"AZ Law" is a new, nonprofit journalism effort covering Arizona's courts, legal system and laws. "AZ Law" is now airing on Sun Sounds of Arizona. Our sister website can be found at ArizonasPolitics.com. Your ideas for articles, programs, etc. are welcome, at "Paul.Weich.AZlaw-at-gmail.com".
In this broadcast installment, we bring you a range of articles and commentaries about Arizona-related cases at the U.S. Supreme Court. Not only the well-publicized cases about DACA and workplace discrimination against LGBTQ workers, but the long-running case about Arizona Libertarians' "electoral purgatory".
Also, there is an update on the former Maricopa County elected official running an illegal international child adoption scheme.
Here is the full story listing:
1.Supreme Court's ruling on LGBTQ discrimination
won't end efforts for state law in Arizona (Oxford, Republic)
2.Arizona DACA Recipients Celebrate U.S. Supreme
Court Ruling (Casey and Reznick, KJZZ)
3.The Supreme Court says ‘Dreamers’ can stay, for
now. It’s time we let them stay for good. (Commentary, Garcia, Arizona Mirror)
4.BREAKING: U.S. Supreme Court Shuts Door On Two
Arizona Cases, Rejects Libertarian Party and Tempe's "Squatter(?)"
(Weich, AZ Law)
5.Former County Assessor Paul Petersen pleads
guilty to welfare fraud in international adoption scheme (Anglen, Republic)
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc.
More on these cases and other legal news can be found at ArizonasLaw.org.
AZ Law also airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here.
(Update, July 6: Coverage from the emergency hearing can be found here.) UPDATE, 7/1, 10:15a.m.: Court Sets Monday Morning Emergency Hearing On Challenge
Judge Timothy Thomason has quickly set an emergency hearing on Mountainside's challenge to Governor Doug Ducey's Executive Order shutting down Arizona gyms. He has called the parties into his (virtual) courtroom for first thing Monday morning hearing.
Mountainside indicated yesterday that the chain was working with the conservative Goldwater Institute on the quick challenge to Monday's Executive Order. However, the Institute has denied being involved. One of the attorneys filing the case yesterday indicates in his firm biography that he has long been involved in conservative issues, and it is possible that Mountainside was referred to him by someone at the Goldwater Institute.
Original Article: BREAKING: Mountainside Fitness Sues State Over Shutdown, Violates Due Process; Lifetime Will Join Suit (READ Complaint, TRO Request)
Mountainside Fitness, one of the largest chains of gyms in the state, has filed a lawsuit against Arizona Governor Doug Ducey's new Executive Order shutting down all gyms for at least 30 days, as a way of slowing down the outbreak of COVID-19 cases in the state.
Arizona's Law confirmed this evening that Lifetime Fitness, one of the other largest players in Arizona, is going to join the lawsuit tomorrow. Other media outlets have reported that other gyms are also defying Monday's Executive Order.
Governor Ducey announced the closure after 3pm yesterday, and said it would be effective at 8pm that evening. (You can read the Executive Order here.)
Lifetime was especially irked that the order included gymnasiums along with bars and water parks. Noting the special anti-viral chemicals and cleaning procedures that LTF is using continuously during the day, Lifetime Tempe General Manager Steve Getz said "We don't agree with being lumped in with bars."
Mountainside's lawsuit (h/t to Brahm Resnik) was filed in Maricopa County Superior Court, and includes a request for a 30-day pause on the closure, to give the judge a chance to conduct an immediate court hearing on a Temporary Restraining Order request.
It notes that fitness centers were allowed to reopen in May as part of Phase 1, and that bars were not included at that time. The suit also notes that the reopening was permitted conditioned on gyms taking steps to minimize the possible spread of the virus. Noting that Mountainside took such steps, the suit claims that the no-notice shutdown on Monday violated substantive and procedural due process rights guaranteed by the state Constitution, and that it incorrectly treats the fitness centers the same as the bars.
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here. Previous episodes of AZ Law can be streamed or downloaded here, or wherever you get your podcasts.
A Democratic suit challenging Arizona's ballot order statute was dismissed this afternoon by U.S. District Court Judge Diane Humetewa. The judge stated that the plaintiffs did not have standing to challenge the statute.
The plaintiffs consisted of three voters and three Democratic organizations - the Democratic National Committee, the Democratic Senatorial Campaign Committee and Priorities USA (a Super PAC supporting Democrats - including Mark Kelly in Arizona's Senatorial contest).
They claimed that Arizona's statutes - which determine which party's candidates are listed first on a county's ballots by which party gathered more votes in that county in the previous gubernatorial election. They also claimed that research establishes that the first-listed candidate has an unfair advantage (of between 2.2 and 4.4 percentage points). Based on Governor Doug Ducey's 2018 win, 82% of Arizonans will receive a ballot with all Republicans listed before their Democratic opponents.
Judge Humetewa wrote that "he Voter Plaintiffs allege that they intend to cast ballots in the November 2020 election. However, the harm that Plaintiffs allege is not a harm to themselves, but rather an alleged harm to the Democratic candidates whom they intend, at this juncture, to support.... Moreover, although the Voter Plaintiffs attempt to frame their injury as personal to them, the Plaintiffs do not argue that they, personally, are at greater risk of losing an election due to the alleged effects of Arizona’s Ballot Order Statute. Nor could they, as none of the Voter Plaintiffs allege that they are, or intend to be, candidates on the ballot."
Judge Humetewa was even more frutstrated by the Democratic organizations' claims of standing, noting that two of them do not even represent members and that the DNC did not claim that any of its seven Arizona members are candidates.
Arizona's Law will update this article as it receives responses from the parties, including whether the plaintiffs plan to appeal to the 9th Circuit.
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here. Previous episodes of AZ Law can be streamed or downloaded here, or wherever you get your podcasts.
Every election season features allegations that churches or other tax-exempt organizations are engaged in inappropriate political activity. This year will be no different. There are steps you can take if you see such activity.
First, the basics. As federal law has set up, churches can qualify as tax exempt organizations, under section 501(c)(3) of the Internal Revenue Code. However, in the statute itself - as a condition of receiving the special exemption - the organizations are prohibited from participating/intervening in "any political campaign on behalf of (or in opposition to) any candidate for public office."
Here is a handy chart about the different types of exempt organizations and their limitations:
The advantages of obtaining the 501(c)(3) status from the IRS are twofold: (1) the organization does not have to pay taxes on income it receives; and (2) an individual who donates to the organization gets a tax deduction for the amount of her contribution.
The IRS tries to explain to churches and exempt organizations what political involvements are permissible and which jeopardize that prized tax exemption. Other than webinars, this publication lays out a number of different possible factual situations to analyze. Example #17 is representative:
Some of the factors that the IRS would analyze if evaluating a complaint are whether the facility was equally available to opposing candidates, whether fair value was paid for the facility, and whether the event was part of an ongoing activity or just one conducted for this particular candidate. If the organization claims it was duped into permitting a candidate event, the IRS would analyze the evidence supporting or refuting such a claim.
It could be important to inform the IRS of statements, videos and actions of the organization before, during or after the event.
The IRS accepts information from the public if it is believed that an exempt organization "is involved in a political campaign". This one-page fillable form can then be emailed/faxed/mailed to the IRS. The complainant may tell the IRS that they are concerned about retaliation or retribution if their identity is disclosed, and the IRS also accepts anonymous complaints.
While the current Administration has previously expressed interest in eliminating the restriction on political involvement by exempt organizations, the law has not been changed and complaints may be considered by present or future administrations.
The 9th Circuit harshed everyone's mellow today, when it ruled that a chain of marijuana dispensaries lost out on its tax appeal of a $2M IRS bill because Fed Ex did not deliver the appeal the next day. The chain of unfortunate circumstances was even longer, but none of them changed the legal outcome.
Even Judge Daniel Collins seemed to feel a bit down, opening the unanimous opinion by saying "This unhappy case presents a cautionary tale about the
need for lawyers to ensure that they have done exactly what
is statutorily required to invoke a court’s jurisdiction."
In fact, the rest of that opening paragraph is also worth reading:
The unusual Internal Revenue Code (“I.R.C.”) provision at issue
here allows taxpayers to benefit from a “mailbox” rule—i.e.,
that a document will be deemed filed when dispatched—
only if the taxpayer uses one of the particular delivery
services that the Internal Revenue Service (“IRS”) has
specifically designated for that purpose in a published
notice. In preparing two Tax Court petitions for filing, the
attorneys here delegated the task of arranging delivery to a
secretary who, unfortunately, selected an overnight delivery
service that was not then on the published list (it was added
two weeks later). The error would not have mattered if the
petitions had nonetheless arrived the next day, but as it
turned out, they were not received by the Tax Court until two
days after being dropped off at a FedEx office in California.
Because the Tax Court concluded that the petitions had not
been timely received and that the mailbox rule did not apply,
it dismissed the petitions for lack of jurisdiction. Finding no
error, we affirm.
That's right. The secretary chose FedEx First Overnight delivery. FedEx did not deliver it to the Tax Court in Washington, D.C. on the deadline day - they indicated that the driver was somehow unable to reach the Tax Court's door because of police action, construction, or something. FedEx created a new shipping label and delivered it the next day.
The IRS - in a surprise to probably noone - waited 15 months to move to dismiss the appeal as untimely filed. To make matters even more harsh, the IRS approved FedEx First Overnight as an approved courier service two weeks after the delivery snafu; if the approval was 15 days earlier, the appeal would have been marked as timely!
Nevertheless, the 9th Circuit found no basis for allowing the dispensaries' appeal, and the $2M tax determination stands.
*
(Yes, this was just an elaborate excuse to post that song from my youth.😜 )
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here. Previous episodes of AZ Law can be streamed or downloaded here, or wherever you get your podcasts.
A Roosevelt Row high-rise is on hold today after a judge found that the city of Phoenix was giving an unconstitutional gift to the developer in its deal to abate taxes and use a GPLET workaround. The Goldwater Institute won a significant victory in the decision, as Superior Court Judge Christopher Coury found that the developer was getting a "grossly disproportionate" deal from the city, as the agreement could be canceled with the city giving up $4.5M dollars in just the first eight years.
The decision is likely to be appealed.
The Goldwater Institute sued the city of Phoenix in 2017 about the proposed Derby Roosevelt Row GPLET (usually pronounced "geep-let", and standing for "government property lease excise tax"). Plaintiffs - including nearby property owners - claimed the agreement violates the Gift Clause of the Arizona Constitution, and that the city's 1979 designation of the Roosevelt Row as a "slum" no longer applies.
project, and the city's agreement with the developer that involved at least $17M in tax incentives through the use of what is called a
Goldwater Institute Litigation Director Jon Riches told AZ Law that he was surprised by part of the City's attempted defense: "It claimed that unsubstantiated, speculative economic impact from what’s called an IMPLAN study counts as consideration under the Gift Clause. It also claimed that locating the private building in downtown Phoenix for the benefit of a private developer was consideration for the City. Case law is clear though that these types of indirect benefits are not consideration under the Gift Clause."
The GPLET would permit the developer to convey the building and land to the City of Phoenix with the exclusive right to lease it back. It would eliminate the property tax and replace it with a lower tax (and, rent). Additionally, because it is located in Phoenix's Central Business District, the tax would likely be waived (abated) for the first eight years.
One of the attorneys for the City, Kristin Windtberg, listed many of the ways that the city would benefit from the 19-story tower, and that it is "just one piece of the city's long-term plan for redeveloping the area". The project includes "micro-unit apartments" of approximately 1,400 square feet each, above-ground parking and commercial. Windtberg said that among those benefits are also jobs, "unique housing options" and combines smaller parcels of land in a way fitting contemporary development.
The Judge compared the value of the benefits received by the developer and by the City at different points in the contract. "In sum, even after taking a panoptic view of the transaction and giving due deference to the decisions of Phoenix’s officials as the law requires, the benefits received by Amstar are grossly disproportionate to the Benefits received by the City. Therefore, City of Phoenix Ordinance S-42353, the Agreement, and the Lease violate ARIZONA CONSTITUTION, Article 9, Section 7." Here's a table Judge Coury included in the opinion:
Judge Coury did rule in favor of Phoenix against Plaintiffs' claim that the deal was an "arbitrary and capricious" use of the GPLET statutes. He did not ding the City Council with that partly because he found that the statute just required the area to be established as a slum or blighted area, and that it did not need to still meet that definition when the deal was entered into. Coury also noted the undisputed evidence that the City did do its due diligence before entering into the redevelopment deal.
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here. Previous episodes of AZ Law can be streamed or downloaded here, or wherever you get your podcasts.
UPDATED, 3:00pm: U.S. District Court Judge Dominic Lanza accepted the Settlement Agreement this afternoon and dismissed the case.
Arizona and Democratic groups finalized the settlement of a lawsuit challenging the law that mail-in ballots must be *received* by 7pm on Election Day. The Democratic Party said that the ballots should be accepted and counted as long as they are postmarked by Election Day (and received within five days after). The E-Day receipt deadline will remain in place for this year's elections, but the state agrees to study switching to a *postmark* deadline for future elections.
Arizona also promises to use some federal funding from pandemic relief measures to increase early voting opportunities in Native American, Latino and rural communities this year.
Attorneys for the Democratic-affiliated groups Voto Latino and Priorities USA filed the suit looking to change Arizona to a postmark deadline. Democratic Secretary of State Katie Hobbs did not side with the Plaintiffs, and the Attorney General's Office has represented her in defending the *received by Election Day* law.
“We were able to come to an agreement quickly in this case because our office was already working on many of the initiatives being requested,” Hobbs said. “This settlement was possible because both sides share the same goal of ensuring voters have the ability to participate in a way that is meaningful to them.”
The Democratic groups also characterized the settlement as a "victory". “This is a big win for voting rights and accessibility,” said MarÃa Teresa Kumar, president and CEO of Voto Latino. “The right to cast a vote safely, even during a global health crisis, will not be infringed.
Arizona moved to so-called "no excuse" absentee mail-in voting a bunch of years ago, and most Arizonans are on the Permanent Early Voting List, which gives them the option of using the early-mailed ballot or voting in person on Election Day. People can mail a PEVL request form to their County Recorder or add their name online at ServiceArizona.com.
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here. Previous episodes of AZ Law can be streamed or downloaded here, or wherever you get your podcasts.
The U.S. Supreme Court shut the legal door on two long-running Arizona cases this morning, when it refused to hear appeals from Tempe's (original) squatter(?) and the Arizona Libertarian Party.
The Libertarians have been fighting a law passed in 2015 by the Republican-controlled Legislature (signed by a Republican Governor) that has effectively wiped out Libertarians from appearing on general election ballots. The amendments - following several close Congressional races that featured Libertarian candidates possibly impacting the outcome - changed signature requirements for the Libertarian candidates. (It factored in unaffiliated voters in the calculations. Although it also changed the formula for Democratic and Republican signature requirements, only Libertarian candidates saw a significant increase in the minimum number of signatures required.)
The Libertarian Party has argued that this has put them in an unconstitutional "electoral purgatory" - with enough registered party members to have an established spot on the ballot while it is impossible for party candidates to qualify for the primary and general elections. Arizona law gives each party the choice of whether to allow independents to vote in its primary elections, and only the Libertarians have chosen to keep their "associational right" to exclude non-Libertarians from voting in their primary.
The Libertarians have been battling against the law since 2016. In fact, the first challenge was filed by the Republican Party against a Libertarian Party's candidate for Governor that year. The Arizona Supreme Court upheld the new rrequirements. Last year, the Ninth Circuit panel unanimously ruled that Arizona only "impose, at most, a modest burden on the Libertarian Party’s First and Fourteenth Amendment rights, while directly advancing Arizona’s important regulatory interests."
Today, the U.S. Supreme Court decided not to review that Ninth Circuit ruling.
* * *
Simultaneously, the Justices declined to hear what could be the final legal chapter in the city of Tempe/Salt River squatter dispute that dates back to before Arizona's statehood.
Steven Sussex lives in an adobe house on the banks of the Salt River near downtown Tempe that his family bought and has occupied since 1892. (Arizona became a state in 1912.)
Tempe and the state of Arizona have been trying to get him and his personal property off of the property since shortly after Tempe Town Lake became a reality. The legal cases began in 2010, and have continued at one level or another ever since.
Sussex told the Supreme Court that "the injustice to the Sussex family is of national
magnitude." He also claims that the Arizona Court of Appeals incorrectly applied state law to decide federal law - the New Mexico-Arizona Enabling Act of 1910. (The Arizona Supreme Court chose not to review the lower court's decision.)
The Sussex Petition outlines an interesting chapter in the state's history, explaining how Congress gave Arizona land to establish the trust to benefit Arizona education. The "checkerboard" method of deciding which land went into the trust deeded the state some lands that already had settlers living on it.
In 2002, the State sold the land the Sussexes were on to the Union Pacific Railroad and then to the city of Tempe. The crux of the case against that sale is that the State is required to sell the trust lands by public auction, per the Enabling Act.
As detailed in this Arizona Republic article, one of the Arizona Court of Appeals judges figuratively threw his hands in the air and asked "Who the hell owns this property, then?!?" for this article, Steven Sussex also gave the paper and his attorney, Jack Wilenchik, this tour of the 128+-year old property.
*
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here. Previous episodes of AZ Law can be streamed or downloaded here, or wherever you get your podcasts.
We couldn't be more excited, and we hope it at least gets you to nod and think that it is NOT too soon
for us to re-open one of the newest additions to the Arizona media menu. (OK, we have continued reporting articles since March, but the audio program compiles articles from other pages of the media.)
In our first post-shutdown broadcast installment, we bring you a range of articles and commentaries about Arizona cases and the justice system. For example, we have an editorial on the media case to obtain Covid-19 data about nursing homes, a briefer on jury duty *in these uncertain times*, and an article on a proposed Phoenix highrise trial being impacted by the curfew.
Make sure you subscribe to "AZ Law" wherever you get your podcasts from. We're on Apple iTunes, Google Play Podcasts, you name it, you'll find us.
There are plenty of other interesting articles, both originally reported and from fine Arizona media outlets. Here is the full listing*:
1. Gov. Doug Ducey won in court on nursing home data. But the rest of Arizona lost (Editorial, Kwok, Republic)
2. Called up for jury duty? Here's what it will be like under COVID-19 (Castle, Republic)
3. Supreme Court Orders Hearing For Death Row Inmate On Whether Juror Misconduct Contributed To Second Conviction In Notorious Yuma Murders (Weich, AZ Law)
4. Curfew Shortens 1st Day of Trial On Tax Incentives For Proposed Phoenix Highrise (Weich, AZ Law)
5. Court holds disorderly conduct requires victim's peace disturbed (Fischer, Capitol Media)
6. Feds sued over red-squirrel management on Arizona's Mount Graham (Davis, Star)
And remember, if the sound quality is not yet up to pre-shutdown quality, blame it on the acoustics in my office... and not the mask I was wearing.😉
"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. More on these cases and other legal news can be found at ArizonasLaw.org. AZ Law also airs on non-profit Sun Sounds of Arizona, a statewide reading service that provides audio access to printed material for people who cannot hold or read print material due to a disability. If you know someone who could benefit from this 24/7 service, please let them know about member-supported Sun Sounds. And, YOU can donate or listen here.
*Yes, I do agree with a listener/reader comment that it would be great to add time stamps to both the listing and the recording; I'm open to suggestions as to the most time-effective way to do that.
A former U.S. Attorney for the District of Arizona and at least four other former Justice Department officials from Arizona have signed onto a letter requesting an investigation of Attorney General William Barr's actions in clearing Lafayette Park of demonstrators last Monday so that President Trump could walk across it.
Reuters photo via Wash. Post; Barr highlighted
More than 1,250 former DOJ officials have signed on to the letter so far. A. Bates Butler, the U.S. Attorney for Arizona during part of the 1970's, is one of a couple of dozen signors who reached that level (under both Republican and Democratic Administrations) to join the call.
Other Arizona former DOJ officials include
2) Michael LoGalbo - Arizona's Section Chief for the Organized Crime Drug Enforcement Task Force, including under the present Administration
3) Paul Corradini - Special Attorney, Organized Crime & Racketeering Section
4) Peter Jarosz - Criminal Chief, retired during this Administration; and
5) Jan Kearney - Criminal Chief
The letter is directed to Michael Horowitz, the Inspector General for the Justice Department, and concludes thusly: "If the Attorney General or any other DOJ employee has directly participated in actions that have deprived Americans of their constitutional rights or that physically injured Americans lawfully exercising their rights, that would be misconduct of the utmost seriousness, the details of which must be shared with the American people."
Barr indicated that he personally had ordered that the mix of law enforcement officers clear the park of the mostly peaceful demonstrators so that the President could cross. According to the Washington Post, the officers then used "smoke canisters, pepper balls, riot shields, batons and officers on horseback to shove and chase people gathered to protest the death of Floyd. At one point, a line of police rushed a group of protesters standing on H Street NW, many of whom were standing still with their hands up, forcing them to race away, coughing from smoke. Some were struck by rubber bullets."
In its final nomination challenge of the season, the Arizona Supreme Court threw a City Council candidate off of the ballot because he will not have lived in the city for more than a year when the "primary election" takes place in August.
This reverses the trial court's verdict that Steven Caros' would be permitted to remain on the ballot for the Prescott Valley Town Council, and echoes a Supreme Court opinion from this past December, in which the Justices determined that Payson Mayor Tom Morrissey would not face a recall election.
Both cases turned on the fact that some municipal elections have a "primary election" in which the result is final - i.e. there will not be a "general election" - if one candidate gets more than 50% of the vote. "When the primary effectively functions as the general election, the residency requirement refers to the date of the primary election," said the four Justice panel today.
Today's Decision *almost* marks the end of this year's court challenges of nomination petitions and qualifications. The Supreme Court ruled that State Rep. Shawnna Bolick can stay on the ballot, but promised to issue a full Opinion "in due course." (Also, it is likely that there will be challenges of initiative petitions that will be turned in within the next month.)
Arizona's statewide curfew is shortening the first day of trial on whether tax incentives for a proposed downtown Phoenix high-rise violates the state Constitution. Ironically, the (virtual) trial is happening in a part of downtown impacted by the last several days of violence while the new tower would be on the undamaged Roosevelt Row area.
The Goldwater Institute sued the city of Phoenix in 2017 about the proposed Derby Roosevelt Row project, and the city's agreement with the developer that involved at least $17M in tax incentives through the use of what is called a GPLET (usually pronounced "geep-let", and standing for "government property lease excise tax"). Plaintiffs - including nearby property owners - claim the agreement violates the Gift Clause of the Arizona Constitution, and that the city's 1979 designation of the Roosevelt Row as a "slum" no longer applies.
That would permit the developer to convey the building and land to the City of Phoenix with the exclusive right to lease it back. It would eliminate the property tax and replace it with a lower tax (and, rent). Additionally, because it is located in Phoenix's Central Business District, the tax would likely be waived (abated) for the first eight years.
Somebody visiting the northern edge of downtown in 2015 (or, now), "would not see a slum in the Roosevelt Row area", Goldwater Institute General Counsel Jon Riches told Superior Court Judge Christopher Coury in today's opening statement. He also argued that whether the judge accepts the city's numbers or Amstar's (the developer's) numbers, it constitutes an inappropriate gift: "Either way, it is grossly disproportionate consideration."
Opening for the City, Kristin Windtberg listed many of the ways that the city would benefit from the 19-story tower, and that it is "just one piece of the city's long-term plan for redeveloping the area". The project includes "micro-unit apartments" of approximately 1,400 square feet each, above-ground parking and commercial. Windtberg said that among those benefits are also jobs, "unique housing options" and combines smaller parcels of land in a way fitting contemporary development.
The Plaintiffs' first witness was Kevin McCarthy, the President of the Arizona Tax Research Association. He presented his analysis of the unfair benefits that Phoenix was giving to the developer. He also doubted the city's contention that the incentives were necessary, saying "that noone would fill that need in the market without this project, seems to escape me."
Amstar is paying the $36M to develop the tower. It entered into the GPLET agreement in 2016.
The trial is expected to take up to two weeks. However, that was thrown into the air yesterday, with the Governor's emergency 8:00pm curfew for this week. Judge Coury announced that he was receiving many emails during the morning session, warning him that he and his staff needed to be out of the courtroom by 3:45pm today.
