ARIZONA NEWS

Arizona Supreme Court revives AG Brnovich’s suit against ASU hotel plan

Apr 5, 2022, 4:00 PM | Updated: 4:00 pm
(Omni Tempe Hotel Rendering)...
(Omni Tempe Hotel Rendering)
(Omni Tempe Hotel Rendering)

PHOENIX (AP) — The Arizona Supreme Court on Tuesday revived a lawsuit filed by Attorney General Mark Brnovich against the board that oversees the state’s three public universities over a hotel development agreement, giving him the right to try to prove the deal doesn’t benefit taxpayers.

The ruling revived two of four allegations the attorney general made in the lawsuit he filed in January 2019 against the Arizona Board of Regents. All four had been dismissed by a lower court in a ruling upheld by an appeals court.

Brnovich alleged the deal the Regents approved between Arizona State University and Omni Hotels to build a hotel and conference center on land the university owns in Tempe does not benefit taxpayers and is a illegal gift of public monies to Omni. He also alleged the Regents exceeded their legal authority when they agreed to the deal.

The high court did not rule on the merits of those allegations, and they now go back to a trial court for resolution. The Republican attorney general, who is running for U.S. Senate, wants ASU’s deal with the hotel developer voided.

The Arizona Board of Regents says the hotel now being built will benefit the university by providing much-needed space for student and other university activities and boost the economy in Tempe.

ASU will receive lease payments from the hotel over 60 years totaling $120 million. It 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 hotel and conference center will be owned by the university and leased by Omni Tempe Hotel, but at the end of the agreement Omni will be able to purchase it for a nominal price. Because it is on university land and owned by the university, Omni will not pay property taxes.

Brnovich also challenged that part of the deal, alleging that a provision in the state constitution that exempts state-owned land from taxation could not apply to a commercial enterprise such as Omni. He also alleged that the deal “was a conveyance to avoid taxation.”

The Supreme Court refused to revive those two counts, rejecting Brnovich’s argument that the university’s property was not state-owned and thus subject to taxes. It pointed to a ruling from 1960 that said the Regents were a public agency of the state, and said that because state property is exempt from property taxes, “there is no enforcement action the Attorney General can take under his … authority because there is no tax to enforce.”

The chair of the Board of Regents, Lyndel Manson, said in a statement that the board was happy the high court rejected “a core of the challenge” made by Brnovich — the property tax exemption the board said had helped make the development possible.

She said the board is confident that Brnovich’s other claims are “meritless” and defended the benefit to the university of the new hotel.

“The project the Attorney General has sought to derail is creating a significant community asset for ASU and the Tempe community,” Manson’s statement said.

Brnovich said in a statement that is lawsuit is meant to challenge the Regent’s “practice of using its tax-exempt status for private businesses.”

“From the very beginning, we said this lawsuit is about protecting hardworking Arizonans by ensuring that taxpayer funds are not used for private business deals,” Attorney General Mark Brnovich said.

The hotel is under construction and expected to open in Spring 2023. The Supreme Court put on hold nearly $1 million in attorney fees awarded by lower courts to the Regents, saying it was premature in light of its new ruling.

Lifetime Windows & Doors

We want to hear from you.

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

Arizona News

A bartender at Hops & Barley brewpub pours a pint of beer on November 12, 2013 in Berlin, Germa...
KTAR.com

‘Real Wild and Woody’ festival hits Bell Bank Park in August

Beer enthusiasts can celebrate 30 years of craft beer in Arizona with the "Real Wild and Woody" beer festival coming to Bell Bank Park on Aug. 6.
22 hours ago
(Twitter Photo/@GlendaleFire)...
KTAR.com

Glendale fire personnel respond to 3 blazes believed to be firework-related

Glendale firefighters responded to three fires, all of which are believed to be firework-related in a span of 12 hours, authorities said.
22 hours ago
Two cloud-to-ground lightning strikes in a rain curtain at sunset in Avra Valley, silhouetting a lo...
Alex Weiner

Hiking safety during the warmest, stormiest summer months in Arizona

It’s the time when a day will seldom have temperatures under triple digits, but it does not mean Phoenicians cannot venture onto trails.
22 hours ago
(KTAR News Photo/Torrence Dunham)...
KTAR.com

City of Phoenix adds 12 weeks of paid parental leave for employees

The city of Phoenix announced on Friday it would begin providing paid parental leave to some employees starting in the fall.
22 hours ago
(Facebook Photo/Dave & Buster's)...
KTAR.com

Dave & Buster’s coming to Queen Creek Marketplace

Queen Creek Marketplace announced Thursday that Dave & Buster’s has begun construction on a new location at the East Valley shopping center.
22 hours ago
The late Sen. John McCain and former U.S. Rep. Gabby Giffords were selected to receive the Presiden...
KTAR.com

Weekend wrap-up: Here are the biggest Arizona stories from July 1-3

Here are some of the biggest stories that headlined the Arizona news cycle over the weekend.
2 days ago

Sponsored Articles

...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
...
Arizona Division of Problem Gambling

Arizona Division of Problem Gambling provides exclusion solution for young sports bettors

Sports betting in Arizona opened a new world to young adults, one where putting down money on games was as easy as sending a text message.
Arizona Supreme Court revives AG Brnovich’s suit against ASU hotel plan