Coyotes file $2.3 billion lawsuit against city of Phoenix over arena dispute

The Arizona Coyotes along with their development firm, Bluebird Development, announced a $2.3 billion claim against the city of Phoenix for damages caused by Phoenix’s legal filing on March 27 that acted against the NHL team’s plans to build a hockey arena and entertainment district in Tempe.

A public relations firm on behalf of the Coyotes and their developers said Wednesday that the legal response is for Phoenix breaking its word and deciding “to undermine a plan to convert a hazardous unlined Tempe-owned landfill into a new sports and entertainment district next to Tempe Town Lake.”

“Bluebird is seeking damages because Phoenix is knowingly and intentionally interfering with its business, because Bluebird relied on Sky Harbor’s previous statements indicating it would not be in opposition,” the statement read.

“We will not stand for Phoenix bullying Tempe and will vigorously push back on Phoenix’s shenanigans. In addition to this claim, the Coyotes and Bluebird will continue to investigate Phoenix and Sky Harbor’s use of taxpayer dollars to interfere with a neighboring city’s election. Furthermore, they will be seeking any and all communications, documents, and negotiations between the City of Phoenix, Phoenix council members, and Phoenix city staff with any and all developers and property/business owners within Phoenix city limits and similar proximity to Sky Harbor as Tempe Entertainment District.”

Phoenix later responded to the claim saying it “understands and appreciates the developer’s frustration” but adds it should be directed toward Tempe after the city ended discussions on a compromise between the two sides.

“After a meeting with the mayors of both Tempe and Phoenix and two negotiations between the city managers of Tempe and Phoenix, we understood that Tempe was open to a reasonable compromise that would protect the airport, the communities around the airport, and allow these developments to proceed,” Phoenix said. “That compromise was, at Tempe’s request, reduced to a simple document that would have amended the IGA to allow current projects, including the TED, to proceed, while also restating the commitment to prohibit future residential development within the 65DNL. That document was sent to Tempe on February 7, 2023, as our Complaint makes clear.

“We expected to promptly hear input or agreement on that amended IGA. Instead, after over a month of delay, Tempe abruptly ended discussions with its March 17 letters, and the City of Phoenix was forced to sue. A clear and reasonable resolution was in Tempe’s hands and they elected to reject it. We join the TED developer in their frustration.”

The Coyotes’ claim is a response to Phoenix suing Tempe last week.

The formal complaint in Maricopa County Superior Court has Phoenix, the owners and operators of Phoenix Sky Harbor International Airport, suing Tempe for a breach of contract, “asking the court to rescind Tempe’s recent zoning and land use changes and prohibit future residential uses in an area that the Federal Aviation Administration says is incompatible with residential development.”

Coyotes president and CEO Xavier Gutierrez suggested in a statement Wednesday that Phoenix’s actions are political.

“Phoenix City Hall’s bad behavior seems intended to preserve its downtown sports venue monopoly and has nothing to do with safety or soundness of the airport,” Gutierrez said in a statement. “While Phoenix bureaucrats have allowed developers to build a basketball arena, a ballpark, and apartments in flight paths, when Tempe attempts to do the same a manufactured crisis arrives.”

The $2.3 billion claim is the entitlement value of the planned Tempe entertainment district, according to the Coyotes’ PR firm. It added that the group is seeking documents to determine the creation of a “malicious dark money newsletter” sent to Tempe, Phoenix and Scottsdale residents last October fighting the arena plan. Tempe mayor Corey Woods in October called it a “scare tactic.”

But a month after those mailers were sent, the City of Phoenix Aviation Department announced it was finalizing negotiations with Tempe and developers regarding that project. It was seemingly good news with Tempe set for a May 16 citizen vote on three proposals (301, 302 and 303) to approve the project.

A key part of that was the “full indemnification against litigation over noise and vibrations caused by aircraft.”

On March 27, the operating entity of Phoenix Sky Harbor International Airport reversed course, filing legal action against the city of Tempe for the planned residential development.

Phoenix’s aviation department filed a legal claim against the city of Tempe for the planned residential development that is a part of the new entertainment district with the new arena for the Arizona Coyotes.

The issue is not about airplane safety concerns that even are held by some members of the Tempe Aviation Commission, nor economical concerns coming from former Tempe council members, who worry about affordability for people living in the city.

It is about the noise contour that had been widely discussed, a mile-plus swath of land where the decibel levels are at or above an average day-night level (DNL) of 65 decibels.

Both parties spoke out Thursday, two days after the legal action was announced.

“Their lawsuit is a complete fabrication and it is a political document, not a legal one,” said former Tempe mayor Hugh Hallman at a rally featuring the Coyotes and Tempe’s former mayors on Thursday.

Hallman has been deeply involved in forming the agreement between the city and the NHL franchise’s developers. He believes in the agreement where the Coyotes will use private funds to turn former landfill land into an arena, hotels, residences, offices and a concert venue at Priest Drive and Rio Salado Parkway. It is projected to cost around $2.1 billion.

Chad Makovsky, director of aviation services at Sky Harbor International Airport, also told KTAR News on Thursday that this isn’t about the entertainment district and Coyotes arena, which is only considering multi-family residences. They remain in favor of a stadium.

But Phoenix’s airport fears that Tempe residents near the Salt River bed could, in the future, push back against more development of the airport because of the noise levels.

Makovsky also admitted that this isn’t about this single project.

“This is not about the stadium,” Makovsky told KTAR News. “What this is about is Tempe’s actions not only on this development but on multiple other developments over the last two years that are adding homes underneath the flight paths in this high-noise area … only a mile to two miles away from the end of the runways at the airport.”

Tempe voters will decide on the arena with votes on props 301, 302 and 303 by May 16. Ballots will be mailed April 19.

Follow @kzimmermanaz