Oro Valley made a deal with a developer to put in the Oro Valley Marketplace. It’s been a hotly contested deal and cost a few council people their seat. The development agreement involved a $23 million sales tax rebate back to the developer.
Goldwater Institute has taken a case to the Arizona Supreme Court arguing that the use of sales tax rebates are allowing local governments to selectively favor one private firm over another.
OV put the payments they agreed to into an escrow account until the court issues a ruling. From teh AZ Republic today:
At issue is a 2007 agreement between the city and the development under which the developer, after constructing and opening 1.2 million square feet of retail space and parking garages with 3,180 free spaces, would receive 50 percent of sales taxes collected by the city from the development during the previous year. The agreement would go for 11 years, 3 months or until the total reached $97.4 million, whichever comes first.
More broadly, the case is about the circumstances under which cities may enter economic development agreements with private organizations – whether it is sales-tax breaks to major retailers or property-tax breaks to proposed resorts or offices……
WHAT HAPPENS NEXT
The Goldwater Institute has until March 23 to respond. Then the other side is permitted a response. After that, the court will schedule the case for review. On that day, the court will decide whether or not to hear the case. If it rejects the case, the Appeals Court ruling banning the agreement stands. If it accepts the case, a briefing schedule will be drafted and a date will be set for oral argument. The court then would rule, but is not required to follow a particular schedule.
The outcome on this has ramifications for a number of deals already done, not to mention future projects.