Coons v. Hallman (Sea Life Aquarium subsidy case)

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Case Background:

The City of Tempe made a deal with the developer of Sea Life Aquarium, a children's theme park being constructed at Arizona Mills Mall. The agreement provides the developer with tax subsidies and concessions in violation of the Arizona Constitution and state law. The deal includes rebates to the developer on all construction sales tax up to $900,000; all retail taxes up to $78,000; rebates on planning, engineering, and building safety processing fees up to $70,000; and special assistance from the city on permitting, planning and other regulatory hurdles required of other non-favored developers and business owners. The deal violated the Arizona Constitution's Gift Clause and Equal Protection and Special Law Clauses, as well as laws prohibiting all retail sales tax subsidies in Maricopa and Pima Counties, and puts restrictions on sales tax subsidies throughout the state.

Since the Goldwater Institute filed suit, the City of Tempe amended the agreement with Sea Life Aquarium. Sea Life agreed to give the City a guarantee that it would allow trips to Sea Life for Tempe students for a rate of $7 in exchange for the subsidies. But not all of the problems are solved and there are still many questions to be answered, such as how many student trips will take place or how many students will be on the trips. The Goldwater Institute is now on a schedule for discovery to learn whether or not the guarantee constitutes a tangible benefit of equal value as required under Arizona law.

The Stakes:

• The elimination of corporate welfare.
• An equitable business environment in Arizona that does not favor the politically connected over small business owners.
• The affirmation of the Court of Appeals ruling that subsidies shall not be given to private business.

Case Documents:

•  Complaint

Case Timeline:

November 23, 2009: Goldwater Institute asks Maricopa County Superior Court to strike down agreement between City of Tempe and Merlin Entertainment Group

December 9, 2009: "Order to Show Cause" hearing. 10AM - 10:15AM at Maricopa County Superior Court, 201 W. Jefferson, Judge Eileen Willett's Courtroom 401.

December 11, 2009: City of Tempe hires consultant to determine whether the development would proceed without the City's financial support and whether the City would receive more benefits than the amount of the tax breaks. Tempe also approved a different contract requiring the developer to provide discounts.

Media Coverage:

The latest on the Sea Life and Fish Therapy lawsuits

News Releases:

Tempe Changes Sea Life Deal in Response to Goldwater Institute Lawsuit

Goldwater Institute Sues Tempe Over Handouts for Aquarium

How can I help?

• The stakes are high, help build positive press. Write letters to the editor for your local newspaper and let them know how you feel.
• The Goldwater Institute's Scharf-Norton Constitutional Litigation Center is able to defend your constitutional freedom because of the generous donations of private individuals.  R. Evan Scharf and John R. Norton III have arranged for a $1 million challenge grant to establish and fund the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.  To donate to the litigation center or become a member of the Goldwater Institute, please call (602) 462-5000.

Learn more about the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.