State of Arizona ordered to pay nearly $1M over dismissed ASU hotel lawsuit

PHOENIX – The state of Arizona has been ordered to pay nearly $1 million in costs related to a dismissed lawsuit filed by Attorney General Mark Brnovich last year over an Arizona State University real estate deal.

The Arizona Attorney General’s Office told KTAR News 92.3 FM on Tuesday it planned to appeal both the original decision to dismiss the case and the fee order.

On Feb. 5, Superior Court Judge Christopher Whitten awarded the Arizona Board of Regents $979,758 in defense fees and $2,356.62 in taxable costs.

“Valuable taxpayer dollars and public resources have been wasted at the expense of the attorney general’s choice to pursue litigation rather than consultation,” ABOR Chair Larry E. Penley said in a press release last week.

“However, once the suit was filed, the board had no choice but to defend itself vigorously with experienced and highly qualified counsel.”

Brnovich said he wasn’t done in his fight “to hold the Regents accountable.”

“I would rather be on the side of taxpayers and students versus an out-of-state billionaire,” he said in a statement to KTAR News. “Shame on the Regents for using procedural tactics to delay our case from being heard.”

In January 2019, Brnovich filed the lawsuit in Arizona Tax Court alleging that Arizona State University has misused its tax-exempt status to benefit private developers. In March, ABOR filed motions to dismiss the suit.

Whitten dismissed most of the suit in July 2019. In November, he ruled in favor of ABOR on the final remaining claim of Brnovich’s suit, leading the board to seek reimbursement of defense fees and court costs.

After the suit was filed, ASU President Michael Crow told KTAR News he was confused because the university has engaged in the practice of using private companies to build something on their property “forever.”

“If someone builds something on our property — which they’re allowed to do, working with us — they pay us in lieu of the taxes. They pay us what they would pay for taxes,” Crow said.

“We then take those resources and build things for the university. That’s the way we’ve been working forever.”

Brnovich told KTAR News at the time he filed the lawsuit to prevent a deal between ASU and Omni for a hotel and conference center near downtown Tempe from going forward in its negotiated form. Tempe City Council approved a $21 million tax break for the project.

“In his suit, the attorney general sought to undo a transaction that will provide the ASU community access to a much-needed conference center and hotel facility, and will generate well over $100 million in rental payments to the university as well as provide additional positive economic impact to the city of Tempe and the state of Arizona,” Penley said in the release.

“This waste of taxpayer dollars and resources for unnecessary litigation brings into question whether the Attorney General is on the side of the taxpayer, as he claims.”

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