Pima County Superior Court Judge Catherine Woods struck down Pima County’s contract with World View Enterprises that would have required taxpayers to foot the bill for a new facility for the company’s luxury tourism business. According to the judge, the County was required to have the building appraised, hold a public auction, and set the lease rate no lower than 90% of the appraised value.
The County ignored those requirements; therefore, the lease with World View will be cancelled.
The Goldwater Institute filed a lawsuit against the County on behalf of Pima County taxpayers.
Supervisor Ally Miller stated, “I whole heartedly agree with the judge’s opinion. After reading the ruling, it appears that my assessment that the County should have secured a competitive bid for this lease was correct. It echoes what I said at the January 2016 meeting in which we considered this contract. Had the Legislature felt the need to do away with these protections, they would have done away with the requirement to get competitive bids. Unfortunately I am a defendant in this case even though I voted against the contract and sounded the alarm.”
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“Judge Woods’ ruling protects Pima County taxpayers from having to foot the bill for World View’s untested business model,” said Jim Manley, Senior Attorney at the Goldwater Institute. “Instead of relying on a sweetheart deal from taxpayers, World View will need to pay market rates to lease its building, just like every other business in Pima County.”
In November 2015, Pima County voters resoundingly rejected six ballot measures that proposed to let the County borrow hundreds of millions of dollars for economic development and tourism. Two months later, County officials secretly negotiated a deal to borrow $15 million to build World View’s headquarters, without taxpayer approval.
The deal used government-owned buildings as collateral to borrow money to build a 135,000 square-foot headquarters and balloon pad for World View. The company planned to charge $75,000 per balloon ride, but was only required to pay the County a fraction of the market lease rate for a custom-designed building.
“The County is free to renegotiate the lease,” said Manley, “but only after they appraise the building, hold a public auction, and lease the building to the highest bidder. All of that will protect taxpayers from illegally subsidizing a private business.”
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The World View deal also violates the state constitution. The Arizona Constitution makes it illegal for the County to “give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any . . . corporation.” In Turken v. Gordon the Arizona Supreme Court decided that public expenditures must be for public purposes. The Court held that general economic improvement or potential job growth do not satisfy the Constitution.
The County conceded that it ignored Arizona laws that forbid counties from leasing land without auctioning it to the highest bidder. However, the County claimed economic development projects were exempt from this law. Judge Woods rejected that argument.
“‘Economic development’ is not a magic phrase that vanishes taxpayer protections,” said Manley. “In fact, when the County conspires to subsidize a private company, that is exactly when you want the most robust protections in place. Judge Woods’ ruling ensures those protections still apply to Pima County.”
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