DALLAS – Plans to mortgage the Glendale, Ariz. city hall in a $30 million debt deal are on hold as the Phoenix suburb continues to negotiate in private with prospective buyers for the local National Hockey League team.
The two deals are related because Glendale’s financial distress stems from its efforts to keep the Phoenix Coyotes playing in the $180 million city owned Jobing.com arena. The arena was built in 2003 for the Coyotes using sales-tax-backed revenue bonds and additional debt for roads and other infrastructure.
The city committed to paying the NHL $50 million for keeping the money-losing Coyotes in the arena over two seasons after the NHL bought the Coyotes in bankruptcy proceedings in 2009 to prevent the team’s move to Canada.
Glendale City Council was scheduled to vote Tuesday on an ordinance to sell the city hall complex for $30 million. The city would then lease the facilities through certificates of participation.
To meet its commitment to the NHL, the city borrowed from funds internally. The sale of city hall would have replenished most of those funds.
However, the NHL recently added a new wrinkle, telling the city that it could pay the last $25 million of Coyotes subsidies in $5 million annual installments if it would agree to let the NHL sell the team to a group of investors known as Renaissance Sports & Entertainment, which needs a deal with the city to manage the arena.
With that option available, the council voted to table the ordinance to sell city hall.
Glendale spokeswoman Julie Frisoni said last week the city would continue to negotiate with Renaissance.
The city has negative outlooks on its A-minus general obligation bond rating from Standard & Poor’s and A2 rating from Moody’s Investors Service.