Local groups spar over breadth, depth of incentive case - Phoenix Business Journal:

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Clint Bolick, director of litigation for the , a Phoenix-basedr think tank, says that’s not going to Gammage and Bolick are playing yet opposite roles in a lawsuit pitting the Goldwater Institutes and several small businesses it represents agains CityNorth developer and the cityof Phoenix. At issu is whether it was constitutional for the city of Phoenixx to offera $97 milliob tax incentive to Klutznick for parking and infrastructure at the CityNortb mixed-use development in northeast Phoenix. The Goldwater Institute file dthe lawsuit, Turken v.
Gordon, in 2007 shortly afteer the deal was approved by the PhoenixCity Council, arguinvg the arrangement violated the state’s gift clause a portion of the Arizona Constitution preventinf the government from subsidizing private business. In the firsty round of legal wrangling, Maricopz County Superior Court supported the city and the dismissing Goldwater’s claims. According to the court’z opinion, the deal to use the development’x sales tax collections to reimburse Klutznicjk for parking and infrastructureserved “a public purpose.” Goldwater appealed that ruling.
In December, the Arizonsa Court of Appeals concluded the agreemenft did violatethe state’s gift clause and was Klutznick, represented by Gammage, and the city, representing itself, filex petitions in February asking the Arizonaa Supreme Court to review the case. According to the issue is not the CityNorthh dealper se, but what the court believes are acceptable incentive deals, given the state’s gift clause and the appellate court’s opinion. “The Court of Appealsx decision is so sweeping in language that it has a muchlargere application,” said Gammage, a partner in the Phoenix law officre of Gammage & Burnham PLC.
Government he said, “are not sure what they can or cannoty do.” For example, indirecy benefits such as job creation might not be acceptable factors for considering otherincentivde deals, Gammage said. The whol landscape of economic incentives, he said, is in murk water. Bolick doesn’t buy that argument. He said the appellatre court’s ruling applies solely to the sales tax incentivesxfor City­North and does not have far-reaching Because new state law forbids incentivesz for retail projects in Maricopa and Pima the CityNorth tax rebate could not be duplicated in future deals.
As for the recent suspensionh of a sales tax rebats involving retail developments in Oro Bolick saidthat town’s newly elected City Council was eagedr to stop the rebate. The new memberse have philosophical differences with the previous council over and the ruling provided them with a temporaryy way to suspendthe rebate, he said. Phoenisx Vice Mayor Tom Simplot agreeswith Bolick. He votex against the original tax rebate dealwith Klutznick, and he was the only City Counci l member who opposed asking for the Arizonqa Supreme Court review.
“What the court said is that this particular instance fell outside the boundarie sof acceptability,” Simplot said of the incentive He does not believe the court’s languagre presents an “unworkable formula” for future dealsx between the city and Bolick doesn’t think the Supreme Court will hear the but Simplot hopes the court will providw guidelines for future incentives. One factof that will come into play is the potential for interestedd parties to file amicus or “friend of the court,” briefs. Such briefw are filed by outsid e parties who claim they or their stakeholders couldf be impacted by thecase outcome.
Gammagew has been stumping for local organizations to file such briefs to urgethe state’sz highest court to define the parameterss of the gift clause. Gammage thinks the Arizonaw League of Citiesand Towns, a nonprofit that represents 90 incorporated will file such a brief.