AZ AG Finds Rio Nuevo Can Give Money Away

The Arizona Attorney General, in response to a question from Senator Bob Worsley, has issued an opinion that the controversial District is exempt from the State’s gift clause. The decision paves the way for the Rio Nuevo Board to spend money at will.

Worsley, Vice-Chairman of the Senate Finance Committee, has earned a reputation for finding creative uses of public resources for private purposes, was advised of the finding in a letter on Tuesday. Attorney General Mark Brnovich wrote Worsley: “There is no statutory limitation, nor is there any provision in the authorizing agreements [1] related to the Rio Nuevo District, that affect its otherwise clear status as a “tax levying public improvement district.” Therefore, the Rio Nuevo District is subject to exemption from the Gift Clause pursuant to the Exemption Clause.”

The Senate was supposed to provide oversight of the District, but since the watchdog members were removed or resigned from the District’s Board, the District has played fast an loose with the few rules that remain. This decision will allow the District to “donate” funds for the January 8 shooting memorial among other non-revenue generating pet of the powerhouse Board.

The Attorney General’s letter reads:

You asked whether the Rio Nuevo Multipurpose Facilities District is subject to the restrictions of Article 9, Section 7 of the Arizona Constitution (the “Gift Clause”) or is exempt from those restrictions pursuant to Article 13, Section 7 of the Arizona Constitution (the “Exemption Clause”).

The Exemption Clause specifically states: “[T]ax levying public improvement districts, now or hereafter organized pursuant to law . . . shall be exempt from the provisions of [the Gift Clause].” The Rio Nuevo District is a Multipurpose Facilities District organized pursuant to Arizona Revised Statutes, Section 48-4202. That provision clarifies that a district formed pursuant to § 48-4202 “is a tax levying public improvement district.” That designation is subject to any statutory limitations found elsewhere, as well as any limitations set forth in the relevant intergovernmental agreement or authorizing documents.

There is no statutory limitation, nor is there any provision in the authorizing agreements [1] related to the Rio Nuevo District, that affect its otherwise clear status as a “tax levying public improvement district.” Therefore, the Rio Nuevo District is subject to exemption from the Gift Clause pursuant to the Exemption Clause.

In October 2012, Judge Jan Kearny ruled in favor of the Rio Nuevo District on its Motion to Dismiss a lawsuit brought by taxpayer advocate John Kromko. The Kromko lawsuit had argued that Rio Nuevo is subject to Arizona’s gift clause.

The court ruled that Rio Nuevo is exempt from the gift clause statute, paving the way for Rio Nuevo to resolve the stalled development of the Thrifty Block, purchased by Don Bourne. The motion was initiated by District Chair Fletcher McCusker after he identified the Kromko suit as one the most significant barriers to Rio Nuevo “progress.”

In 2014, the Arizona Legislature passed SB 1351. The bill, pushed by Rio Nuevo Board’s lobbyist, Jonathan Paton, lifted many of the spending specific restrictions Paton himself and his former colleagues put in place in 2009, after the District had squandered $265 million dollars intended for downtown development.

The bill lifted more barriers to Rio Nuevo progress that had been in the planning stages for years by McCusker and Pima County administrator Chuck Huckelberry after Huckelberry was left holding the bag when the City of Tucson declined to lease space in Huckelberry’s new multi-million dollar courthouse.

According to one expert, it appears back in the late 1980’s Phoenix wanted the stadium district, and those statues passed with them being exempt from the gift clause. In 2014, the Legislature did nothing to change that.

So, at its October 17, 2014 meeting, the Rio Nuevo District Board voted to contribute $75,000 to the January 8th Memorial project, to be housed in the County’s old courthouse complex. The vote was conditioned on the Board obtaining third-party confirmation that the District is exempt from the Gift Clause of the Arizona Constitution.

On February 24, 2015, the Board voted to remove the gift clause qualification. Former Sen. Jeff Hill, the lone remaining watchdog member of the Board, voted against the proposal.

Collins then advised the Board that he had contacted the Arizona Attorney General’s office and it “responded by saying the District doesn’t qualify under the statutes to be able to ask for an Attorney General’s opinion. I can take issue with that, but they are the ones that make that decision. They have said that if a legislator were to make that inquiry, then they could render an opinion.”

Rio Nuevo then turned to Worsley to secure an opinion.

Related article:

Rio Nuevo Board claims exemption from Gift Clause

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