Craig Harris, Jessica Boehm, and Anne Ryman

The Republic | azcentral.com

The Coyotes could get $225 million in public funding for a new arena

The team says it will contribute $170 million to the project

The Arizona Coyotes could receive $225 million in public financing for a new arena that would go in downtown Phoenix or the East Valley under legislation approved by a state Senate committee Tuesday.

Sen. Bob Worsley, R-Mesa, sponsored and pushed through the bill for the Coyotes, who want out of Gila River Arena, a 13-year-old facility built mostly by Glendale taxpayers. The Arizona Diamondbacks and Phoenix Suns also are unhappy about playing in older facilities in downtown Phoenix and want new buildings.

Worsley acknowledged the legislation could help the Diamondbacks and Suns, but said it was intended to help the Coyotes.

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.

The state sales-tax rate is 5 percent, feeding Arizona's general fund that pays for K-12 education, community colleges, universities, prisons, health insurance for the poor and other services.

The bill further requires the user of the facility and the city in which it is located to pay up to half of construction debt.

ROBERTS: A $225 million subsidy for the Coyotes? Really?

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.

Previously, the Coyotes said they would pay half of the arena cost.

The legislation, Senate Bill 1149, passed 6-1 out of the Transportation and Technology Committee. It likely heads to the Senate Rules Committee before a floor vote.

Other sports teams may be helped

While Tuesday's hearing focused on the Coyotes, the bill could allow other sports teams to use it for more expensive facilities.

The legislation caps state sales taxes used to build a facility at half of a facility's cost, up to a maximum of $750 million. And it allows a city to pick up the entire other half. Therefore, it is possible that a sports franchise could get all or most of a new arena subsidized through taxpayers.

Coyotes officials told the committee that they would locate the new arena in downtown Phoenix or the East Valley, where the majority of hockey fans are located. They said playing in Glendale is not financially viable, and a new 16,000-seat arena with a larger lower bowl would provide the Coyotes with more ticket revenue. The plan also calls for having an adjacent practice facility with a seating capacity up to 4,000 seats.

"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."

Team officials said a new engagement district would create additional sales taxes for the state, county and the local government hosting the arena. The team, however, was unable to say how much money would be lost in state and local sales taxes by their moving from Glendale.

The legislation was scheduled to be heard Monday in the Senate Commerce and Public Safety Committee, but it was moved at the last minute to the Transportation Committee that Worsley, the sponsor, chairs. The Mesa Republican used a "strike everything" amendment to attach the plan to a transportation-funding bill.

Along with funding facilities for Phoenix-area professional sports teams, the legislation could underwrite convention or civic centers or other major entertainment facilities throughout the state.

Glendale says city still viable location

The Coyotes, who have the third-worst home attendance record in the 30-team National Hockey League, want to leave Glendale because the city slashed the team's lucrative arena-management deal and halted other subsidies.

The city paid the NHL $50 million in subsidies to cover operating losses from 2010 to 2013, which helped keep the team in Glendale after the team's previous owner filed for bankruptcy protection. The city then awarded an annual $15 million arena-management fee to the Coyotes, but the city terminated the contract in 2015 and later hired another manager to run the arena for roughly one-third the cost.

Glendale officials contend that the Coyotes still have one of the "most favorable" lease agreements in the NHL. The team pays the city $500,000 per year to use the arena for all practices and games. The team keeps all of the revenue for hockey parking, merchandise, concessions and ticket surcharges, and retains 80 percent of the revenue from naming rights.

RELATED: West Valley lawmakers object to potential Coyotes move

The Coyotes are contractually bound to stay in Glendale through the 2017-18 season. The city has a $13 million annual debt payment on the arena through 2033, bearing most of the construction debt.

Glendale City Manager Kevin Phelps said that by 2033, Glendale will have invested more than $500 million between principal, interest, arena management and infrastructure improvements. He said it would be a "slap in the face" to taxpayers if the state paid for a "shiny, new" arena elsewhere.

Phelps said he has spoken to Worsley about his legislation, and understands the senator's motivation is ensuring the team stays in Arizona. But, "I think where the disconnect comes in is that I think (Glendale is) very much still a viable option and it's a much smarter option for the team and the taxpayers to figure out a solution here," he said.

Phelps said he "doesn't think it's appropriate to use taxpayer dollars to fund for-profit professional teams," but the city would consider investing additional money into the arena — which could generate extra revenue for the team — if it received a commitment from the Coyotes for the team to stay long term.

The Coyotes, who likely will miss the playoffs for the fifth straight season, last year asked lawmakers to create a special tax for a new arena, but that effort didn't succeed.

In November, the team announced it wanted to build a $400 million arena with Arizona State University. ASU, however, killed that plan earlier this month.

Ray Anderson, ASU athletics director, said he initiated discussions with the Coyotes about a partnership.

But the deal fell apart as top university officials believed it would hamper other initiatives the university had at the Legislature.

"We never just pursue one option. We like to think we can take parallel tracks. We have some options that we can’t say publicly, but what I want to tell you is if one goes away we’re working on another or multiple others because that’s what we do," Anderson said. "But the way things evolved, during the course of discussions and negotiations, things shift and shake."