TEMPE, AZ — Tempe will hold a special election meeting where residents will get to vote on whether they approve of three proposals surrounding the Tempe Entertainment District.
The $2.1 billion development near Rio Salado Parkway and Priest Drive would include hotels, apartments, retail businesses, a music venue, and a hockey arena that would serve as the new home for the Arizona Coyotes.
"You're talking about bringing 3 million conservatively, new people to Tempe, to have shopping to have dining to have events and yes, to have Coyotes games but it's more than that," said Arizona Coyotes CEO and President Xavier Gutierrez.
It's also the last large parcel of land in Tempe, and there are questions about how this massive project is being funded.
ABC15 reached out to city leaders who voted unanimously to approve the project.
The city is seeking a portion through Government Property Lease Excise Taxes, also known as 'GPLETS'.
"It's $100 million," said Tempe City Councilman Randy Keating.
"The City of Tempe's portion is $100 million abatement, again we're not giving any money away, and that is over the 30-year timeframe," said Keating.
Councilman Keating said this way of funding is not anything new, 37 properties along Tempe Town Lake have been developed in the same manner.
"Omni Hotel right over here on Mill Avenue got a 25-year GPLET. The State Farm building along the lake, it kind off started off the development along that, got a 99-year GPLET," said Keating.
Tempe is also allowing the developer to use some of the taxes generated directly from the entertainment district to pay for this project.
"What we're doing is we're splitting the sales tax with the Coyotes at the arena itself. And they're going to use their half of that sales tax to go help with construction costs over the long term. So, if you're not a hockey fan, you don't go to a game, not one dime of your money will go towards anything at the Tempe entertainment district," said Keating.
However, according to the Grand Canyon Institute's independent economic analysis, not all the numbers match up.
"There's no taxes that are going to be paid for the arena, the music venue, or the Coyotes headquarters and practice facility for 30 years," said GCI Director of Research Dave Wells, "So effectively, the whole life of it, and that's you know, that's one of the things that's going to be a net loss."
That's one of the main reasons GCI determined this project will be a net drain instead of a net gain.
"For every dollar of new revenue that Tempe is going to generate, they're gonna have to pay out about $2.70 to the CFD. So they'll lose money on it. It'll show up not as a direct obligation, but just means the general fund in Tempe will grow a little slower than it would have otherwise," Wells told ABC15.
But Wells admits their analysis didn't look at the whole project, mostly focusing on the arena and the concert venue.
"We call that speculative and fairly arbitrary. So, a lot of that, like when you build a hotel, people don't come to Tempe because somebody built a hotel, and you don't open a business just because there's new office space there. So, it requires some kind of a demand, some kind of a pull that brings people in. That's what the music venue and the arena do," added Wells.
However, Councilman Keating and the city have dismissed GCI's analysis.
"They didn't even take into account the entire project, right? I mean, there's a reason why we're having housing in retail and other amenities on site. Because yeah, arenas themselves, don't necessarily pencil out, they won't necessarily be profitable," said Keating.
It will now be up to voters in Tempe to decide whether Propositions 301, 302, and 303 are what's best for the city.
ABC15 asked Gutierrez, "You can understand why residents are skeptical. It's a huge project, they were sold the same spiel when the coyotes moved to Glendale. They've heard the same thing at various franchises across the country. What would you say to them directly to help them understand this is not too good to be true?"
Gutierrez said it's simple, "The City of Glendale paid for that arena, taxpayers paid for every other sports venue in Arizona, whether it's the football stadium, the basketball arena, the baseball minor league facilities. Taxpayers paid for it. And guess what? None of them pay taxes ever. You're right people should not want that and that is not what this is."
May 9 is the last day to mail ballots for the Tempe Special Election. In-person voting is available at the Tempe History Museum from May 8-15, on weekdays from 8 a.m. to 5 p.m.
In-person voting will be available on Election Day, Tuesday, May 16, from 6 a.m. to 7 p.m.
