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Arizona AG Brnovich settles lawsuit with Tempe over lease tax breaks

Arizona Attorney General Mark Brnovich (Flickr/Gage Skidmore)

PHOENIX — The Arizona Attorney General’s Office has settled its lawsuit against Tempe over the city’s improper use of tax breaks to private developments.

The office said in a statement Tuesday that the agreement means that Tempe can no longer use Government Property Lease Excise Tax rates, which were eliminated by the state Legislature in 2010, on new leases.

“This will prevent Tempe from extending the abolished rate to several pending projects that were approved after 2010, including a Whole Foods and high-end apartment complex,” the statement read.

The lawsuit was filed in May after state Attorney General Mark Brnovich claimed Tempe violated state law in using property lease tax breaks as economic development incentives.

It came at the instigation of a legislator who invoked a state law allowing legislators to obtain legal reviews of actions by local governments.

Republican Rep. Vince Leach of Tucson contended that incentives provided for a Bank of the West building violated limits set by the state.

Tempe officials said at the time that the city’s reliance on a 2010 resolution authorizing the incentives wasn’t challenged during a 2015 state audit or a subsequent lease approval by the state Department of Revenue.

In a statement, Brnovich said “tax deals like this unfairly shift the tax burden to other hardworking taxpayers and deprive our schools from much needed revenue.

“This settlement gives the state the total relief sought in the suit, without the expense of ongoing litigation.”

The Associated Press contributed to this report. 

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