The Goldwater Institute filed suit on Wednesday challenging Phoenix's $97.4 million subsidy to CityNorth, a mixed-use development under construction in northeast Phoenix.
The lawsuit, filed in Maricopa County Superior Court, seeks an injunction against the subsidy and to restore the constitutional ban on subsidies.
Phoenix and the Thomas J. Klutznick Co. signed a contract last month providing Klutznick with a rebate of half the sales tax revenue generated by stores at CityNorth in exchange for building parking garages. Assistant City Manager David Krietor, who had not seen the lawsuit Wednesday morning, said the deal was "consistent with other retail details we have done around the city."
The deal has been highly controversial, with many citizens arguing that the CityNorth development could have proceeded without the additional money. A new state law prohibits similar deals in the future, and the sponsor of that law, Sen. Ken Cheuvront of Phoenix, is a plaintiff in the lawsuit.
CityNorth will be a mixed use development with nearly 5.5 million square feet of luxury retail shops and upscale department stores, office space and condos. It is situated on 144 acres at Loop 101 and 56th Street
"This is Robin Hood in reverse," said Clint Bolick of the Goldwater Institute, a conservative think tank based in Phoenix. "The City is taking nearly $100 million in taxpayer money to give to a Chicago developer to build a fancy shopping mall. Corporate welfare is a blatantly improper use of government power."
Klutznick is only one of scores of companies receiving subsidies across Arizona. The City of Surprise recently granted $250 million to Westcor to build a shopping mall.