Craig Harris

The Republic | azcentral.com

Coyotes are asking the state legislature to create a taxing district for a new arena

Taxpayers would fund at least $350 million for arena

Despite being turned down by one key lawmaker, the Arizona Coyotes continue seeking legislation to allow creation of a municipal taxing district that would give the National Hockey League franchise a new arena, its president told The Arizona Republic.

One proposal floated at the Capitol would allow from $350 million to $750 million to be generated for an arena from sales and excise taxes imposed within a new taxing district. The plan, detailed in a 49-page draft bill obtained by The Republic, also could allow public funds to be used to build a hotel or other commercial real estate within the district, according to those who have examined the proposal.

The Coyotes confirmed they would want a hotel in any arena project — it would generate taxes to help pay for the arena — but public funds would not be used to build it.

ROBERTS: Coyotes arena scheme deserves icy response

The district's location and size was not specified, but only a community with a population of at least 150,000 people could establish a taxing district. By that definition, several Valley cities would qualify to create such a district.

MORE: LeBlanc pledges arena-plan announcement within weeks

The team would contribute $100 million to $170 million toward any project, according to Anthony LeBlanc, the team's president and chief executive. He said the franchise is looking to build on 50 to 60 acres.

'I don't think there is any desire to do it'

The proposed legislation, currently on the shelf at the Capitol, is opposed by an influential commercial real-estate group. And the Arizona Tax Research Association argues the public doesn't have the appetite to build a new, mostly taxpayer-funded hockey arena for a team that wants to leave a 12-year-old facility built for them in Glendale.

LeBlanc and the team's lobbyist, Jim Norton of Axiom Public Affairs, last month asked state Sen. Debbie Lesko, chairwoman of the Senate Finance Committee, to push through the legislation for a municipal facilities district, she said. Axiom, whose partners have close ties to Gov. Doug Ducey, did not return calls or respond to emails.

Coyotes officials say the concept of using sales and excise taxes generated from businesses within a district to retire debt on an arena has been used numerous times for arenas around the country.

Lesko, in an interview, said there wasn't enough time to fully vet such a plan this year at the Legislature, and that's why she wouldn't sponsor the bill. She also said it was unlikely such a plan would be thrown into the state budget in the waning weeks of the Legislature.

According to Lesko, NHL Commissioner Gary Bettman personally met with her and Senate President Andy Biggs while in Phoenix a few weeks ago. He pushed for a new arena, as the Coyotes are looking to leave Glendale's Gila River Arena. Bettman also met with Ducey's chief of staff, Phoenix Mayor Greg Stanton and Arizona State University officials, according to LeBlanc.

LeBlanc earlier this week said the team soon expects to announce plans for a new arena in metropolitan Phoenix. Sites being considered include downtown Phoenix and in Tempe at ASU.

"I don't think there is any (legislative) desire to do it," Lesko said. "I'm not a big fan of tax-increment financing. Also, this is a big deal, using taxpayer money or having taxpayer risk for an arena."

But Lesko said she would be willing to keep listening, and possibly consider a similar plan in the near future.

Ducey said he wouldn't comment on proposed legislation, but he added that he doesn't want to see the team leave.

"I'm a Coyotes fan, and I want to see them stay in Arizona," Ducey said. "We have four major sports franchises here, and that is what differentiates the state."

LeBlanc said the team would continue to lobby lawmakers after the session ends and plans to bring a similar proposal to the Legislature in 2017.

Greg Stanton said it was his understanding the Coyotes' plan was not currently going forward at the Legislature, but he wouldn't oppose it if it did.

"As it relates to arena issues, we need to keep all available options on the table," Stanton said.

LeBlanc said the team's arena funding plan poses no risk to the state.

"No funds would be pledged out of the state's general fund, and the state would take no risk," he said.

'No way' taxpayers will sign up for new arena

But Kevin McCarthy, president of the Arizona Tax Research Association, disagrees.

McCarthy said he reviewed the plan and it likely would take from the state about half of sales taxes generated within the district, and that money would be directed to retiring the arena's bond debt or mortgage. The other half would flow into the state's coffers, he said. The plan also calls for up to a 10 percent excise tax "on business activity in the district," including admissions and user fees.

McCarthy noted with interest that the Coyotes are seeking a new arena at the very time the Arizona Diamondbacks have threatened to leave Chase Field in downtown Phoenix. In both instances, he said, the public likely is not in the mood to pay for new sports complexes.

"There's no way taxpayers are signing up for new facilities when the existing facilities are more than adequate," McCarthy said.

A Diamondbacks spokesman said the team was unaware the Coyotes were trying to get sports-facility legislation through the Legislature.

The plan is problematic for the 700-member NAIOP Arizona, a commercial real-estate trade association.

Tim Lawless, NAIOP's president, said his group would not object to using state incentives to build an arena, but it opposes allowing public funds to be used to build a hotel or other retail development within an arena district.

Lawless said public financing for commercial real estate is in direct conflict with projects being undertaken by the private sector and gives an "unfair advantage to the taxpayer-subsidized enterprise." He added that even if public funds aren't used to build a hotel, including a hotel in the project would give that operator an unfair advantage because the project is being underwritten by a government entity.

LeBlanc has repeatedly said the Coyotes intend to leave Gila River Arena, likely at the end of next season. Glendale built the arena for the NHL team by selling $180 million in bonds. Those bonds are being retired through sales taxes now imposed citywide. The city still owes $144 million on the arena, opened in December 2003 and built to lure the team from downtown Phoenix.

Glendale last year terminated the team's long-term lease, which included a large subsidy for the Coyotes.

Glendale Mayor Jerry Weiers said the city is doing all it can to keep the team at Gila River Arena. He added that AEG Facilities, which this year was selected to run the city-owned arena, has experience operating arenas in which the main tenant is an NHL team. He said it should be able to retain the Coyotes.

"I'm not saying 'no' to anything. The Coyotes have a lot of things to work out on their end, but with AEG, it's our best opportunity," Weiers said.

LeBlanc said his team had no choice but to look for other locations after Glendale "effectively evicted" the team at the end of next season. However, the team also has struggled to attract fans at the Glendale location.

"We have heard loud and clear from our fans and from potential stakeholders that they want us to stay here in Arizona, and we are committed to staying," LeBlanc said. "The manner in which we're contemplating a new arena is a true public-private partnership, one that pays for itself."

Reporter Paul Giblin contributed to this article.