By Roland Murphy for AZBEX
Earlier this week, Tempe voters rejected three measures that would have green-lighted the $2B-plus proposal from the Arizona Coyotes to build a new hockey arena and multi-faceted mixed-use entertainment district on 46-City-owned acres.
The Coyotes development would have been largely self-funded. The agreement between the City and the team clearly laid out both parties’ obligations. Since the rejection, the various controversies and the terms of the plan and supporting agreement have been extensively covered both here and elsewhere; we won’t bother to rehash them.
I’ve said before that one of my favorite movie scenes is the opening arguments from “A Few Good Men.” Something about Kevin Bacon’s delivery of the line, “These are the facts of the case, and they are undisputed,” gives me a rallying point for the hope that reasoned debate and a clear assessment of facts will lead people to rational outcomes in reviewing controversial issues.
In our current development environment, however, the facts of the case often become not only disputed, but irrelevant to opponents, who simply pretend things like development agreements, traffic impact studies, civil engineering reviews, economic studies and the very laws of physics are lies intended to help “greedy developers” push their “neighborhood destroying” projects through city councils that are either too dumb or too corrupt to see or care that they are being taken for a ride.
A Massive Misinformation Campaign
In recent years there has been growing pushback against publicly funded sports stadiums and similar projects. Given Arizona’s mixed bag of benefits from such projects, that is a topic worthy of extensive debate. Do the public benefits in terms of economic ripple effects offset the massive outlays of public treasure to build billion-dollar homes for multi-billion-dollar teams? It depends on the team, the market and whom you ask.
What is not debatable about the Coyotes plan is that it was self-funded and referred to by multiple market watchers and analysts as one of the most responsible and well-structured sports facilities deals in U.S. history.
In the end, however, a massive, multi-tiered and multi-faceted opposition campaign laid waste to the facts of the case. As much as they would like to promote themselves as passionate local activists running a humble grass-roots effort fueled by nothing more than moxie and civic pride, the opposition was well-funded and better organized than a simple cadre of Karens.
Former Tempe Mayor Hugh Hallman was cited in a Phil Boas editorial in the Arizona Republic as laying at least part of the opposition funding and organization at the feet of California-based unions that had called on the Coyotes to use only union labor for the project and who swore revenge when that demand was rejected.
The NIMBYs, CAVEs and BANANAs (Not In My Back Yard, Citizens Against Virtually Everything and Build Absolutely Nothing Anywhere Near Anyone) had a laundry list of reasons for their rage and hatred, almost none of them valid. In many instances, listening to them was akin to listening to religious zealots argue that Earth is 5,500 years old. Their faith was unshakable, even if it was completely divorced from reality.
In the end, they won, choosing to keep a barren dump site instead of a multi-billion-dollar destination draw. Meanwhile, the entire Valley and state lost.
Does the Rejection Foreshadow Trouble on the Economic Development Horizon?
While the loss of a $2.1B development project with an estimated $13.6B 30-year economic impact is a hard enough blow to absorb, there’s a fear among many market watchers, including myself, that this could play into a growing host of economic development headwinds.
Arizona in general and metro Phoenix in particular have been among the leading markets for growth across the country for several years. Our economic development officials have masterfully marketed all the things that make Arizona an attractive option for new development, corporate relocations and individual migration, and it has brought us billions of dollars in new development, from the Taiwan Semiconductor Manufacturing Company plant to millions of square feet in new industrial/logistics facilities to finally ramping up residential development to begin accommodating hundreds of thousands of new residents.
While those successes are legitimate and cannot be dismissed as a bubble, they have also engendered pushback in the form of development fatigue and increased NIMBYism, which is being more frequently acknowledged and yielded to by planning commissions and city councils.
They have also created real market consequences. The high rate of in-migration, particularly by people from markets used to paying much higher rents and mortgages, fueled a nearly geometric increase in housing prices and exacerbated an already crisis-level under-supply, which has completely eroded the state’s marketing point for affordability. Now, rather than billing Arizona as an affordable market, the pitch has had to become, “At least we’re not as expensive as California.”
Cynics would say that statement needs to add the word, “Yet,” at the end to be completely accurate.
The state also has a water supply problem that, while not as precarious as some of the media hype would like to portray, is still a major reality that will continue to influence location and relocation choices, particularly for the advanced manufacturing and alternative transportation supply industries that have been such front-runners in the current Arizona success story.
While it is, admittedly, only one survey, Phoenix’s recent two-year plummet in the U.S. News & World Report “List of the Top 150 Places to Live” list has many watchers worried about a possible downturn in the market’s attractiveness. In 2021, Phoenix ranked 40th. In 2022, the city dropped to 67. The latest issue marked a 43-spot fall to #110. The magazine does not say why Phoenix fell so far so fast, but our eroded affordability has been touted by several market watchers as a likely factor.
We also have to contend with increasingly entrenched, organized, well-funded, vocal and empowered opposition to new development of everything from 20-unit apartment communities to improved freeway interchanges to high-efficiency data centers and advanced manufacturing sites. The scale of this threat to responsible, rational and sustainable development cannot be overstated.
Despite being the fifth-largest city in the country, Phoenix is still viewed as a provincial, second-tier market by both coasts and by Chicago. While we may have some of the most beautiful scenery, solid pro-business regulatory environments, good roadways, solid infrastructure, outstanding dining choices and other amenities, coastal- and Second City-based developers and financiers still imagine they’re walking into the tumbleweed-strewn Wild West when they first consider expanding here.
One cultural marketing point that has worked in Arizona’s favor has been we’re one of the few cities in the country with teams in all four major professional sports. Granted, that doesn’t stack up against matters like adequate water supply, superior affordability or ease of project approval by regulatory bodies, and the Coyotes are a distant fourth in terms of draw power against the other three local teams, but it’s undeniably a checkmark in the plus column when it comes to countering the provincial stereotype.
A One-off, or a Sign of Things to Come?
Now that plus is likely to be taken away. While the Coyotes have pledged they will remain in their temporary home at Arizona State University next season—the second in their three-year agreement—it’s difficult to find a sports commentator or market analyst who believes they will stay in town for any appreciable length of time.
Kansas City and Houston have facilities in place that could make a new home for the team with minimal investment. Several other cities have also expressed interest.
Appearing in multiple local and national news outlets, the NHL’s response did not fuel optimism: “The National Hockey League is terribly disappointed by the results of the public referendum regarding the Coyotes’ arena project in Tempe,” NHL Commissioner Gary Bettman said. “We are going to review with the Coyotes what the options might be going forward.”
We reached out by email to Greater Phoenix Economic Council President & CEO Chris Camacho for comment on the referendum results, the role of sports in economic development marketing and the current state of economic development and its challenges.
In an emailed response, he said, “As the leading economic development group responsible for attracting new companies and fostering a diverse economic base in Greater Phoenix, we recognize the significant impact of sports. Professional sports franchises not only contribute to the cultural fabric of a community but also yield tangible economic benefits. They enhance the reputation of a region, foster social cohesion, and promote community engagement. We remain dedicated to working with Coyotes’ ownership and leadership to ensure the NHL has a successful future in this market. We are actively engaged with all stakeholders to explore alternative solutions.”
He also questioned some of the findings in the U.S. News & World Report listing, saying, “Regarding the U.S. News and World Report, there were some disparities between their findings and our own, particularly concerning the cost of living and unemployment rates. Quality of life attributes of this market continue to attract businesses and individuals, as illustrated by the nation-leading population growth we saw in Greater Phoenix from 2021 to 2022. While we have experienced cost of living changes over the last decade, that is not isolated to this region…
“Our pro-business operating environment has enabled companies from around the world to thrive and expand here. We remain committed to working with local, state, and national leadership to promote our region, attract high-wage and high-growth jobs, and create equitable opportunities within our community.”
It is ultimately, however, that very “pro-business” and pro-growth operating environment the Tempe vote calls into question. Policies and empowering legislation at the state level are essential, but when groups of angry opponents armed with misinformation, disinformation and outright falsehoods can strangle reasonable development in the cradle at both ballot box and in council chambers, how much do they really matter?
Time to Fight Fire With Fire
Land use attorneys, developer representatives and project supporters tend to be a genteel lot. Watching zoning hearings and other regulatory meetings, they make every attempt to counter hysterical opposition with calm, reasoned, point-by-point rebuttal.
There’s an adage among litigation attorneys that goes, “When the law is on your side, argue the law. When the facts are on your side, argue the facts. When neither are on your side, pound the table.”
In most instances, NIMBYs have neither the law nor the facts on their side. They certainly didn’t in the Tempe Entertainment District campaign. Opponents’ strength lies in their willingness and ability to pound the table so loudly that rebuttals cannot be heard.
What this case and hundreds of smaller cases like it have demonstrated, however, is that pro-development combatants must also begin to accept that the gloves need to come off, and they must be willing to pound the table and rebut with volume and ferocity if anyone is going to give any attention to the law and the facts.