A court hearing Wednesday between Tempe and the Goldwater Institute explored the leeway cities have to woo developers of high-profile projects with public money.
The Goldwater Institute, a Phoenix-based conservative think tank, has sued Tempe over a deal it made with the Sea Life Aquarium, a subsidiary of U.K.-based Merlin Entertainments Group. The suit claims Tempe offered an illegal incentive to clear the way for the group to build the estimated $15 million project at Arizona Mills Mall.
Tempe maintains the incentive is not illegal because the developer is providing a discounted admission to the aquarium for Tempe school-aged children in return for an estimated $218,000 retail-development tax-incentive.
That includes reimbursement of lease taxes and construction sales taxes and waivers on development fees. Goldwater officials oppose cities offering developers incentives because they believe it creates an unfair market where select businesses are offered public money to open.
At Wednesday's preliminary hearing Maricopa County Superior Court Judge Eileen Willett said she would set a speedy hearing to weigh the institute's allegation that the incentive violates state law and the gift-clause of the Arizona Constitution.
That means the development agreement stands, for now. But City Attorney Andrew Ching told Willett that Tempe plans to draft a new development agreement, which could be available as soon as today for the City Council to consider.
The new agreement, Ching said, would comply with the law Goldwater claims Tempe violated. Goldwater supports the aquarium being built in Tempe as long as the developers do so without a tax incentive.
Last year, the Arizona Court of Appeals declared a similar development agreement illegal that Phoenix offered to the developers of the CityNorth mall project. An appeal of that decision is pending before the Arizona Supreme Court.