CityNorth Incentive Goes to the AZ Supreme Court

It's likely to be the hottest ticket in town: Oral arguments on the CityNorth case at the Arizona Supreme Court, scheduled for tomorrow morning.

Now, you might think we're being sarcastic -- who wants to watch a court hearing? much less a Supreme Court hearing on a civil case? -- but we're actually dead serious. So many interest groups and government agencies have weighed in on this one, we suspect the court will literally run out of seats.

CityNorth, of course, is the giant development planned (and partially built) in northeast Phoenix. After the city of Phoenix voted to remit a staggering $97 million in tax revenues to the project's developers, supposedly to help pay for the project's parking garage, the libertarians over at the Goldwater Institute challenged the constitutionality of the giveaway. While they lost in trial court, the appellate court agreed with Goldwater and ruled that the "gift" to the developers was barred by the Arizona Constitution.

The Supreme Court will hear arguments tomorrow on whether to uphold the appellate verdict and toss out the subsidy for good.

Clearly, this ruling could have impact on all sorts of other tax giveaways. Justices have been inundated with helpful briefs from all sorts of parties.

And if the briefs are any indication of where this thing is headed, it's going to be nail-biter. Our tally of "for" vs. "against" briefs ends in a 4-4 tie.

And even though the court did receive a ninth brief, one from the Pima County Supervisors, that one stubbornly refuses to break the tie. It's merely a request for further clarity (which, really, considering that 4-4 score, is probably not a bad idea.)

Briefs siding with Goldwater against the subsidy (and against the city of Phoenix) come from the following groups:

* The Arizona Center for Law in the Public Interest. Our favorite lefty group, run by attorney Tim Hogan, argues that even if the subsidy has a "public purpose" doesn't mean it's constitutional,
* The Arizona Chapter of Americans for Prosperity, the Arizona Free Enterprise Club, and Valley Business Owners (and Concerned Citizens), Inc. the business groups argue that tax dollars shouldn't be used to lure businesses to one location over another,
* The National Federation of Independent Business and Small Business Legal Center, a D.C. based group which argues that such subsidies hurt small businesses,
and finally,
* The City of Scottsdale, which took the dramatic move of filing a brief in opposition to both its neighbor, Phoenix, and the League of City and Towns, after the League voted to support the project without consulting its members. Damn!

Meanwhile, briefs supporting the subsidy and the city of Phoenix, and urging the court to overturn the appellate verdict, come from these groups:
* The Arizona League of City and Towns, which argues that the appellate decision deviates from legal precedent and could adversely impact its members,
* Valley Partnership, the civic group that represents business groups in the Valley, argues that striking down the incentive would threaten supposedly final municipal agreements across the state
* The City of San Luis, which argues that "a political question [is] best left to the political branches of government"
and finally,
* The City of Glendale, which argues that local governments need the right to determine public policy without judicial overreach. (See how well that's turned out for them!)

Now, as for that ought-to-be-a-tie-breaker. The Pima County Supervisors felt the need to weigh in on CityNorth without actually taking a side. They seem to be mainly concerned with the idea that the court just settle this issue for good, one way or another.

The brief notes that Pima County is "not particularly enamored" with the type of incentive at issue here, but that it does have "significant interest" in how the Constition gets interpreted.

"The difficulty and uncertainty in assessing whether a particular local government expenditure is permissible under the Gift Clause has a very real affect on the day-to-day operations of local government officials whose judgment is constrained by a legitimate fear of liability," County Attorney Barbara LaWall writes. "The Board therefore urges this court to take this opportunity to ... give local government bodies and their counsel more guidance and certainty..."

If nothing else, that sounds like something we can all get behind. We'll try to get a sense of whether the Court agrees during its questioning tomorrow...


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Sarah Fenske
Contact: Sarah Fenske