Glendale, Ariz., OKs Bonds to Keep Coyotes

DALLAS — Glendale, Ariz., will issue up to $125 million of excise tax revenue bonds under a lease agreement designed to keep the Phoenix Coyotes hockey team playing in the city-owned Jobing.com arena.

In a deal approved by the City Council on a 5-to-2 vote Tuesday night, Chicago businessman Matthew Hulsizer would buy the Coyotes from the National Hockey League with a commitment to keeping the team in Glendale.

Glendale will also pay Hulsizer $97 million in annual payments over five years to manage events at the arena in addition to the expected 43 NHL games each season. Glendale then has the option to renegotiate further payments to Hulsizer or sell the arena.

Approval of the revenue bonds came under an emergency provision designed to allow a quick sale amid fluctuating interest rates. The NHL, which bought the team out of bankruptcy, is expected to approve the sale to Hulsizer once Glendale issues its bonds.

The city had pledged $25 million to cover the losses this season of any owner who agreed to keep the team in Glendale, but officials say they do not expect to pay that under the 23-year lease with Hulsizer.

Proceeds from the revenue bonds would pay Hulsizer $100 million for parking rights at the arena. The city would charge parking fees to service the debt.

Glendale now has about $1 billion in sports-related debt after issuing $180 million of bonds for the Jobing.com arena, helping to finance a stadium for the National Football League's Arizona Cardinals, and building spring training facilities for Major League Baseball.

Hulsizer is the latest in a series of investors who proposed buying the team after it filed for bankruptcy in 2009. The team, which is a perennial money loser, had been on the block to a buyer who proposed moving it to Canada. That would have left the arena and the surrounding West Gate City Center retail development without scheduled events for 43 days of the year.

The loss of the team would create minor risk for arena bondholders because the bonds are backed by city sales.

During last year's bankruptcy proceedings, the annual benefit of the Coyotes to Glendale was estimated at $511 million.

While Glendale has pledged $197 million to Hulsizer, the value of the team is only $170 million, according to the NHL.

The cost of operating the arena is about $17 million per year. As interim owner, the NHL has not borne those costs.

The agreement would allow Hulsizer to terminate the arena lease if the city fails to meet its financial obligations or faces a lawsuit the strikes down any part of the deal. Under that scenario, Hulsizer would keep money advanced by the city.

The conservative Goldwater Institute issued a report that the lease may violate the state constitution's gift clause restricting the use of public funds for private purposes. The tax-exempt status of the proposed bonds has not been determined.

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