On the heels of CityNorth's developer, Thomas J. Klutznick Cos., deciding to appeal the Arizona Court of Appeals ruling to the Arizona Supreme Court, the City of Phoenix decided today to join in the appeal. The Appeals Court ruled back in December in Turken v. Gordon that tax incentives given to Klutznick by Phoenix for its mixed-used development in the Desert Ridge area were unconstitutional under the Arizona Constitution's "gift clause".
The decision was made by an 8 to 1 vote of the Phoenix City Council and was expected, as the stakes are potentially very high for Phoenix and other municipalities who rely heavily on tax incentives to encourage development.
Phoenix Mayor Phil Gordon said legal action is necessary because the appeals court decision cast a shadow over every incentive that cities have offered in the state — past, current and future.
“Most of us on the council are appealing not the structure of the agreement (with CityNorth), but we’re looking for clear instruction for future projects. We want to know if this ruling is retroactive to prior agreements like Glendale (Westgate) and Tempe (Marketplace),” Gordon said. “This is an issue much larger than just Phoenix.”
Many cities in Arizona use similar tax incentive structures, so I wouldn't be surprised to see some amicus briefs filed in the case (on both sides). The Goldwater Institute originally filed the suit on behalf of a number of small Arizona businesses. More detail on the Appeals Court ruling can be read here.
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