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Lawmakers Question Coyotes Arena Financing Plan

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The Arizona Capitol Times

 

The Arizona Coyotes want taxpayers to pay for half of planned arena in the East Valley with a public-finance scheme resembling one lawmakers have traditionally loathed.

Coyotes President and CEO Anthony LeBlanc described the financing plan as a "flavor" of Tax Increment Financing, or TIF, and "a form of tax rebate" to raise $200 million of the estimated $400 million cost.

The Coyotes have pledged to pay the other half of the arena cost.

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.

LeBlanc said at a Nov. 14 news conference unveiling the plan that the team will begin its lobbying effort in the next few weeks. The financing plan would require the Legislature's approval.

The team plans to build a 16,200-seat arena on a 58-acre plot within Arizona State University's Athletic Facilities District at McClintock Drive and Rio Salado Parkway in Tempe.

The parcel of land is currently the back nine of ASU Karsten Golf Course.

The Coyotes say the arena would be part of a larger destination area that would include a hotel and mixed use development.

The team, whose lease at Gila River Arena in Glendale ends in 2018, wants to break ground by next summer, meaning any proposal approved by the Legislature would have to move quickly.

Under tax increment financing, an entity bonds against future revenues that it expects to generate from the project being financed.

And whenever TIF-style proposals surface, so does the specter of Rio Nuevo, a sales-tax TIF backed by Tucson's general fund. The downtown redevelopment project has been mired in questions about how the money is being spent, questions that make Arizona lawmakers squeamish about such projects in the future.

The last two times a TIF-style proposal has been introduced in the Legislature, they met their end at the hands of former Senate President Andy Biggs, who did not hear a 2011 proposal and let a 2013 bill languish in the Rules Committee after it passed through two other standing committees.

"We don't really view it as a typical TIF as you see in other markets, but it would be something within that flavor," LeBlanc said.

The team is asking for a refund on a portion of the sales tax that would be generated within the development.

"Our view is these are taxes that are generated but-for the arena being on site, so we absolutely understand that everybody needs to get the benefit of those tax dollars, and we think this is a way that would assist in assuring the arena funds itself," LeBlanc said.

He said the team isn't looking for a $200 million handout from the state, and it will be the team that takes the financial risk.

"We, as the Coyotes, will actually guarantee that, if the taxes that we are speculating and that we are forecasting, if they are not met, if it is a dollar short, the Coyotes will be the one to cover that off," LeBlanc said.

Mesnard said he's been concentrating on setting up staff and committees under his leadership and he hasn't spoken with the Coyotes yet.

But Mesnard said he and many of his colleagues would resist any form of a TIF.

"It's a big decision without us having to involve taxpayer money or passing a policy that would have an impact on surrounding taxpayers," Mesnard said. "I know they'll make the economic engine argument and how this is going to be a boon for this and that, but we hear those time and again. "

He said the public has seen too many business proposals related to professional sports teams go south.

Mesnard said he'll still reserve judgment until hearing a formal proposal from the team.

Kavanagh said any proposal is going to be a tough sell to lawmakers.

"We estimate right now, that after we do mandatory, automatic increases in next year's budget, our total surplus for new expenditures will be $24 million," Kavanagh said.

LeBlanc said a plan floated to lawmakers in the 2016 session was well received.

In that proposal, which was presented to GOP leadership, the team pitched the idea of creating a municipal facilities district, which could issue bonds as a way of financing a new arena.

The bonds would then be partly financed using the more traditional TIF, under which an entity would bond against future revenues that it expects to generate as a result of the project that is being financed.

Sen. Debbie Lesko, R-Peoria, and Biggs, R-Gilbert, even met with National Hockey League Commissioner Gary Bettman, who was interested in keeping the team in Arizona.

Lesko ultimately balked at pushing such a substantive measure late in the legislative session.

- Jeremy Duda contributed to this article

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