Arizona High Court Reinitiates AG Lawsuit Against ASU Hotel Project | Politics

By BOB CHRISTIE – Associated Press

PHOENIX (AP) — The Arizona Supreme Court on Tuesday revived a lawsuit filed by Attorney General Mark Brnovich against the board of trustees that oversees the state’s three public universities over a development agreement hotelier, giving him the right to try to prove that the agreement does not benefit taxpayers.

The decision revived two of the four allegations made by the attorney general in the lawsuit he filed in January 2019 against the Arizona Board of Regents. All four had been dismissed by a lower court in a decision upheld by an appeals court.

Brnovich alleged that the deal the Regents approved between Arizona State University and Omni Hotels to build a hotel and conference center on land the university owns in Tempe does not benefit taxpayers and is an illegal donation. of public funds to Omni. He also alleged that the regents exceeded their legal authority when agreeing to the deal.

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The High Court did not rule on the merits of these claims, and they are now being sent back to a magistrate’s court for determination. The Republican attorney general, a candidate for the US Senate, wants ASU’s deal with the hotel developer to be rescinded.

The Arizona Board of Trustees said the hotel being built will benefit the university by providing much-needed space for students and other academic activities and boosting Tempe’s economy.

ASU will receive lease payments from the hotel over 60 years totaling $120 million. It plans to pay nearly $20 million of the construction costs for the conference center. They will also build an adjacent parking garage funded by $42 million in newly issued bonds that it will repay using parking fees and a portion of the hotel’s $1.1 million in annual lease payments. The hotel will have access to approximately 20% of the parking spaces.

The hotel and conference center will be owned by the university and leased by Omni Tempe Hotel, but at the end of the agreement, Omni may purchase it for a nominal fee. Since it is on university land and owned by the university, Omni will not pay property taxes.

Brnovich also challenged this part of the deal, arguing that a provision of the state constitution that exempts state-owned land from taxation could not apply to a business enterprise such as Omni. . He also alleged that the deal “was a means of transportation to avoid taxation.”

The Supreme Court declined to revive both counts, rejecting Brnovich’s argument that the university’s property was not owned by the state and therefore subject to taxation. He pointed to a 1960 ruling that regents were a public agency of the state, and said that as state property is exempt from property taxes, “there is no enforcement that the Attorney General can take under his … authority because there is no tax to apply.”

Chairman of the Board of Regents, Lyndel Manson, said in a statement that the council was pleased the High Court had rejected the “essential challenge” brought by Brnovich – the property tax exemption the council said had helped make development possible.

She said the board was satisfied that Brnovich’s other claims were “baseless” and defended the university’s benefit from the new hotel.

“The project that the Attorney General has sought to derail creates an important community asset for ASU and the Tempe community,” Manson said in his statement.

Brnovich said in a statement that this lawsuit seeks to challenge the Regent’s “practice of using his tax-exempt status for private businesses.”

“From the outset, we have said this lawsuit is about protecting hard-working Arizonans by ensuring that taxpayer funds are not used for private business transactions,” Attorney General Mark Brnovich said.

The hotel is under construction and is expected to open in the spring of 2023. The Supreme Court has suspended nearly $1 million in attorney fees awarded by lower courts to the regents, saying it was premature in light of his new decision.

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