DALLAS — The financial trouble surrounding Glendale, Ariz.’s $180 million bond-financed hockey arena appears to be worsening as the adjoining Westgate City Center retail and entertainment complex faces the threat of foreclosure.
The privately financed development could be auctioned to new owners or foreclosed on by the lenders unless the Ellman Cos., the owner of the center, negotiates new lending terms.
Developer Steve Ellman promised to develop Westgate as part of a deal with Glendale to issue tax-exempt bonds to build the $180 million Jobing.com hockey arena as a home for the National Hockey League’s Phoenix Coyotes, which is owned by Ellman.
Financial troubles forced Ellman to sell the team in 2005 to trucking magnate Jerry Moyes, two years after the arena opened.
The Westgate City Center did not reach the full development that Ellman had promised.
A spokesman for the Ellman Cos. said a major lender found the developer and other lenders in default for missing the payment on the balance of the loan when it recently came due.
In May 2009, Moyes put the Coyotes in bankruptcy with plans to sell the team to Canadian billionaire Jim Balsillie, who planned to move the team to Hamilton in Ontario, Canada.
Alarmed by the possibility of losing the major tenant of its arena facility, Glendale joined with the NHL in seeking a new owner.
Ultimately, the league bought the team out of bankruptcy with plans to find a buyer.
Matthew Hulsizer, a Chicago investor, agreed to buy the team for $170 million, provided the city paid him $197 million for parking rights and management of the arena.
To raise the money, Glendale planned to issue debt. However, a threatened lawsuit prevented an issuance of certificates of participation that would have raised the money.
While the city continued to negotiate with Hulsizer Tuesday, uncertainty over the Coyotes’ future continued to cast a pall on Westgate Center, where numerous storefronts are vacant.
As negotiations with Hulsizer were going on, a group of Canadian investors were seeking to buy the Coyotes and return them to Winnipeg, Canada, where they were known as the Winnipeg Jets before their move to Phoenix in 1996.
Instead, the investors bought the Atlanta Thrashers, relieving some of the pressure on Glendale to work out a deal.
Before the Thrashers deal, Glendale agreed to pay the NHL $25 million to keep the team in Arizona for another year.
That came on top of a previous $25 million the city paid to cover losses last season.
Last week, Standard & Poor’s removed Glendale from its negative watch list after the city assured analysts that it had no plans to issue the $100 million of COPs that it originally proposed to finance the team’s sale.
With a negative outlook, Standard & Poor’s left Glendale’s general obligation rating at AA and its certificate of participation rating at AA-minus.