ARIZONA NEWS

Arizona Supreme Court ponders Brnovich lawsuit on ASU hotel deal

Dec 17, 2021, 7:39 AM

(Omni Tempe Hotel Rendering)...

(Omni Tempe Hotel Rendering)

(Omni Tempe Hotel Rendering)

PHOENIX (AP) — The state Supreme Court on Thursday appeared conflicted over whether Arizona Attorney General Mark Brnovich’s lawsuit challenging a deal between Arizona State University and a hotel developer should be revived.

Justices sharply questioned both sides on Thursday but gave no indication of how they might rule. Brnovich wants the court to overturn lower court decisions that said he did not have the right to sue over the deal. He said the agreement that allows the hotel now being built on land owned by the Board of Regents to avoid paying property taxes is a sham agreement.

But Justice Bill Montgomery questioned the premise, saying state law explicitly allows the board that oversees the state’s three public universities to lease tax exempt land it owns. In this case, that allows it to collect rent payments and the Omni Hotel to retain the tax exemption during the 60 year lease term.

Montgomery said the transaction “would seem to fall within the four squares of what the board is allowed to do.”

Brian Bergin, a private attorney who argued the case for Brnovich, said that would only be true if the deal met other conditions.

“One of the conditions is that the transaction must be for the benefit of the state,” Bergin told the justices. “And the second condition is that it also must be for the use of the institutions under its jurisdiction.”

The private hotel meets neither condition, he contends. He also argued that the board wasn’t acting as the state but as a political subdivision, which does not qualify for the same exemption.

But attorney Joel Nomkin, representing the Board of Regents, said the court would need to overturn decades of precedent to conclude that property owned by the Regents was taxable. And he noted that because the land is now and will remain tax exempt, Brnovich can’t sue for tax evasion.

“There has never been a case in Arizona history that has viewed the Board of Regents as anything other than the state for purposes of property tax exemption,” Nomkin told the court. “So I think you would be making a rather dramatic shift to say that the board somehow isn’t the state for this purpose.”

He said the Regents retaining title to the land is all that matters to keep the tax status.

The Regents say the transaction is a good deal for taxpayers because the hotel will pay more than $100 million in rent over 60 years and the university will benefit from construction of a hotel and conference center that it needs.

The two attorneys also sparred over whether a claim that Brnovich added months after he initially filed the lawsuit was filed too late. In that claim, he alleged the deal violated the state constitution’s gift clause, which requires public bodies to get fair value for property. Lower courts said he waited too long to sue and it was barred by the statute of limitations.

The justices were asked to revive the lawsuit after lower courts dismissed three of its claims and said Brnovich waited too long to file the gift clause action. After sharply questioning both lawyers, they took the case under advisement and will issue a ruling later.

The Arizona Tax Court ruled that because ASU owns the land and will own the hotel and university property it isn’t subject to taxation. The Arizona Court of Appeals upheld the decision.

The Republican attorney general, who is running for U.S. Senate, wants ASU’s deal with the hotel developer voided. He said the Regents exceeded their power to enter into leases for public purposes and argued they improperly exempted the hotel and an adjacent conference center from property taxes.

ASU plans to pay nearly $20 million of the conference center’s construction costs. They also will build an adjacent parking garage funded with $42 million in newly issued bonds it will pay off using parking fees and some of the hotel’s $1.1 million in annual lease payments. The hotel will have access to about 20% of the parking spaces.

The Court of Appeals decision ordered Brnovich’s office to reimburse the Board of Regents for nearly $1 million in attorney fees and other legal costs.

We want to hear from you.

Have a story idea or tip? Pass it along to the KTAR News team here.

Arizona News

(AZ511 Photo)...

KTAR.com

Eastbound Loop 202 closed for multi-car crash leaving 1 dead

Authorities closed eastbound traffic on the Loop 202 near 32nd Street early Sunday after a pedestrian was struck and killed by a car.

1 hour ago

Mesa College Promise program gets $25K to help STEM students...

Serena O'Sullivan

Mesa College Promise program gets $25K from Google Fiber to support STEM students

A new grant from Google Fiber could help STEM students in Mesa through a new $25,000 donation, officials said Friday.

3 hours ago

(Jopwell Photo/via Pexels)...

Kim Komando

Smart tech life hacks Arizona workers should use to save time and stay safe

I got a text from a number I felt I should have known not long ago, but it wasn’t saved in my phone. There’s a smart trick I used to find it.

3 hours ago

Heritage Marketplace is a new development in a historic flavor in the historic Heritage Square area...

Jeff Gifford/Phoenix Business Journal

Gilbert approves $18.4 million land purchase in historic Heritage District

The town of Gilbert has approved the $18.4 million purchase of 18 acres of land in the city’s historic Heritage District.

4 hours ago

Chandler woman accused of abusing over 50 special needs dogs...

KTAR.com

Activists played key role in arrest of Chandler woman accused of abusing special needs dogs

The Chandler Police Department arrested an Arizona woman Friday on suspicions of animal cruelty, officials said.

14 hours ago

In this image taken from video, Niko, a pet squirrel, stands on the shoulder of Yeison in their ten...

Associated Press

Venezuelan man and his pet squirrel complete journey to U.S. border

A 23-year-old Venezuela man is preparing to say goodbye to a pet squirrel he says he brought from his home country on a journey to Mexico.

16 hours ago

Sponsored Articles

Home moving relocation in Arizona 2023...

BMS Moving

Tips for making your move in Arizona easier

If you're moving to a new home in Arizona, use this to-do list to alleviate some stress and ensure a smoother transition to your new home.

...

Ability360

At Ability360, every day is Independence Day

With 100 different programs and services, more than 1,500 non-medically based home care staff, a world-renowned Sports & Fitness Center and over 15,000 people with disabilities served annually, across all ages and demographics, Ability360 is a nationwide leader in the disability community.

...

OCD & Anxiety Treatment Center

5 mental health myths you didn’t know were made up

Helping individuals understand mental health diagnoses like obsessive compulsive spectrum disorder or generalized anxiety disorder isn’t always an easy undertaking. After all, our society tends to spread misconceptions about mental health like wildfire. This is why being mindful about how we talk about mental health is so important. We can either perpetuate misinformation about already […]

Arizona Supreme Court ponders Brnovich lawsuit on ASU hotel deal