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Two conflicting reports released this week explored the potential economic impact of the Tempe Recreation District — one said the project would put economic pressure on the community when it was completed, while the other said it would bring thousands of dollars to the city. billion dollar revenue.
comments by this Grand Canyon Institute The L. William Seidman Institute at ASU’s WP Carey School of Business and the L. William Seidman Institute differ significantly in projecting the potential economic and employment impacts and longevity of the recreation district.
this Proposed Tempe Entertainment District It will include nearly 2,000 apartments and a new Arizona Coyotes hockey arena on approximately 46 acres with 16,000 seats, with other commercial and retail locations at the northeast corner of Priest Drive and Rio Salado Parkway.
Three proposals for a proposed recreation district on the May 16 special election ballot addressed land use issues and brought the City of Tempe to an agreement with a development company to create the recreation district.
Ballots will be mailed to residents on Wednesday, April 19 and must be returned by May 9. If your mail-in ballot is lost, damaged, destroyed or not received, you can by-election in person between May 8-16.
read more: Tempe special election at Arizona Coyotes Arena and Recreation District explained
Seidman Institute Report
The Seidman Institute is a consultancy arm of WP Carey College that provides resources to private and public businesses, according to its website. The Institute was commissioned to produce a report and was paid for by the Arizona Coyotes development team.
Dennis Hoffman, longtime professor of economics at Arizona State University and director of the Seidman Institute, said his role in the report was primarily that of auditing capacity, not lead authorship.
The report was produced in a relatively short period of time compared to the time required to complete a full study. In just 10 days, the team reviewed reports previously completed by Conventions, Sports & Leisure International, commissioned by the Coyotes, and Hunden Strategic Partners, commissioned by the City of Tempe.
The CSL report concluded that the arena and entertainment complex will generate a total of $12.5 billion during and 30 years after its construction.
“We only undertake these projects knowing that we have complete independence in reaching the conclusions of the assessment,” Hoffman said.
Seidman’s report concluded that the entertainment district would generate millions of dollars in revenue for Tempe, and because much of the construction will be privately funded, previous reports by Hunden and CSL underestimated revenue projections. Seidman’s report has not been made available to the public.
Seidman’s report determined that CSL had “taken a comprehensive approach in estimating the economic impact,” but it underestimated revenue per net new job by 36.5% and net sales tax by $34 million. The CSL analysis said the development would create 6,900 jobs, and Seidman reported that both reports were in line with that figure.
Mike Scerbo, a spokesman for the Tempe Wins Athletic, which supports the three proposals, said in a media alert that Seidman’s review confirmed that “there was no cost to the city of Tempe and the project was privately funded, unlike every other athletic facility in Arizona. …No money from the Tempe General Fund has been used to pay for any part of the project, and no new taxes have been imposed on development — ever.”
Hoffman, who produced the report, said his only experience with the entertainment district before producing the report was analyzing it as a Tempe resident and voter. He said he was impressed by the part of the proposal that said the recreation area would be privately funded.
grand canyon institute report
According to the GCI report, adding a third arena in the valley would add to the impact of two other stadiums — Phoenix’s Trail Center and Glendale’s Desert Diamond Arena (formerly known as the Gila River Arena). Utilization presents a challenge. All three could compete to gain an upper hand in negotiations to book live events.
It may be optimistic to assume the arena hosts 45 events and hockey games, the report said, adding that the loss of events at other long-term venues could negate the positive results of incorporating the entertainment area.
In a press release, Dawn Penich-Thacker, Tempeh No. 1The grassroots campaign against the recreational zone proposal said it was pleased to see an “unbiased economic analysis” consistent with the group’s beliefs.
“This proposed development is a financial drain on Tempe that is unlikely to meet the developer’s optimistic projections,” the statement said. “Tempe residents would do well to reject this plan so our city can start over and serve our Land invites better, more responsible and more profitable projects.”
The report, which took about two months to complete, found that the city would experience “net consumption, not net gain” from the project. For every $2.70 that goes from cities to arenas and music venues, cities get only $1 back on average, the study said. This will hinder the growth of citywide general funds, the report said.
“What we found was that there wasn’t enough profit to actually repay the money, so that’s the city’s net loss, which means the city doesn’t miss out on the general fund,” said Dave Wells, director of research at GCI. .
The GCI report also echoed previous reports by CSL and Hunden that Coyotes and the city had used it months earlier and called their numbers “arbitrary.” GCI said two previous reports failed to account for the potential losses to Tempe businesses from the new development.
It also said the impact would be more localized, noting that the impact on the greater Phoenix statistical area would be negligible because coyotes have been established for 30 years. The report used a multiplier effect representing Tempe rather than metro area sales taxes.
Wells said a 10-11 percent sales tax would be levied within the entertainment district to allow the city to break even.
“Whoever goes will pay for it,” Wells said.
GCI called Seidman’s report “pie in the sky.” The GCI responded that the Seidman report used a multiplier larger than the one representing Tempe, rather than using the multiplier representing the entire Phoenix MSA. According to Wells, Seidman’s report also double-counted the hotel’s tax instead of getting it right once.
“No one came to visit Tempe because they built any hotels, and businesses didn’t start because people went to office space,” Wells said. “The fact that the Seidman Institute actually has this fantastic financial return, I think it’s a misuse of economic impact, so that’s one of the key drivers of our results being lower than others, because other Things can happen.”
Coyotes senior real estate consultant Edward Pascual said since 1996, a significant portion of the lot on which the entertainment district sits has had development options.
“The site is a brownfield that requires a lot of upfront capital to fix and put in public infrastructure,” Pascual said. “Once they do, the land is worth less than the investment they put in. So when we consider These what-if scenarios … or potential scenarios for the future, when these development scenarios have had the opportunity to present themselves to the city, they haven’t been there yet.”
Wells said it was difficult for voters who didn’t know which report to look at to gauge the future, but he believed the GCI study was more accurate.
“Everyone should take all these numbers with a grain of salt, which means that none of them are necessarily as precise as they seem,” Wells said.
Veteran sports reporter Alex Wakefield contributed to reporting on this article.
Edited by Reagan Priest, Greta Forslund and Anusha Natarajan.
contact reporter pjhanse1@asu.edu and sbrenna5@asu.edu and follow @piperjhansen and @shanebrennan36 on twitter.
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Piper HansenDigital Editor-in-Chief
Piper Hansen is the Digital Editor in Chief at The State Press, overseeing all digital content. She joined SP in Spring 2020 and is responsible for Student Union, Housing and COVID-19. She previously wrote about state politics for the Arizona Republic and Arizona Capitol Times, and covered social justice for The Cronkite News.
Sean Brennanpolitical reporter
Shane Brennan is a political reporter for The National Press. He also works for Cronkite News and Blaze Radio.
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