Adelante files notice of intent to countersue EVIT as lease dispute escalates

PHOENIX – A health care center is planning to countersue the East Valley Institute of Technology (EVIT), escalating an ongoing lease dispute with the publicly funded East Valley career training school.

Adelante Healthcare and Mesa Medical announced last week they have filed notices of claim against EVIT for damages exceeding $200 million. A notice of claim is precursor to a lawsuit against a public entity in Arizona.

The move is in response to EVIT suing Adelante and Mesa Medical last month over a 40-year lease signed in 2011.

What is the EVIT-Adelante lease arrangement?

EVIT is a state-funded district that provides career training for East Valley high school students. It also offers adult classes.

Adelante operates a 45,000-square-foot health center on 2.3 acres of the trade school’s main campus on Main Street between Dobson and Alma School roads in Mesa.

In addition to providing comprehensive care for low-income community members, the facility serves as a training ground for EVIT health students.

Mesa Medical, which financed and built the $15 million health center at no cost to EVIT, receives over $60,000 in monthly payments from Adelante.

Meanwhile, EVIT receives about $2,800 per month under the terms of the original lease agreement.

Why is EVIT suing Adelante Healthcare?

The trade school’s lawsuit alleges that the lease, which has no provision for rate adjustments, wasn’t properly authorized under state law. EVIT says any agreement of this length should have gone to a public vote, which did not happen.

The suit also argues that the arrangement represents a gift to a private business in violation of the Arizona Constitution.

However, Adelante says EVIT gets over $500,000 in value annually for using the facility to train students.

“For more than a decade, EVIT reaped the benefits of this partnership — one they knowingly approved and reaffirmed multiple times. Yet now, they have fabricated a crisis to justify an unfounded legal attack,” David Leibowitz, a spokesperson for Adelante, said in a press release last week.

Adelante’s current leadership team wasn’t involved in the lease negotiations. The company said it completed a review of the deal and didn’t find any evidence of impropriety.

In fact, Adelante is accusing EVIT of trying to cover for its own financial mismanagement by challenging the lease. The health group said it will seek the following damages if it is forced out of the property:

• $16.2 million in property development and improvement costs.
• $44.5 million in lost revenue and reputational harm.
• $136.9 million in relocation and replacement costs.
• Tens of millions in additional legal fees and damages.

“In an attempt to distract from its own failures, EVIT has resorted to attacking Adelante — an organization that actually delivers on its mission to serve the community and provide educational opportunities. EVIT’s attempt to deflect its failures and shift its budget rebalancing to Adelante and Mesa Medical will fail,” Leibowitz said.

EVIT says it doesn’t want Adelante to leave; it just wants to be compensated at the fair market value for its property.

“As stewards of taxpayer funds, ignoring this problem is not an option,” EVIT Superintendent Dr. Chad Wilson said in a March 6 press release. “Mesa Medical is exploiting a sweetheart deal and trying to maintain it by hiding behind Adelante’s record of service.”

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