On January 25, 2010, the Arizona Supreme Court issued its opinion in Turken v. Gordon, commonly known as the CityNorth case. The case was filed in 2007 by local businesses led by Meyer Turken against the City of Phoenix and developer NPP CityNorth over an economic development agreement that will pay NPP CityNorth up to $97.4 million in sales tax generated from the CityNorth project in exchange for setting aside 2,980 parking garage spaces for the non-exclusive use of the general public and 200 spaces for the exclusive use of commuters for 45 years. Payments begin after NPP CityNorth builds the parking garage and at least 1.02 million square feet of retail space.
Meyer Turken challenged the agreement as a violation of the Arizona Constitution’s “Gift Clause,” which prohibits most Arizona governmental entities from subsidizing or lending their credit to individuals or private companies. The prior seminal Arizona Gift Clause case, Wistuber v. Paradise Valley Unified Sch. Dist., had held that “a governmental expenditure does not violate the Gift Clause if (1) it has a public purpose, and (2) in return for its expenditure, the governmental entity receives consideration that is not so inequitable and unreasonable that it amounts to an abuse of discretion, thus providing a subsidy to the private entity.”
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