meruelo could seek to use the theme-park tax surcharge that was passed for (but not yet used by) the Arizona Diamondbacks for their own stadium plan, but given that as we’ve covered here before, that ticket tax money could end up coming out of a team’s own pockets — or not! — it’s unclear whether that will be used here, or whether that would represent a public subsidy.

In short, we have no clue how much Tempe is looking to put up for a hockey arena to lure the Coyotes from Glendale, because that still has yet to be negotiated. The plan is apparently to pick a developer first, then hash out the financial details later, which doesn’t exactly sound like the best way to get “the best deal possible for Tempe residents” as city officials told the Republic is the goal, but you know how authority figures can get when you tell them they’re doing things in the wrong order.

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5 comments on “Coyotes arena in Tempe could get tons of subsidies or none at all, depending

  1. Some more details from the PBJ.

    Arizona Coyotes’ vision: Create a ‘Deer District’ around proposed Tempe arena

    https://www.bizjournals.com/phoenix/news/2021/07/24/coyotes-plan-to-submit-multibillion-dollar-arena.html

    1. Yeah I was just going to say, the Deer District has opened a lot of politicians’ eyes. It certainly surprised me. Deer District really was a dead area, even before and after games. It does shockingly (to me, at least) good business, even when there is no event at the arena. I honestly think it has been even stronger than LA Live, which I have always considered the gold standard for arena developments.

      I’m sure a counter-argument is, “that’s what was supposed to happen at Gateway”. True. Gateway is isolated though. I think developers, politicians and team owners now view the magic potion as an arena centered development in a lightly-trafficked urban area. (Even though Patriot Place has reportedly been a success in a Glendale-esque isolated suburban area.)

      As far as opportunity cost concerns go, I must bite my lip and agree with Neil’s general worldview here. From what I understand, Phoenix’s east suburbs are hot from a real estate perspective. If that’s the case, then I would think this wouldn’t be the time to offer a bunch of subsidies to the Coyotes. Although on that front one has to be careful. LA’s market for apartments and condos was white hot before the lockdowns, and a ton of mixed use developments went up. Now most of them have long term vacancies, both for the ground floor retail and the residential units above. If there were, say, a Chargers stadium nearby, I doubt we would have this level of blight.

  2. More problems for the Coyotes.

    Environmental remediation costs present challenge for Coyotes’ proposed Tempe stadium site

    https://cronkitenews.azpbs.org/2021/08/02/coyotes-proposed-land-remediation-costs/

    1. That’s the same $70m we knew about last week, so technically not “more” problems.

  3. Mr Barroway buys a soccer team?

    https://twitter.com/user/status/1422546684895141901

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