Court Allows Lawsuit Against ASU, ABOR Alleging Gift Clause Violations To Move Forward

PHOENIX – The Arzona Attorney General Mark Brnovich’s lawsuit against the Arizona Board of Regents 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 by the Maricopa County Superior Court.

The Arizona Board of Regents (ABOR) 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

“We welcome the Arizona Superior Court’s ruling in the latest lawsuit against the Arizona Board of Regents and Arizona State University and applaud the fact that the judge has, with regard to motion number one, rejected all of the Attorney General’s arguments on this matter,” ABOR argued in a press release. “This is the second time the courts have ruled that the Attorney General does not have the authority to insert himself into decision-making that has been definitively granted to ABOR and the universities. The court ruling affirms that ABOR, and only the Board, has the authority over real estate held for the benefit of the institutions under its jurisdiction and that the Board is “expressly empowered” to enter into leases like the Omni Hotel and Conference Center.”