Appeals Court Voids CityNorth Subsidy

Posted on December 23, 2008 | Type: Press Release
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Phoenix--Today the Arizona Court of Appeals ruled unanimously in favor of the Goldwater Institute, deciding the $97.4 million taxpayer subsidy given to the developer of the CityNorth shopping mall by the City of Phoenix is unconstitutional.

"Santa got a head start on Christmas this year," said Goldwater Institute litigation director Clint Bolick. "This ruling is an early present for the citizens of Phoenix."

In 2007, the City of Phoenix provided the subsidy to the Klutznick Company for its CityNorth retail center in north Phoenix, despite a constitutional prohibition on corporate subsidies in Arizona. The Goldwater Institute's Scharf-Norton Center for Constitutional Litigation filed suit in July 2007 claiming the agreement violated the Arizona Constitution's Gift Clause.

Today the three-member Appeals Court agreed. In an opinion written by Judge Patrick Irvine, joined by Judge Winthrop and Judge Hall, the court said, "We think these payments are exactly what the Gift Clause was intended to prohibit."

The Goldwater Institute represented six small business owners in the lawsuit: 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.

"This ruling vindicates this important provision of the Arizona Constitution," added Bolick. "No longer will cities and towns be able to give away our tax dollars to pay private businesses to pursue a profit. At a time of tight budgets, those tax dollars should be paying for essential services, not for corporate subsidies."

To read the ruling click here.

The Goldwater Institute is a nonprofit public policy research and litigation organization whose work is made possible by the generosity of its supporters.

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