University Lease Case Headed to Arizona Supreme Court

Arizona Attorney General Mark Brnovich has one more chance to try to sue the Board of Regents over what he contends is an illegal deal to build a hotel and conference center.

In a brief order, the justices said they will hear his arguments that he did not wait too long before challenging the arrangement as a violation of the Gift Clause of the Arizona Constitution. They also will allow him to argue that, timing or not, he has separate and independent authority to bring suit at any time against the regents for making a deal to evade taxes and for exceeding the board’s authority to enter into leases.

But even if he wins at the Supreme Court, that’s not the end of it. All that would do is allow him to go back to a trial judge to actually try to prove his claims.

The fight is over a plan to exempt from taxes a parcel that Arizona State University owns. Construction already has started to build a 330-room Omni hotel and a 30,000-square-foot conference center. Brnovich says the deal amounts to a gift of public money.

He said ASU is paying $19.5 million to build the conference center even though the contract allows the school to use it without paying rent just seven days a year. And he said the school agreed to pay about $30 million to construct a 1,200-spot parking garage but will “gift” Omni 275 of the spots that the hotel gets to use exclusively and keep the revenue from the spaces.

And then there’s the issue that, by having the hotel built on property owned by the university, it escapes having to pay property taxes.

The deal does call for some “payments in lieu of taxes.” But Brnovich contends that still will leave local schools and governments short of what they would otherwise have received if the property were on the tax rolls the same as any other commercial property.

Attorneys for the regents have defended the policy they have approved to allow for such deals — and not just at ASU — saying it brings in money to help underwrite the costs of running the system.

And there is one other issue that will be decided: whether Brnovich — meaning taxpayers — has to pay the legal fees of the private attorneys hired by the regents. Whitten already awarded nearly $1 million in fees from just the trial court proceedings.

Where someone is about to break ground on an exciting new deal, you can bet someone else is disputing something about it.  Disputes are EVERYWHERE! And when those things negatively impact you and/or your business including bankruptcies, landlord/tenant matters including unlawful detainers, contract issues, nuisance ADA claims and even collections, call in your good guy business litigator, Dean Sperling to resolve YOUR matter with YOUR best interests in mind!  

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