• ABOUT US
  • Firm History
  • In the News
  • Commitment to Clients
  • Representative Client List
  • Diversity
  • Fennemore Craig Foundation
  • The State Capital Group
  • Client Service Survey
  • Administration Contacts
• ATTORNEYS
• LEGAL SERVICES
• PUBLICATIONS & SEMINARS
  • Articles
  • Blogs
  • Newsletters
  • Seminars
  • Videos and Podcasts
• RECRUITING
  • A Career At Fennemore Craig
  • Summer Associate Program
  • Recruiting Schedule
  • NALP Questionnaire
  • Training & Development
  • Diversity
  • Attorney Opportunities
  • Staff Opportunities
• LOCATIONS
  • Phoenix
  • Tucson
  • Las Vegas
  • Nogales
  • Denver
• CONTACT US 

Fennemore Craig In The News Archives

January

Supreme Court of Arizona rejects Gift Clause Challenge to "CityNorth" Agreement

Published Date: January 25, 2010
Description:

Link to Phoenix Business Journal Article

Link to Official Arizona Supreme Court Decision

In an opinion filed on January 25, 2010, the Arizona Supreme Court reversed and vacated the opinion of the Arizona Court of Appeals in Turken et al. v. Gordon et al., which had invalidated a retail sales tax incentive agreement between the City of Phoenix and NPP CityNorth, L.L.C., the developers of the massive North Phoenix mixed-use project known as "CityNorth."

In Turken, a group of City of Phoenix taxpayers filed suit against the City seeking to invalidate an agreement between the City and a developer under which the City agreed to rebate a certain portion of all new retail tax revenue generated by the project for a limited time, in exchange for the developer's agreement to build the project in the time, place, and manner desired by the City. The trial court rejected the taxpayers' claims, but the Court of Appeals reversed, holding that by providing an economic incentive to build the project, the agreement violated the Gift Clause, which prohibits government entities from making gifts or "subsidies" to private parties."

The Supreme Court granted the City's Petition for Review, and subsequently reversed and vacated the Court of Appeals' decision. In so doing, the Court clarified the requirements that must be satisfied for an agreement to pass muster under the Gift Clause, and specifically upheld the City's agreement, holding that even if the agreement violated the Gift Clause, any change in law occasioned by its opinion should be applied prospectively only. Although the Supreme Court remanded the case for consideration of various arguments not reached by the Court of Appeals, the Supreme Court's opinion represents a significant victory for municipalities throughout Arizona by preserving their ability to enter into retail sales tax incentive agreements, rejecting the inherently subjective analytical framework adopted by the Court of Appeals, and clarifying the requirements such agreements must satisfy under the Gift Clause.

Timothy Berg, Andrew Federhar, Theresa Dwyer-Federhar, and Scott Shelley represented the City of Phoenix in Turken v. Gordon, Supreme Court case No. CV-09-0042-PR.