In July 2007 the City of Phoenix signed a contract with the Klutznick Company to provide a $97.4 million subsidy for their CityNorth project through sales taxes, despite a constitutional prohibition on corporate welfare within Arizona. The CityNorth project is a $1.8 billion high-end retail development on prime real-estate in an affluent part of north Phoenix. On August 8, 2007 the Goldwater Institute filed suit against Phoenix Mayor Phil Gordon over the City North subsidy.
The Goldwater Institute's Scharf-Norton Center for Constitutional Litigation, directed by Clint Bolick, argued that the CityNorth subsidy violates three clauses within the Arizona constitution.
The Goldwater Institute represented six small business owners in Phoenix; Meyer Turken, owner of Turken Industrial Properties, a small real estate development and management company; Kenneth D. Cheuvront, owner of Cheuvront Wine and Cheese Cafe and Cheuvront Construction; Zul Gilliani, who owns an ice cream shop at Paradise Valley Mall; James Iannuzo, who owns Sign-a-Rama; Kathy Rowe who owns Music Together; and Justin Shafer, owner of Hava Java. The case made it to the Arizona Supreme Court, which ruled that the law was unclear and clarified the law. Though the CityNorth subsidy deal can stand, the Court unanimously ruled that, going forward, government subsidies to encourage development violate the Gift Clause of the Arizona Constitution unless the developer offers tangible benefits of equal value in return. The Court did not rule on two legal issues related to the CityNorth case--the equal privileges and immunities, and special law provisions. The Goldwater Institute is currently deciding whether or not to pursue those issues in the Court of Appeals.
View press release below:
- Arizona Supreme Court Strikes Down Future Taxpayer Subsidies
- Appeals Court Voids CityNorth Subsidy
- City of Phoenix and CityNorth Lose Motions for Attorney’s Fees
- Coalition Backs Goldwater Institute on CityNorth Attorney Fees
- Goldwater Institute Will Promptly Appeal CityNorth Subsidy Ruling
- City of Phoenix Spends $10,000 a Week on Attorneys to Defend CityNorth Subsidy
- City of Phoenix Spends $100,000 on Attorneys in Three Months
- Goldwater Institute sues city of Phoenix over $100 million subsidy
Read more about corporate welfare and the Arizona constitution:
- "Deal Breaker: A Critique of Phoenix's Subsidy of CityNorth"
- "Regifting the Gift Clause: How the Arizona Constitution Can End Corporate subsidies"
- The elimination of corporate welfare in Arizona.
- An equitable business environment in Arizona that does not favor the politically connected over small business owners.
- Greater economic efficiency for a prosperous economy.
- A realignment of city priorities from the creation of high-end retail stores to police and fire protection.
- August 8, 2007: case filed with Maricopa Superior County Court.
- February 11, 2008: 10:30 a.m., oral argument on motions for summary judgment in the Turken v. Gordon subsidies case before the Honorable Judge Robert E. Miles at Maricopa County Superior Court, Old Courthouse, 125 W. Washington, Courtroom 303, Phoenix, AZ 85003. Open to the public.
- April 2, 2008: Judge Robert E. Miles rules that $97.2 million sales tax deal with CityNorth creates a public good and does not violate the constitution as a corporate subsidy. Goldwater Institute promises to appeal.
- April 4, 2008: Goldwater Institute appeals court ruling.
- June 9, 2008: Judge Robert E. Miles hears oral arguments on attorney's fees. Old Courthouse, 125 W. Washington St., Courtroom 303
- November 25, 2008: Court of Appeals heard oral argument on appeal.
- December 23, 2008: Court of Appeals rules the deal with CityNorth does in fact violate the gift clause.
- September 30, 2009: Hearing in the Arizona Supreme Court at 9:30 A.M., 1501 W. Washington Street.
- January 25, 2010: Arizona Supreme Court rules that government subsidies to encourage development violate the Gift Clause of the Arizona Constitution and applies the decision prospectively.
- Supreme Court Ruling
- Response to Amicus Briefs
- Supplemental Brief in the Arizona Supreme Court
- Response to Petition for Review by the Arizona Supreme Court
- Court of Appeals Ruling
- Appeals Court Reply Brief
- Appeals Court Opening Brief
- Declaration of Clint Bolick
- Response to Attorneys' Fees
- Motion for Attorneys' Fees
- Amicus Brief on Attorneys' Fees
- Judge Miles Ruling
- Reply in Support of Motion for Summary Judgment
- Motion for Summary Judgement
- NFIB Amicus Brief
- CityNorth Retail Economic Analysis
- Review of CityNorth Project
- Turken v. Gordon Complaint
- CityNorth and campaign contributions
ABC 15 News, October 29, 2009
- CityNorth investment questioned
Arizona Republic, October 1, 2009
- AZ Supreme Court Considering CityNorth Case
NBC 12, October 01, 2009
- "Appeals Court Overturns $97.4 Million"
Linda Bentley, Sonoran News, December 24, 2008.
- "Clint Bolick on Channel 12 Discussing CityNorth"
KPNX Channel 12, November 13, 2008.
- "Byron Schlomach talks to 3TV about City North"
KTVK Channel 3, November 12, 2008.
- "City loses battle over legal fees"
Michael Clancy, Arizona Republic, July 10, 2008.
- "Court ruling favors the little guy"
Laurie Roberts, Arizona Republic, June 12, 2008.
- "Attorneys spar over $97 million incentive for CityNorth"
Christian Palmer, Arizona Capitol Times, June 27, 2008.
- "The $687,000 question"
Sarah Fenske, Phoenix New Times, May 15, 2008.
- "Institute officials explain role, hear local concerns"
Laura Ory, Bisbee Daily Review, May 8, 2008.
- "Sore winners in CityNorth case"
Bob Robb, Arizona Republic, May 2, 2008.
- "City of Phoenix has become the bully"
Robert Robb, Arizona Republic, May 2, 2008.
- "Legal fees latest twist in CityNorth battle"
Michael Clancy, Arizona Republic, April 23, 2008.
- "Institute hopes to block CityNorth agreement on appeal"
Arizona Republic, April 16, 2008.
- "Foes confident CityNorth deal can be blocked"
Arizona Republic, April 8, 2008.
- "Arizona's Booster Socialism"
George Will, Washington Post, March 16, 2008.
- "Goldwater Institute’s Suit Against the City of Phoenix - Update!"
Lindsay Boyd, Townhall.com, March 5, 2008.
- "Judge hears arguments in CityNorth case"
Michael Clancy, Arizona Republic, February 11, 2008.
- "Huge city tax-break under fire"
Brahm Resnik, KPNX 12 News, February 11, 2008.
- "Oral arguments next in CityNorth challenge"
Michael Clancy, Arizona Republic, January 19, 2008.
- "Mayor bristles at Goldwater Institute stance"
Casey Newton, Arizona Republic, January 12, 2008.
- "Subsidy 'gift' squanders taxpayer money"
Laurie Roberts, Arizona Republic, January 9, 2008.
- "Mayor grapples with Goldwater Institute over CityNorth"
Mike Sunnucks, Phoenix Business Journal, January 9, 2008.
- "Benefits of CityNorth were inflated, 2 studies say"
Michael Clancy, Arizona Republic, November 14, 2007.
- "OV tax-sharing deals come up short"
Danielle Sottosanti, Arizona Daily Star, November 1, 2007.
- "Revolting Development"
Sarah Fenske, The New Times, September 6, 2007.
- "OV council says no to retail incentives"
Patrick McNamara, Explorer, August 22, 2007.
- "Car dealers forgo $900k in city subsidies"
Brian Powell, East Valley Tribune, August 17, 2007.
- "Tax incentive policies scream for change"
Editorial, Arizona Republic, August 16, 2007.
- "Constitution should ease taxing practice of playing favorites"
Bob Robb, Arizona Republic, August 14, 2007.
- "Group may join opponents of Waveyard deal"
Jason Massad, East Valley Tribune, August 14, 2007.
- "CityNorth revives subsidy debate"
Michael Clancy, Arizona Republic, August 12, 2007.
- "Court needs to strike CityNorth Agreement"
Bob Robb, Arizona Republic, August 10, 2007.
- "Goldwater Institute Sues the City of Phoenix"
Lindsay Boyd, Townhall.com, August 10, 2007.
- "City North subsidy challenged"
Michael Clancy, Arizona Republic, August 9, 2007.
- "Group files suit against Phoenix for $100M subsidy"
Ari Cohn, East Valley Tribune, August 9, 2007.
- "Goldwater Institute sues Phoenix over CityNorth"
Michael Clancy, Arizona Republic, August 8, 2007.
- "Senator, others sue to stop tax subsidies"
Jim Small, Arizona Capitol Times, August 8, 2007
- "Goldwater Institute files suit to cut off CityNorth incentive"
Mike Sunnucks, Phoenix Business Journal, August 8, 2007.
- "A competition we all lose"
Clint Bolick, Inside Tuscon Business, June 4, 2007.
- "Taxpayer-Funded Goodies on the Rise"
Clint Bolick, North Scottsdale Times, June 1, 2007.
- "Giveaways to corporations stick taxpayers with hefty tab"
Darcy Olsen, East Valley Tribune, May 20, 2007.
- "Phoenix's deal with developer a disservice to taxpayers"
Darcy Olsen, Arizona Republic, April 29, 2007.