Coyotes File $2.3B Claim Against City of Phoenix Over Arena

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The Arizona Coyotes and the firm the NHL franchise hired to develop a new arena project near Sky Harbor International Airport on Wednesday filed a $2.3 billion notice of claim against the city of Phoenix for alleged breach of contract.

As reported by The Associated Press, the claim, a precursor to a lawsuit, that was filed along with Bluebird Development is seeking damages from Phoenix for a March 27 legal filing by the city.

In that filing, Phoenix asked to rescind Tempe's recent zoning and land-use changes, along with prohibiting future residential considerations in an area the FAA says is incompatible with residential development.

The city and Sky Harbor said the plan for the Tempe Entertainment District, which would include a new home arena for the Coyotes, could not include previously approved multifamily housing due to noise issues under airport flight paths.

"Phoenix City Hall's bad behavior seems intended to preserve its downtown sports venue monopoly and has nothing to do with safety or soundness of the airport," Coyotes CEO and President Xavier Hernandez said in a statement, as reported by the AP's John Marshall. "While Phoenix bureaucrats have allowed developers to build a basketball arena, a ballpark, and apartments in flight paths, when Tempe attempts to do the same a manufactured crisis arrives."

The $2.3 billion in damages sought equal the entitlement value of the Tempe Entertainment District.

An amendment to an intergovernmental agreement between the cities of Phoenix and Tempe, dating to 1994, would have allowed the residential development in the Tempe Entertainment District if Tempe lived up to its commitments.

The amendment was sent to Tempe on Feb. 7, and Tempe sent a letter on March 17 ending discussions.

Phoenix officials said they were willing to agree to a compromise allowing the Tempe Entertainment District and other known current projects to be permitted in exchange for Tempe's renewed commitment that no more residential projects be built in the high-noise area under Sky Harbor's flight path.

"Phoenix will respond in due course, but the developer restates the same arguments that the airport, and more importantly, the FAA has already debunked," the city said in a statement, according to the AP. "At the same time, we can understand and appreciate the developer's frustration. But their frustration is misdirected. They should be frustrated with Tempe."

The Coyotes have been negotiating with the city of Tempe to build on a tract of land just west of downtown in their bid to find a permanent home. The team is currently playing at Arizona State's 5,000-seat Mullett Arena, by far the smallest arena currently hosting NHL competition.

The franchise shared America West Arena with the NBA's Phoenix Suns after relocating from Winnipeg in 1996 before moving to Glendale's Gila River Arena in 2003. The Coyotes leased Gila River Arena on an annual basis until the city of Glendale announced in 2015 that it was backing out of the long-term lease agreement after the 2021-22 season.

The proposed arena and entertainment district are set to go to a referendum in May, the AP reported.

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