The City of Tempe made a deal with the developer of Sea Life Aquarium, an aquarium at a local shopping mall, to provide Sea Life with tax subsidies and concessions. The subsidies and concessions violated the Arizona Constitution and state law, which prohibit “gifts” of public money to private interests.
The deal included rebates to the developer on all construction sales taxes 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.
After 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.
On January 28, 2011, a judge ruled Tempe changed its development agreement to avoid an illegal subsidy to the Sea Life aquarium.
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|Case Closed: City voluntarily fixed the legal issues with the deal.|
- 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.
November 23, 2009: Goldwater Institute asks Maricopa County Superior Court to strike down agreement between City of Tempe and Merlin Entertainment Group.
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.
January 28, 2011: Judge rules Tempe changed its development agreement to avoid an illegal subsidy to the Sea Life Aquarium.
Goldwater Institute Successfully Protects Taxpayers in Tempe Aquarium Deal
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Clint Bolick is the Goldwater Institute’s litigation director. He has extensive success before trial judges and appellate courts. He was lead attorney for parents in Zelman v. Simmons-Harris in 2002, in which the U.S. Supreme Court ruled that school vouchers were constitutional, and Kotterman v. Killian in 1997, in which the Arizona Supreme Court upheld private school scholarship tax credits under the Arizona Constitution.