Developer Could Call Off 46-Acre Tempe Entertainment District – If Phoenix Coughs Up $2.3B

The Arizona Coyotes National Hockey League team’s developer is fighting a city of Phoenix lawsuit that would "torpedo" its plans to build a $2.1B, 46-acre entertainment district — though it did leave the door open to a hefty financial settlement to make the development go away.

Bluebird Development, which shares an owner with the Coyotes, filed a notice of claim against Phoenix officials last week, stating it would take a settlement of $2.3B to avoid proceeding to court, Axios Phoenix reported.

Bluebird Development has proposed building the Tempe Entertainment District, which would include a new arena for the hockey team, a music venue, 330K SF of Class-A office space, about 2,000 residential units, 315K SF of retail and two hotels on city-owned land near Tempe Town Lake. The project’s four phases would take about 10 years to complete, according to a development agreement.

A special election slated for May 16 would give Tempe residents the opportunity to vote on approval of the Tempe Entertainment District. 

But Phoenix sued the city of Tempe late last month to stop the development, citing a 1994 agreement that there would be no housing developments in the Sky Harbor International Airport’s 65-decibel noise contour lines, the Associated Press reported. 

That echoes an argument from 2001 when Tempe won a bid to become the new home of the NFL’s Arizona Cardinals, with plans to construct a stadium in the same area. Construction never began after the Federal Aviation Administration said the stadium would create a flight-navigation danger due to its height, and Phoenix threatened to go to court to stop the project, according to the Associated Press article.

Bluebird is fighting back for its proposed entertainment district, saying the 1994 agreement requires apartments in the 65-decibel zone to be insulated from noise, not banned. The developer also claims Phoenix hasn’t objected to any other apartment developments in that area for the past 30 years, Axios reported.

Bluebird said it would settle for $2.3B, its estimate of financial damages that would be incurred if Phoenix stops the project. A notice of claim gives a government entity a 180-day window to settle before a plaintiff can go to court.

The company wants Phoenix’s lawsuit dismissed, alleging the city is intentionally sabotaging the project and rescinding on prior assurances it would not oppose the plan.

"Phoenix has now embarked on a mission to torpedo the project," Bluebird attorney Eric Spencer wrote in the notice of claim.

Sky Harbor spokesperson Tamra Ingersoll told Axios that Phoenix was forced to sue after Tempe rejected a compromise that would allow the $2.1B development, but prohibit future residential development in the 65-decibel zone.

Sportsnet’s Elliotte Friedman said the Coyotes, the subject of relocation speculation for years, could make a new home in Houston if the new stadium plans don’t work out, the Houston Chronicle reported.

The Coyotes moved to Arizona State’s Mullett Arena this season, which has a capacity of 4,600, the article states. Houston has a hockey arena in the Toyota Center with a capacity of 18,300. It hasn’t been used by a pro hockey team since the American Hockey League's Houston Aeros moved to Iowa in 2013.

“If this whole Arizona situation doesn’t work with the new building, I have to think Houston is the likely location, right?” Friedman said, according to the Chronicle article. “It’s a natural rival for Dallas; it’s the largest market in the U.S. that doesn’t have a team. There’s a lot of things that make sense there.”