Bond refinancing for troubled Arizona sports venue is spurned

Problems are piling up for the nonprofit developer of a massive Arizona participant sports venue as its plan to refinance defaulted bonds was rejected by bondholders.

In a disclosure notice Monday, Legacy Cares, Inc. said it was advised last week "that based upon a number of factors, the members of the directing bondholder group were not interested in proceeding with a refinancing of the bonds under the terms being considered by Loop (Capital)."

The refinancing plan would have raised about $400 million, providing funds to settle claims from contractors and others.

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Legacy Cares issued $284 million of mostly tax-exempt revenue bonds in 2020 and 2021 through the Arizona Industrial Development Authority to build the 320-acre Bell Bank Park in Mesa that opened in January 2022. The unrated bonds were priced at yields from 6.25% to 7.836%.

"While this particular effort to refinance the bonds will not proceed, Legacy Cares, its management team and the trustee remain hard at work on various options to ensure the long term future of Bell Bank Park," Douglas Moss, president of Legacy Cares, Inc., said in a statement. "Working through these issues should not impact what's continuing to take place at the Park."

Last year, bond trustee UMB Bank declared events of default because Legacy Cares failed to make scheduled monthly payments toward the revenue fund that supports debt service on the venue, built to host youth and amateur competitions in sports including soccer, basketball, volleyball and pickleball.

A bond payment default occurred in January when only $2.68 million was available in the bond fund to make a $10.3 million interest payment.

The nonprofit developer also faces mechanic's lien claims from contractors who say they are owed for their work building Bell Bank Park.

Mechanic's lien plaintiffs, who sued Legacy Cares in state court, agreed last year to stay proceedings in anticipation of a bond refinancing, but the stay has expired and claimants have not agreed to a further stay, according to the latest disclosure notice.

The 2023 budget of Legacy Sports, the for-profit manager of the park, remains up in the air.

"The borrower's board has elected not to approve the budget as presented, but to respond with questions on the budget," the notice said." At this time, this remains an open item."

It also said the bond trustee, pursuant to bondholder direction, agreed to transfer all the money in the capitalized interest fund to the operating reserve fund to pay expenses for Legacy Cares, the trustee, and for operating facilities. 

The new notice also disclosed a March 2021 lawsuit filed by Icing Investment Holdings that had been referred to binding arbitration. The plaintiff claims among other things that Legacy Cares breached an "advisory agreement" by failing to pay a fee due to Icing under the agreement, the disclosure said.

Icing prevailed on two of its claims in December, including breach of contract, with the arbitrator, who set the total due to Icing at $2.4 million as of Jan. 30, the notice said.