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CityNorth subsidy should be easy call

November 7, 2014

A few years ago, there was a joke running around Scottsdale. It went something like this: Why did the Mercedes dealership cross the road?

Answer: to get to the $3 million.

What? You don’t think that’s funny? Well, you’re not supposed to because the joke’s long been on you.

Chickens, you see, may cross the road merely to get to the other side, but car dealers and shopping mall developers have been eagerly crossing over for years in order to collect freebies from the taxpayers.

I was thinking about that this week. About the $3 million in sales tax rebates that Phoenix offered to get Schumacher European Mercedes-Benz to cross from the Scottsdale side of Scottsdale Road to the Phoenix side, and the $12.7 million to the United Auto Group. About the $7.5 million that Scottsdale in turn shelled out to keep Lund Cadillac on the Scottsdale side of the street and the $27.5 million to snag Nordstrom.

About Chandler, promising $41 million to Chandler Fashion Center and Gilbert, offering $60 million to make sure the San Tan Motorplex didn’t go to Chandler. About giveaways in Mesa and Glendale and Goodyear and Surprise and Avondale and on and on and on.

For anyone who has followed the Great Arizona Sales Tax Giveaway, this was a big week – the long anticipated Supreme Court hearing on the biggest joke of them all: the $100 million handout to CityNorth.

As I awaited the arrival of the justices, I was thinking back to 2004, to Phoenix Mayor Phil Gordon’s first State of the City speech when he vowed to end city subsidies to shopping malls. “It’s destructive,” he said, in asking other mayors to join him in putting a halt to the bidding wars. “It’s shortighted and I say close the public checkbook on these projects and let the market dictate where the retail development goes.”

Three years later, he offered $100 million to CityNorth, to make sure that the market didn’t dictate that the development went to Scottsdale.

The Goldwater Institute promptly sued and a Superior Court judge sided with the city, ruling that the $97.4 million wasn’t a gift but a legitimate lease of parking spots, an opportunity to ace out Scottsdale in the race to score sales taxes, a chance to build an “urban core”.

Then the Court of Appeals put the kibosh on the whole deal, calling it an unconstitutional gift of public funds. Cue the Supreme Court.

As entertainment goes, Wednesday’s hearing was about as rib tickling as the chicken joke. On one side was Phoenix’s hired gun, attorney Timothy Berg who is charging taxpayers $520 an hour to defend the city’s right to give away $97.4 million to convince a developer to build a mall at that economically depressed corner of 56th Street and Loop 101. On the other, the Goldwater Institute’s Clint Bolick, pointing out that the state constitution bans gifts of taxpayer money — even to shopping center developers.

Then there were justices, pondering whether they should look at this “panoptically” and posing questions about whether it would be OK for a city to spend whatever it took to get a sewer plant built in order to avoid a cholera epidemic. As if the public purpose in building a sewer plant so that we can avoid a cholera epidemic is somehow on a par with the public purpose in building a shopping mall so that we avoid a fashion disaster.

For all the contortions and questions during Wednesday’s hearing, it’s really an easy call unless you just want to create a bunch of bogus standards and legal tests to get around what the constitution says, which is this: “Neither the state nor any county, city, town, municipality or other subdivision of the state shall ever … make any donation or grant, by subsidy or otherwise, to any individual, association or corporation.”

Really, it’s not all that different from a case a few years ago when another city argued that there was a public purpose in condemning one man’s land and giving it to another. You may recall Randy Bailey and his brake shop, sitting on a corner that a well-connected businessman wanted for his hardware store. The Mesa City Council condemned Bailey’s shop and declared his land part of a new “gateway” into downtown.

Frankly, it was hard to see how a hardware store constituted much of a gateway, or how the public’s pressing need for nuts and bolts superseded a man’s right to keep his own land. But city leaders had long ago stopped reading the Constitution, the part that says “private property shall not be taken for private use.”

Fortunately, the courts put Mesa in its place, ruling that the constitution means what it says: You can’t take a man’s land just because you’d rather have a hardware store than a brake shop.

Neither should you be able to give away $100 million just because you want to make sure a shopping center doesn’t go to Scottsdale.

The law, after all, is the law.

Or it should be.



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