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The latest moment of truth has arrived for Arizona Coyotes franchise owner Alex Meruelo. The Arizona State Land Department will hold an auction for a 95-acre (110 gross acres) parcel of land at 11 a.m. on Thursday. The auction will be held at 1110 W. Washington St. in Phoenix.
If Meruelo wins the auction, his hope is to build an entertainment district and an arena that would house his hockey team. Meruelo agreed to sell the team in late April (the sale officially closed on June 13) after securing a contractual right to reactivate the franchise within five years of the date of the agreement, and trigger an expansion draft if an arena is built. Reactivation would require him to pay back the $1 billion that he received from the $1.2 billion sale to Jazz owners Ryan and Ashley Smith.
Even if Meruelo wins the bid, he will have to navigate a minefield of additional obstacles to get approval for his project. Nonetheless, Thursday’s process is an important step.
To answer your questions about the upcoming auction and what comes after it, I spoke to an Arizona State Land Department spokesperson (AZSLD), as well as NHL Deputy Commissioner Bill Daly. PHNX Sports also filled in some gaps with its own reporting.
Here is what you need to know.
(Getty Images)
What is the minimum bid for those interested in purchasing the land?
AZSLD: “$68.5 million.”
Is there a deposit required before participating, how much is that deposit, and when is/was it due?
AZSLD: “There is no advance registration or deposit required which is true for almost all of our auctions. If you are not the applicant, you need to bring a cashier’s check for $15,920,200. If you are the applicant, you need to bring a cashier’s check for $15,767,200. The difference of $153,000 is the approximate amount that the applicant spent on due diligence, and the amount they would be reimbursed if another bidder was the auction winner.”
With the auction being open to the public and media, some questions: Where should they sit? What time should they arrive? Is there a dress code and code of conduct?
AZSLD: “You can sit wherever there is an open chair. We normally have plenty of seating, but given how popular this auction is, you may want to come early to secure a seat. The room will be open at 10:30 a.m. We do not have a dress code. We ask that everyone be respectful throughout the auction, and quiet when the bidding starts.”
For any groups participating in the auction, how complete must their proposed ideas for the land be? In other words, can someone simply show up and buy the land and sit on the investment, or must they show the department some sort of plan?
AZSLD: “The winning bidder does not have to present a plan for development prior to the auction. After the auction, as described in the Auction Notice, and shown below for your convenience, the winning bidder has an obligation to construct certain infrastructure on and adjacent to the sale parcel.
“The City of Phoenix (“COP”) has issued a letter dated February 29, 2024 addressed to ASLD titled; “REVISED: 53-124365 (PARADISE RIDGE PARCELS AT NORTHWEST CORNER OF SCOTTSDALE ROAD AND THE LOOP 101 FREEWAY)” (the “COP Infrastructure Letter”), which details the public infrastructure construction obligations and development standards, stipulations, fees and charges required by COP for development of the Subject Property. The estimated cost for this public infrastructure is over EIGHTY MILLION DOLLARS ($80,000,000.00). All prospective bidders should conduct their own independent cost analysis.
“(B) Trunk Services/Infrastructure Condition. (1) As a condition precedent to commencing construction on the Sale Parcel, on or before the date which is 6 months following the Auction Date (“Trunk Infrastructure Assurance Date”), the Successful Bidder shall deliver to ASLD: a) A phasing schedule for the planning, engineering, permitting and construction of all infrastructure required by Developer pursuant to the COP Infrastructure Letter (the “Trunk Services/Infrastructure”), including a construction commencement date within 12 months of the Auction Date and completion date within 36 months of the Auction Date (“Trunk Infrastructure Phasing Schedule”), in conformance with the COP Infrastructure Letter and Applicable Law, consisting of water and wastewater trunk lines and related improvements with sufficient capacity to provide water and wastewater services to new development in the Sale Parcel area, and dedication of right-of-way for and of construction of, including but not limited to, the full width of 64th Street from the existing ADOT traffic interchange at SRI 01 north to Center Drive (Legacy Boulevard); roadway access between Scottsdale Road and 64 Street following the Legacy Boulevard alignment (and if required based on Successful Bidder’s traffic impact analysis, 64th Street from Center Drive north to Deer Valley Drive, Deer Valley Drive between 64th Street and Scottsdale Road, and any other improvements required by the City for development of the Sale Parcel), all as generally described in the COP Infrastructure Letter and in conformance with City standards and requirements for public infrastructure, with such phasing schedule and Trunk Services/Infrastructure scope to be in form and substance as approved by ASLD; and b) Financial Assurance that the Trunk Services/Infrastructure will be completed (“Trunk Infrastructure Assurance of Completion”) within 36 months from the Auction Date (“Trunk Infrastructure Outside Completion Date”), in form and substance as approved by ASLD, such assurance to be in the form of a cash bond, letter of credit, performance bond or equivalent, or other financial assurance in form and substance as approved by ASLD. (2) The Trunk Services/Infrastructure Condition shall be satisfied upon the Successful Bidder delivering the Trunk Infrastructure Assurance of Completion to ASLD prior to the commencement of construction. (3) The Successful Bidder shall be obligated to cause the Trunk Services/Infrastructure to be planned, engineered, and constructed on or before the dates specified in, and otherwise in conformance with, the phasing schedule and Trunk Sei-vices/Infrastructure scope approved by ASLD pursuant to sub-Paragraph l(a) above.”
We have seen reports that four groups have registered with intent to participate in the auction. Aside from Alex Meruelo, who are the other three groups?
AZSLD: “We don’t require bidders to register until the day of the auction. Brokers need to file at least three days prior to the auction and as of [June 20), we have not received any broker registrations. The only bidder that we are aware of is the applicant, Miracle Development, LLC (Coyotes).”
How did the land department settle on the price per acre?
AZSLD: “Following the identification of a sale parcel, the applicant prepares due diligence materials which are submitted to a third-party commercial land appraiser who will prepare an appraisal of the proposed sale parcel’s value. After that, assuming the Land Commissioner approves the value, ASLD’s Board of Appeals must approve the value, that value becomes the minimum bid amount at a future auction of the subject State Trust Land.”
How soon must the winning bidder complete the purchase of the land with full payment?
AZSLD: “After closing, or when the auction ends, per statute, the winning bidder has 30 days to get us the funds. We then draft the patent paperwork which then needs to be signed by the Governor. We do our best to get these processed as soon as possible. We generally don’t hold up this process.”
Is there a time limit to back out before the auction and if so, is there a monetary penalty?
AZSLD: “Bidders sign up to bid the day of the auction, prior to the start of bidding. The applicant, Miracle Development LLC (Coyotes), could decide to not bid at the auction prior to it starting, but the auction would potentially still be held or rescheduled. If they decided not to bid, and there were no other bidders, they would not be reimbursed for any due diligence or other fees paid prior to the auction.”
(Getty Images)
If Alex Meruelo loses his auction bid, what are his other options in the Valley to meet the deadline given by the NHL, and are the Indian community locations among those options?
PHNX: We know that Meruelo had a letter of intent out on a Mesa site and at least one other site, but neither of those were zoned for an arena, per sources familiar with the situation. It’s unclear if HB 2274 will alter that landscape.
Phoenix Mayor Kate Gallego has made it clear that she does not support the sort of tax abatements Meruelo was seeking through an establishment of a theme park district on the state-owned parcel, which would fall under City of Phoenix jurisdiction.
While PHNX Sports has confirmed that there is interest in building an arena from at least one group associated with the Salt River Pima–Maricopa Indian Community, there have been no discussions between that group and Meruelo. Nor have there been substantive discussions between that group and the league.
There have been reports of several key benchmarks that Coyotes owner Alex Meruelo must achieve along the way and within this 5-year window, including land acquisition. Can you clarify the actual benchmarks?
NHL deputy commissioner Bill Daly: “There is no land acquisition milestone, per se, but there is a land acquisition and 50-percent [arena] completion milestone in order to deliver reactivation notice, which must happen prior to December 31, 2027.
“He’ll also have to make a significant deposit on the purchase price by then… so basically, it’s gonna be the next three years in which that has to happen.”
Is Alex Meruelo allowed to sell the rights to the Coyotes to another potential local bidder?
Bill Daly: “He cannot sell the rights.”
If Alex Meruelo loses the auction, does he automatically relinquish his rights to the Coyotes or is the 5-year window still in place until he either misses the benchmark listed above or formally relinquishes his rights to the Coyotes?
Bill Daly: “I don’t really know how to answer that. He owns the right exclusively until he doesn’t. As long as he owns the right, we aren’t entertaining competing bids. Once he no longer has the right, then Arizona becomes like every other potential expansion city.”
How much did Alex Meruelo sink into this project to get this parcel approved for auction?
PHNX: The Coyotes have not shared those figures publicly, but it’s fair to assume they have spent more than the due diligence amount cited above.
Top photo via Getty Images
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