Commentary: Cap'n Crow Strikes Back: ATRA Calls Letters to Corporate Leaders 'Bully' Tactic

Who has the chutzpah to admonish the mighty titans of industry? Apparently, Michael Crow does. - GAGE SKIDMORE
Who has the chutzpah to admonish the mighty titans of industry? Apparently, Michael Crow does.
Gage Skidmore

Michael Crow could teach a master class in bastardly arrogance.

Consider as evidence seven love letters that Arizona State University's president mailed out in January 2018 to various executives of powerful corporations, warning them not to mess with ASU's sacrosanct revenue streams and reminding them, none too subtly, that as ASU's middle-aged autocrat, he sits atop a Camelback Mountain-size pile of university assets, worth some $4 billion and change.

I obtained the documents by way of a public records request; which contrary to its reputation, ASU's public relations office fulfilled. Let's hope this newfound respect for Arizona's public records law holds, as I will be hitting the country of Crowistan with more PRRs in the near future.

Addressed to high muckety-mucks at such pillars of American capitalism as Intel, Apple, American Airlines, and so forth, the missives kvetch about a bill in the Arizona Legislature at that time, House Bill 2280, which would've kneecapped, if it had passed, Crow's ability to play Monopoly with ASU property and allow corporate Goliaths to cash in on ASU's tax-free status by building on university land.

HB 2280 was backed by the Arizona Tax Research Association (ATRA), a Phoenix watchdog group that boasts 400 dues-paying members, 50 of whom are on ATRA's board of directors. The seven recipients of Crow's letters are from companies with seats on ATRA's board.

The companies involved have ties, financial or otherwise, with ASU. Thus, Crow's message is about as subtle as a crowbar to the cranium.

Take the following passage:

"I am writing to you to express my surprise and frustration that companies that have a long-standing and positive relationship with ASU are being supportive of such efforts by an organization for which they provide significant support and over which they have significant influence because of that support and because they have a seat on [ATRA's] board."

Crow writes that ATRA-supported legislation threatens to "tax the state universities" and proscribe their ability "to secure resources in an entrepreneurial manner." ATRA's pushing this legislation, Crow stresses, "under the guise of advancing K-12 education," and in a manner that is "contrary to the best interests of higher education in Arizona."

In reality, the bill did not propose a tax, though it did seek to circumscribe the universities from misusing their tax-exempt status, with ASU being the chief miscreant.

ATRA and the Phony Entrepreneur

The phrase "entrepreneurial manner" is curious coming from Crow. Entrepreneurs stake their capital and credit on innovations, with a real risk of losing their shirts. By contrast, Cap'n Crow is playing roulette with house money. He draws his $1 million a year salary, no matter where the wheel stops.

Crow tut-tuts any worries about K-12 education, but there is zero doubt that Crow's real estate shenanigans come at the expense of K-12 schools. The most egregious examples include:

• The $928 million Marina Heights complex at Tempe Town Lake, where developers dodged an estimated $120 million in tax payments.

• Crow's middle-brow vision of Xanadu, the yet-to-be constructed Omni hotel at University Drive and Mill Avenue, which is set to score $21 million in tax rebates for its builders and another $28 million in sweeteners up front.

A good portion of those tax receipts might otherwise have gone to local school districts.

ATRA's president, Kevin McCarthy, told me that he was aware of the letters because some of his board members shared them with him.

He saw the letters as an attempt to "bully people off the playing field." The matter was discussed at ATRA's board meetings, but ATRA's commitment to tax equity did not waver.

"My board of directors [is made up of] big companies," McCarthy explained. "They have a lot of different relationships with [ASU] that they value. It’s not as if they are looking to pick fights with the university."

(You can read the letters below.)

Read Crow's letters admonishing corporate execs not to back ATRA's push to rein in ASU.

At the same time, McCarthy said, his members include "some of the biggest property tax payers in the state," who see the shortcomings of Crow's crony capitalism.

Asked for a comment about Crow's letters and whether they are an attempt at intimidation, the university's press office issued a statement via email, saying that ASU had merely been advocating for its interests through the correspondence.

"In this case, Dr. Crow sent seven form letters to seven organizations represented on ATRA’s board," the email read. "These letters were written to encourage the board of directors of ATRA to review the policy agenda set forth by its president and to encourage the board to take a more active role in shaping the policy objectives of the organization.

"To call that intimidation is pretty ridiculous. It’s asking for the kind of dialogue that should be employed by any organization taking policy positions."

Crow's Empire of Influence

Perhaps, but as many have noted, Crow is one of the most powerful individuals in Arizona, largely because during his 17-year tenure, he has cultivated alliances with the state's political and business elite. ASU has employed a number of them, pols such as Senator Kyrsten Sinema, former Senator Jon Kyl, former Corporation Commissioner Andy Tobin, and former Congressman Matt Salmon, who acts as Crow's chief lobbyist for $300,000 per year.

ASU's Cronkite School operates almost as a brand ambassador for ASU, with ever-expanding branches in Washington, D.C., and Los Angeles. Many of its faculty are retired reporters and editors from the Arizona Republic, which in turn employs its share of current and former Cronkite students (as does the New Times, it's fair to say).

Arizona PBS is part of ASU, as is the McCain Institute for International Leadership, now headed by the late Senator John McCain's widow, Cindy McCain. Through the latter, Crow enjoys access to an extensive network of former McCain staffers and allies.

Similarly, the powerful Koch brothers have an impressive footprint at ASU through the School of Civic and Economic Thought and Leadership, which the Koch Foundation helped jump-start.

Given such juice, acquired at great public expense, is it any wonder that HB 2280 never made it to the House floor?

I called and emailed the recipients of Crow's letters. So far, I've received one response, from a spokesperson for Southwest Gas, who declined to comment.

However, I did think to ask ASU for any letters answering Crow's correspondence from the mountaintop, and I received two.

One was from a from a VP at State Farm's headquarters in Bloomington, Illinois, who informed Crow that it was an independent State Farm agent that sits on ATRA's board, and that the agent did not represent the company as a whole.

State Farm, by the way, has a hub at the Marina Heights complex, and was involved in the sale of the buildings there for nearly $1 billion.

The other return letter was from Doug Parker, chairman and CEO of American Airlines, who addressed Crow familiarly by his first name, and wrote three short paragraphs of noncommittal good tidings, assuring Crow that AA values its relationship with ASU and its seat on ATRA's board.

He wrote: "We are hopeful that through additional dialogue, ATRA and ASU will find a resolution that makes sense for all parties and for Arizonans."

Well, even Crow can't win 'em all.

Will the Courts Check Crow?

McCarthy told me that at the beginning of 2019, ATRA and HB 2280's original sponsor, now-Senator Vince Leach, were ready to run a comparable bill, but then the Arizona Attorney General's Office filed a lawsuit against the Arizona Board of Regents over its practice of allowing private businesses to evade property taxes under ASU's tax-exempt umbrella. It's one of two suits the AG has brought against the regents. The other, brought in 2017, attempts to rein in ASU and the other universities' runaway tuition rates.

Legislators were of a mind to let the litigation run its course before considering new legislation from ATRA and Leach, so plans for a new bill were shelved.

I spoke with Leach, an affable and earnest gent who seems mostly preoccupied with ASU's lack of statutory authority to do what it's doing. The Legislature already allows ASU a couple of special tax exemptions, letting it lease tax-exempt space in the university's research park and an athletics district.

Moreover, Leach wondered, if ASU has the power to lease its land tax-free, could other state entities do the same? What's to stop a school district from leasing its tax-exempt status, for a price, to a Holiday Inn? For instance, can Arizona's corrections department lease its land tax-free? After all, they need money, too.

Regarding ASU's contention that the funding it receives from the state has been reduced dramatically over the years, Leach ceded the point, but he added that the universities were hardly the only state entity jonesing for an infusion of funds.

"Government always has more wants than the ability to fill them," he told me. "There are always going to be more people asking for something."

Meanwhile, ASU's aggressive exploitation of its tax-exempt status is robbing Peter to pay Paul. In this case, Peter is every other part of the state that pays taxes to backfill shortfalls in K-12 funding created by Crow's real estate high jinks.

I have little faith that the legislature can bring an imperious figure like Crow to heel. So I have a modest proposal: Deny ASU all state funds and divert the more than $300 million that ASU receives from the Legislature to K-12 instead.

If you take a look at ASU's own pie chart detailing the sources of its revenue, you'll see that the state's contribution is small compared to the money derived from tuition. Hell, ASU is loaded. In February, it announced that it would be expanding the office space that it rents for its branch in Washington, D.C., a move that reportedly will cost more than $540 million.

Given such numbers, it should be self-evident that ASU does not need the money.

Instead of empire building, Crow should concentrate on making ASU's tuition as "nearly free as possible," as the state constitution requires. He might also try raising ASU from its middling national ranking among public universities.

However, as Frederick Douglass once said, power concedes nothing without a demand.

Only the intervention of the court via one of the AG's legal actions will constrain Crow. Otherwise, he will continue to do whatever the heck he wants, law be damned, pretty much as he does now.