Arizona Coyotes 'fully committed' to winning June state land auction, building new arena

A roughly 100-acre rectangle of desert land in north Phoenix will be auctioned for sale on June 27, and the president of the Arizona Coyotes says the team’s owner is “fully committed to being the winning bidder.”

The Arizona State Land Department, which will sell the land to benefit the state’s public school system, published a legal notice with the auction date on Thursday.

The starting bid is $68.5 million and is based on the appraised value of the land.

The Coyotes professional hockey team has been in pursuit of the area north of Loop 101 and west of Scottsdale Road since last June, while under pressure from the NHL to find a permanent home.

Even if they are the highest bidder, the Coyotes will have to clear other hurdles before breaking ground.

Those include reconciling with Phoenix whether an arena is allowed on the property under its current zoning. Team leadership is also likely to seek a special taxing arrangement to help finance construction.

The Coyotes unveil development plans

Ahead of the auction being posted, Coyotes President and CEO Xavier Gutierrez presented team owner Alex Meruelo’s development plans to The Arizona Republic.

Like the team sought to do in Tempe last year, before being rejected by voters, the plans call for a massive hockey arena and adjoining entertainment and residential complex.

But in Phoenix, the plans are bigger.

Gutierrez said the over $3 billion project in north Phoenix would be built in phases, with the arena taking priority and residential coming in the second phase, for a total of 60 acres. The Tempe project was estimated at $2.1 billion on 46 acres.

The plans call for a 17,000-seat arena, more than three times the size of the Coyotes’ temporary home at Arizona State University, and a practice facility. There would be a restaurant and retail center, hotel, office space, a 3,500-person theater and 1,900 residential units.

Construction would begin in 2025, with the arena complete in the third quarter of 2027 ahead of the hockey season. Gutierrez said the team intended to negotiate with ASU to extend its tenure at Mullett Arena until then.

“This is our sole focus," Gutierrez said of the team’s plans. "And I think it's important for you to know that if we are unsuccessful, then we will have to absolutely entertain a relocation of this club. And this is not — we're not threatening — this is just reality, that the NHL has made it very clear that this has to move forward or else we would have to look at other markets.”

Zoning and tax issues to come

One issue to be resolved is whether Meruelo’s planned development is allowed on the land under current zoning.

Coyotes attorney Nick Wood, of the Phoenix office of the law firm Snell & Wilmer, said the team's plans would not require rezoning.

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But arenas are not specifically allowed under the current zoning, according to Dan Wilson, spokesperson for the city. That means the property owner could argue an arena is allowed and seek an evaluation of the current zoning designation, or possibly need to rezone, according to Wilson.

Gutierrez insisted the project would not rely on taxpayer dollars, as was a controversial part of the Tempe deal.

“It is going to be privately funded, and I really want to emphasize that again,” Gutierrez said. “We're buying the land at an auction, we're paying for every part of the improvements.”

But the team will likely ask Phoenix and the Maricopa County Board of Supervisors for help in a way that could come at a cost to Arizonans who go to games or shop at the proposed development.

Meruelo would need those governments to create a special taxing district for the project, called a theme park district, which would establish a board that can issue tax-free bonds to finance construction.

The bonds are often repaid by revenue from an additional tax of up to 9% charged on transactions within the development.

Gutierrez said the designation was not financially necessary to the development and Meruelo could afford the project without it.

“He can, yes,” Gutierrez said. “He has the intention of moving forward with his money, but we are going to look at the theme park district if it's something we can avail ourselves of. We haven’t made that determination.”

How trust land is sold

When Arizona became a state, millions of acres of land were reserved in a trust to be sold or leased for the benefit of programs like education and the state hospital. The sale of that land must follow an application and auction process outlined in state law.

The Coyotes originally sought to buy 200 acres in the same area, but Gutierrez said that was pared back because of high infrastructure costs estimated at $230 million.

Extending infrastructure like water and sewer lines and roads for the 95-acre parcel now in their sights will cost about $100 million, Gutierrez said.

The legal notice for the auction says the infrastructure cost is estimated at over $80 million, and any bidders must bring a cashier’s check for over $15 million to participate. The winning bid will be the “highest and best,” according to the notice.

Nearby parcels of land that have been sold at auction by the Arizona State Land Department have sometimes drawn competition that has driven up prices significantly.

Asked how much of a bidding war Meruelo could sustain, Gutierrez did not give a hard number.

Meruelo, a Cuban-American billionaire, is “very, very committed to ... being the winning bidder at that public auction, and to proceeding with this project,” he said.

Team's work behind the scenes

Gutierrez said minimal work had been done behind the scenes to generate support for the Phoenix project so far.

He said the team had not asked for financial support nor made formal presentations of Meruelo’s plans to Phoenix officials or others. Phoenix Councilman Jim Waring was the first to publicly confirm the team was seeking to buy state land late last year after a preliminary meeting with the team.

"The conversations have been people asking, are we leaving the state?” Gutierrez said.

He confirmed the office of Arizona Gov. Katie Hobbs reached out with a similar question about the team’s future. Gutierrez said he had one meeting with Hobbs and another with her chief of staff, Chad Campbell, the team’s former lobbyist and a consultant for the Coyotes on the Tempe project.

While experts previously told The Republic that Campbell should not have any involvement with the team after being hired as the governor’s aide, Gutierrez denied that the connection with Campbell benefited the team. Hobbs’ office has declined to discuss the nature of those conversations, but denied Campbell had any involvement in the Coyotes’ application.

"The governor has, to date, not done anything involving our project or the team," Gutierrez said.

“We haven’t asked for any help, and they haven’t helped us,” he added.

Reach reporter Stacey Barchenger at stacey.barchenger@arizonarepublic.com or 480-416-5669.

This article originally appeared on Arizona Republic: Arizona Coyotes commit to winning June state land auction for new arena