Superior Court Allows AZ Attorney General’s Lawsuit Against ASU, ABOR Alleging Gift Clause Violations to Move Forward

PHOENIX, AZ (STL.News) – Arizona Attorney General Mark Brnovich‘s lawsuit against the Arizona Board of Regents (ABOR) and Arizona State University (ASU) alleging violations of Arizona’s constitutional gift clause ban concerning the Omni Hotel project in Tempe will move forward following an order Tuesday by the Maricopa County Superior Court.  The defendants had previously filed motions to dismiss the lawsuit based on procedural arguments.

The Attorney General’s complaint alleges ABOR is violating the Arizona constitutional gift clause ban by gifting Omni Hotel almost $37 million dollars up front in discounted property valuations and by paying for a parking garage and conference center for the hotel.  Despite ASU paying $19.5 million to build the conference center, the contract only allows ASU to use the conference center 7 days per year.  Records indicate that ASU valued the property located at the corner of Mill and University at $85/sq. ft., yet directly across the street, the Hilton Canopy paid $212/sq. ft. in a deal signed the day before the Omni deal was announced.  Additionally, ASU agreed to pay approximately $30 million to construct a 1,200 spot parking garage and will gift Omni 275 of the spots, constituting a gift of approximately $8 million for spots that the hotel gets exclusive use of and gets to keep revenue from the spaces.

“ABOR shouldn’t be subsidizing out-of-state billionaires,” said Attorney General Mark Brnovich.  “Worst of all, ABOR is depriving K-12 schools and community colleges millions of dollars in property tax revenue that must be made up by other taxpayers by placing the hotel on property tax exempt land.  Today’s order is a positive development for Arizona taxpayers and significant step towards transparency and accountability.”