Phoenix sues Tempe to stop Arizona Coyotes development deal
Phoenix is suing to stop Tempe's $2.1 billion deal with the Arizona Coyotes, a move destined to reignite an inter-city conflict over a proposed entertainment district that appeared to have died out four months ago.
The deal involves building a hockey arena, an entertainment district and nearly 2,000 apartments on 46 acres of Tempe-owned land west of Town Lake.
Tempe officials initially greenlighted the project in November, and voters were expected to get the final say during a special election May 16 on whether it moved forward.
Tuesday's lawsuit may throw a wrench into that process. It contends that Tempe's approval of the deal violated a policy that limits how close housing can be to Phoenix's Sky Harbor International Airport, part of a 1994 agreement designed to spare residents from loud plane noise and protect the airport from noise-related litigation.
Phoenix is asking a Maricopa County Superior Court judge to prevent Tempe from moving forward with the project by undoing the initial approval of the deal in December.
"The City of Phoenix ... is suing Tempe for 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," Phoenix wrote in a news release.
The argument isn't new. Phoenix spent the better part of 2022 objecting to the deal because of the planned apartments, which would be about 2 miles east of the airport.
A review of the 1994 policy, however, suggests the Coyotes development might not violate the rules, The Arizona Republic reported in October.
It appears to make an exception for soundproofed apartments like the ones the Coyotes plan to build, which team attorney Nick Wood said are needed to make the project work because "arenas don't make money."
The Republic also found that Phoenix never objected to the more than 400 apartment units that were built in Tempe's high-noise zone over the previous three decades. Phoenix even sent a letter of support to Tempe regarding a high-noise area housing development in 2013, asking only that tenants be made aware of the issue.
Phoenix's objections had ended abruptly late last year before Tempe decided to send the deal to voters. The short-lived peace was mainly driven by the last-minute inclusion of an "indemnification" promise in the Coyotes' proposal, according to Sky Harbor official Chad Makovsky.
It essentially required the NHL franchise to defend the airport in court against any excessive plane noise lawsuits filed by new residents on the site. At the time, Makovsky said the airport would no longer "wholeheartedly" oppose the Coyotes deal as long as those promises were kept.
"As it goes to the vote, we're going to work with both the developer and with the City of Tempe to make sure that the commitments that were made actually come to fruition," he said in December. "Provided they do, we don't intend to wholeheartedly oppose this development."
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Makovsky wrote in a news release on Tuesday that "we felt we were very close to a reasonable resolution," but the negotiations eventually went sour. The reasons weren't immediately clear.
“After more than a year of meetings and negotiations, we are disappointed that these efforts did not resolve the dispute,” Makovsky said. “We are now left with no other option than to put this in the hands of a judge."
Tempe officials were not immediately available for comment.
Ballots in the scheduled election are expected to be mailed to voters starting April 19.
Representatives of the Coyotes' development company said Phoenix's lawsuit was an example of the city's "hypocrisy."
"The complaint filed by the Phoenix Aviation Department represents new heights of hypocrisy," they wrote in a news release on Tuesday.
"The ultimate question for Tempe voters is this: Do you stand with Phoenix hypocrisy or an incredible environmental and economic opportunity for Tempe?"
Reach the reporter at email@example.com. Follow him on Twitter @KmackSam.
This article originally appeared on Arizona Republic: Phoenix sues Tempe to stop Arizona Coyotes development deal