CityNorth Development Threatened After Appeals Court Blasts City's Tax Giveaway

The Arizona Court of Appeals today struck down Phoenix's giveaway of $97 million in sales tax that was promised to a developer in exchange for building the Kierland-Commons-like CityNorth center.

A few months ago, a Maricopa County Superior Court judge ruled in favor of Phoenix's be-kind-to-developers deal after it was contested in a lawsuit filed by the conservative Goldwater Institute.

The Appeals Court, on the other hand, ruled that the giveaway violates Arizona's constitutional prohibition of gift-giving by local government.

In a recent New Times article, columnist Sarah Fenske explains why the scheme also violates common sense.

What's especially interesting about this ruling is that it throws a "World's Toughest Fixes"-size wrench into the unfinished CityNorth project. Only Phase One of the project has been completed, and the place wasn't expected to be really cool until Phase Two, when Nordstrom and other top-tier retailers were expected to move in.

Naturally, developer Thomas J. Klutznick Company isn't going to be very excited about finishing the project without the nearly $100 million in government handouts. In a prepared statement by the company published in the Arizona Republic, it was stated that company represenatives were "disappointed" in the ruling and that they would be "forced to pursue a less capital-intensive design" for the project.

In other words, instead of sucking down millions of tax dollars, CityNorth will just suck. -- Ray Stern