BREAKING: Peoria Violated Gift Clause In $2.5M In Subsidies To Private University, Supreme Court Rules

Peoria's agreements to reimburse the private Huntington University more than $2.5M for locating an Arizona campus in the city violated Arizona's Gift Clause, the Arizona Supreme Court unanimously ruled today.

The opinion reverses decisions in both the trial court and the appeals court in favor of the incentives deal. The case was brought by taxpayers represented by the conservative Goldwater Institute in 2016. 

Today's opinion was authored by Vice Chief Justice Ann Timmer. She found that the plaintiffs had sufficiently proven that Peoria would not receive sufficient value from Huntington's campus to satisfy the Gift Clause.

Neither HU nor Arrowhead signed an enforceable promise to provide the City with any particular economic impact. Likewise, neither promised to provide the City with any goods or services, such as an ownership interest in the campus building or reduced tuition for Peoria residents. They simply promised to engage in their respective private businesses (educating and leasing).

In effect, HU and Arrowhead’s promises are no different than a hamburger chain promising to operate in Peoria in exchange for monetary incentives paid by the City in hope of stimulating the local economy. A private business will usually, if not always, generate some economic impact and, consequently, permitting such impacts to justify public funding of private ventures would eviscerate the Gift Clause.

The Goldwater Institute's Christina Sandefur called the decision a "landmark victory".

The agreements were reached in 2015 and were to expire next year. It is not clear whether the monies had been reimbursed to Huntington University while the legal action was pending. Arizona's Law has contacted Peoria and will update as warranted. 

Last year, Superior Court Judge Christopher Coury also found that a deal between the City of Phoenix and a developer for a Roosevelt Row high rise violated the Gift Clause. That case involved a GPLET deal and was also brought by the Goldwater Institute. The City did not appeal the decision.

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