DALLAS — Amid prolonged uncertainty and threats of a lawsuit, Glendale, Ariz., has called off plans to issue $100 million of certificates of participation to finance the sale of the National Hockey League’s Phoenix Coyotes to private investor Matthew Hulsizer.
Glendale assured Standard & Poor’s that it had no plans to issue debt on parity with its outstanding COPs, which allowed the rating agency to take the city’s AA-plus general obligation bond rating off negative watch.
The city’s AA-rated COPs issued under the name Western Loop 101 Public Facilities Corp., were also removed from watch.
Analysts returned the city’s outlook to stable.
“The stable outlook reflects our expectation that good bond covenants, no plans for significant additional debt, and the city’s diverse sales tax base will continue to contribute to strong MADS (maximum annual debt service) coverage, despite recent declines in pledged revenue,” Standard & Poor’s credit analyst Sussan Corson wrote.
“Should debt issuance or declining trends in pledged revenue materially weaken currently strong MADS coverage, we could lower the ratings.”
While the rating action was positive news, Glendale still needs to find a buyer that is willing to keep the Coyotes playing in the city-owned Jobing.com Arena. The arena was financed with $180 million of revenue bonds in 2003 and brought with it private investment in the related Westgate City Center retail and entertainment development.
The NHL bought the Coyotes out of bankruptcy court to prevent the team from moving back to Winnipeg, Canada. After prolonged negotiations with the city and the NHL, Hulsizer last year agreed to buy the team and keep it in Glendale under a long-term contract in exchange for $100 million from the city’s proposed COPs.
The city agreed to pay Hulsizer another $92 million for managing the arena.
The debt sale was halted, however, when the Arizona-based Goldwater Institute threatened to file suit, claiming the use of public funds for private purposes violated the state’s constitution. Efforts to privately place the COPs were unsuccessful.
Hulsizer is still a potential buyer. Glendale’s City Council is expected to meet with him privately Tuesday. No other potential buyers have surfaced.