Revolting Development

The CityNorth project hosed Phoenix taxpayers, but don't look to city leaders for an apology

It's how the game has been played for far too long. Journalists rant and rave, and gadflies scream conspiracy, but nothing changes. No one has the money to fight City Hall.

No one, that is, until the Goldwater Institute decided to file suit.

Darcy Olsen, the institute's executive director, says that the genesis of the suit was a $1 million grant. With that money, she says, the institute hired attorney Clint Bolick to start a litigation center.

Clint Bolick, a lawyer for the Goldwater Institute, believes the CityNorth giveaway is unconstitutional.
Clint Bolick, a lawyer for the Goldwater Institute, believes the CityNorth giveaway is unconstitutional.

Preternaturally cheerful, as well as a budding novelist, Bolick is also one of the sharpest strategists in the conservative movement ("The Merry Revolutionary," March 7, 2002).

Bolick's big idea: Change the world through legal precedent. The lefties did this, of course, throughout the '50s and '60s. School desegregation, abortion rights — neither came from elected officials taking the lead. It was lawyers, and the judges who were convinced to see things their way.

As Bolick intuited, there are two sides to every coin, including judicial activism. Because of the work of lawyers like him, the courts started seeing different sorts of precedent-setting cases in the 1990s. Thanks to Bolick and the U.S. Supreme Court, poor kids in my hometown, Cleveland, can use government-financed vouchers to attend private schools. (And believe me, it would take only one hour in the Cleveland Public Schools to convince even the biggest public education supporters that vouchers are, in fact, a really good thing.) Because of Bolick's work for the Institute of Justice, Arizona residents also enjoy a much stronger right to keep their property even if the government wants to, say, turn it over to well-connected developers for some "better" use.

Bolick believes that the Arizona Constitution expressly forbids the sort of giveaway that Phoenix is attempting in the CityNorth case. Even without the botched financial analysis, he says, the government simply cannot give its bounty to private interests.

"We do not bribe businesses to come into this state," he says. "It's as simple as that."

On its face, Bolick's argument is novel. While they're not always this big, these types of subsidies have been common for years.

They have yet to face this sort of challenge, at least in Arizona.

But you only have to read the state constitution to suspect that Bolick is, in fact, right. The words seem clear. Neither the state nor any city, the constitution says, "shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation . . ."

Hmmm. No gifts or grants or subsidies? To any corporation?

I'd like to see Fennemore Craig explain away that one. But the sad fact is, even if there is no good defense for the CityNorth deal, we're still going to be paying the firm's managing partner a whopping $450 an hour to find one.

How can we not regret that?

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2 comments
Priscilla Wolfe
Priscilla Wolfe

I am writing you with concern and frustration. I speak on behalf of many individuals with interests in the Desert Ridge development.

As a native of Arizona, property owner, and with regret, silent investor in a vacation rental unit at Toscana of Desert Ridge, I am asking that Klutznick concede defeat and exit the State of Arizona and not return under any circumstance. Clearly, Maricopa County Superior Court Judge Robert Miles’ 2008 ruling an err, as the so called "contemplated benefits” to the state, particularly the substantial tax revenues," were not advantageous to the public and would likely be realized on that site in another way.

Phoenix Democratic Mayor, Phil Gordon should be ashamed of his involvement and contribution to tyranny, corruption and unethical, unconstitutional behaviors and allowing this type of mismanagement to occur with taxpayer dollars. It has been said, that the Mayor’s actions are that of a fool, allowing an entity with such obvious conflicts of interest to pocket hundreds of millions, at Arizona's taxpayer’s expense.

In July, a jury in Maricopa County Superior Court awarded Gray Development and its principal, Bruce Gray, $110.65 million in damages from Northeast Phoenix Partners, the master developer of Desert Ridge, composed of Klutznick Co. officials. I agree with the recent court judgment against The Kluztnick Company in favor of Gray Development. Furthermore, I agree with the comment regarding the Klutznick Companies, “The actions are that of "Despicable Tyrants", with interest only in personal enrichment.”

I believe Klutznick has turned a beautiful project into a miserable, failed attempt at development. The project has been thwarted under Klutznick management since inception. Currently, owners are losing their properties at an alarming rate thus increasing bank losses therefore furthering damages to American economy. Major retail contenders have backed out due to a poorly planned and funded operations, and property values have been declining as a result. The Thomas J. Klutznick Companies skills as master developer are less than desirable and the business acumen exhibited, highly indicative of incompetence, dishonesty, power mongering and certainly unethical in every aspect.

Gray Development hopes to take control of the lease to satisfy at least part of the court judgment, and the recent transfer of that asset to a Delaware Corporation by Klutznick is clearly an attempt to shield it from Gray’s claims; just another indication of, and a lack of concern for, taxpayers in the State of Arizona, residential, as well as, business owners and/or investors at Desert Ridge and surrounding areas. I urge you to forgo your holdings to Gray Development allowing a proven, competent developer to proceed. The area is in urgent need of progress, and that can and will be realized in another way, the sooner the better, under the control of Gray Development.

Again, I ask that you settle your claims and relinquish to Gray Development, any assets you attempt to shield. I ask that you concede defeat, both as master developer and as a board member of the Desert Ridge Master Association immediately. Behaviors such as those exhibited by The Thomas J. Klutznick Co., breach of fiduciary duty as master developer, gross violations to personal property rights and anti-competitive behaviors may occur in your hometown of Illinois but, not in my hometown, nor in the State of Arizona. Klutznick, “you’re fired” go home.

Pissed at Phx
Pissed at Phx

First we were given park benches to deal with our spiraling, out-of-control crime problems.Then there was the latest downtown Phoenix "revitalization" scheme.Then there was the light rail debacle.Then there was the "no-bid" public transportation scandal.Finally we have the details of this latest taxpayer rip-off.Gordon doesn't just have feet of clay, he's made of the stuff. Oh no!! Mr. Phil!!Phoenix ain't nothin' but the bird.I'm not worried. I'm packin' a park bench.

 
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