Facing a second legal battle with the Goldwater Institute, Tempe has amended its deal with the developers of Sea Life Aquarium to spell out what the city will get in return for a $218,000 tax incentive.
Tempe City Council voted to approve the new deal at Thursday's council meeting. The move came one day after a Maricopa County Superior Court judge said she would set a speedy hearing to weigh the institute's allegation that the incentive violates state law and state Constitution.
Goldwater Institute attorneys allege Tempe violated a state law that requires cities to hire a consultant to verify the economic impact of tax incentives it offers developers. The $218,000 incentive includes reimbursement of lease taxes and construction sales taxes and waivers on development fees.
Carrie Ann Sitren, a Goldwater attorney, said the group sued because the agreement left the public in the dark about how the city would benefit from ponying up taxpayer money. The original August agreement only noted the developer's "desire" to offer Tempe students an unspecified discount.
"What if at some point the developer no longer desires to give a discount?" Sitren said. "There's nothing saying it has to."
The amended agreement includes a consultant study that puts the value of the discount at an estimated $240,000 per year. The reduced admission would be $7. The "anticipated" standard student rate is $13.50 under the agreement.
Although the new agreement describes the deal as a "tax incentive," Tempe Mayor Hugh Hallman argued on Thursday that it does not qualify as a subsidy because Tempe is getting a significant discount for students. He described it as an "in-kind exchange."
Hallman criticized a similar Phoenix development agreement with a nearly $100 million incentive for the developers of the CityNorth mall project. The Arizona Court of Appeals declared that deal illegal last year. An appeal is pending before the state Supreme Court.
Clint Bolick, a Goldwater attorney, said the institute still has concerns over the legality of the Sea Life incentive. Goldwater opposes incentives from cities because they believe it creates an unfair market where select businesses are offered public money to open.
"I'd love to see the reaction of the City Council if someone went to them and said, 'We want to open a little coffee shop,' and wanted the city to front them $100,000. That business wouldn't get the time of day," he said.