But city manager Ed Beasley and NHL deputy commissioner Bill Daly both told the council that the sale of the Coyotes is still expected to close by the end of June and the payments may never be needed.
Beasley also said that both Ice Edge Holdings and a group headed by Chicago sports mogul Jerry Reinsdorf are still talking about buying the Phoenix Coyotes. Reports have had Reinsdorf's group dropping out in recent days.
A member of the Reinsdorf group, Phoenix attorney John Kaites, said it still stands behind the agreement it made with the city in April.
"The bottom line is we've always been willing to stand by the memorandum of understanding," Kaites said after the meeting. "At no point did we walk away from that."
The NHL purchased the team out of bankruptcy last September with the stated intention of selling it to a buyer who would keep the franchise in Arizona. But the league has said repeatedly that if no local buyer can be found, it would look to find a buyer elsewhere.
"From our perspective this is nothing more than an insurance policy," Daly said of the $25 million the city authorized in payments to the NHL. "We feel confident an ownership transaction can happen and it can happen in an expeditious fashion."
The council's unanimous vote allows Beasley to sign agreements with the league and set up a Community Facilities District that would collect fees, possibly including ticket surcharges and parking charges, in the area around the arena.
That money would go to the NHL to run the arena and the team if it can't be sold by next season.
Glendale needs the team to stay in Jobing.com Arena, which it built specifically for the Coyotes.
An arena deal between Reinsdorf's group and the city was inked in April, but there were reports that the deal fell apart in the past week.
Ice Edge, a group of Canadian and U.S. investors, then re-emerged. They had submitted a competing bid to keep the Coyotes in Glendale that was rejected.
Talks between Ice Edge and the city on a memorandum of understanding broke down on Monday, leading to widespread speculation that the franchise was headed out of town, with Winnipeg the most likely destination. The Coyotes were the Winnipeg Jets before they moved to Arizona in 1996.
But a source told The Associated Press Tuesday afternoon that the talks were not dead, but "probably more like taking a nap."
The person asked for anonymity because of the private nature of the situation.
Daly's comments and those of Reinsdorf group member Kaites reignited interest in the Chicago group's bid.
"I'm not sure the Reinsdorf group was ever out, I don't think they ever confirmed they were out, I don't think they ever suggested they were out," Daly said. "I think a lot of people wanted to throw gasoline on the fire."
Asked if Tuesday's developments mean the team is staying put and not moving to Winnipeg, Daly said he believed they did.
The city has already guaranteed each of the potential buying groups millions of dollars annually to the buyer through creation of the Community Facilities District. Both proposals would change the team name to either the Glendale Coyotes or the Arizona Coyotes, with the NHL's approval, and would keep the team in Glendale.
The franchise hasn't turned a profit since moving to Arizona and is expected to lose at least $20 million this year.
AP Sports Writer Bob Baum contributed to this report.