West Valley State Farm Stadium

Courts ruled that rental-car fees, which funded sports stadiums throughout the West Valley including State Farm Stadium, was constitutional and could continue.


The Maricopa County rental-car tax that helped fund State Farm Stadium, Camelback Ranch and other sports facilities was ruled constitutional by the Arizona Supreme Court February 25.

The key funding for sports stadiums in the Valley took a hit in the courts Aug. 12, 2018 when Maricopa County Superior Court Judge Christopher Whitten ruled the state must refund a rental-car tax that was declared unconstitutional last year.

“Glendale is extremely pleased with the Supreme Court’s decision, Glendale City Manager Kevin Phelps said. “An adverse decision would have severely and significantly impacted the city’s financial position.”

This new ruling reverses that decision and allows the rental car tax to continue to fund sports facilities.

“The car rental surcharge was not enacted with a discriminatory intent, as that term is used in Commerce Clause jurisprudence,” the justices said in the majority opinion. “In sum, the voters did not enact the car rental surcharge with a discriminatory intent because they did not intend to treat in-state and out-of-state economic interests differently.”

Justice Clint Bolick agreed with the Supreme Court’s majority on the federal law but dissented in part regarding state law.

Since 2001, AZSTA has contributed and committed to contribute about $218.4 million of tourism and car rental surcharge revenues to either build new spring training facilities or renovate existing facilities throughout the county. Rental-car taxes in Maricopa County are among the highest in the nation.

Peoria was also quick to respond to the ruling.

“The City of Peoria is delighted that the Arizona Supreme Court has ruled (in Saban Rent-a-Car v. Arizona) that the car-rental surcharge does not violate state or federal law,” said Thomas Adkins, intergovernmental affairs director. 

“The revenue Peoria receives from the surcharge through the AZSTA is critical to funding Spring Training facilities like the Peoria Sports Complex. 

AZSTA funding helps pay for the bonds issued to renovate the Peoria Sports Complex and other similar capital costs.”

Saban Rent-a-Car rents vehicles in Maricopa County and in 2009, was seeking a refund on the rental charge and sued Arizona Department of Revenue (ADOR) in tax court seeking the refund.

Saban argued that the surcharge violated the dormant commerce clause and the antidiversion provision, but the court ruled against their claims.

“The statute does not violate the dormant commerce clause, as presently construed by the U.S. Supreme Court,” Bolick wrote. “The court has created a loophole that allows the legislature and those seeking its favor to divert funding from highways to other purposes, without the pesky inconvenience of constitutional amendment.”

The decision is being hailed as a huge victory for the Arizona Sports and Tourism Authority and the Arizona Department of Revenue against rental-car companies that fought the tax or surcharge.

Rental car companies had been arguing that the levy on rental cars had violated the state Constitution because the money raised didn’t fund highway projects, which the court said was not true.

An audit of AZSTA reported it had received more than $122 million in revenues from the car tax since its inception through June 2014 and AZSTA has said it is appealing.

“First, the city may have been required to repay its share of car rental tax that had already been collected and then distributed to the city,” Phelps said. “Second, it potentially would have reduced future payments that were promised to the city back when Camelback Ranch-Glendale was built. It has been estimated that the negative impact could have topped $90 million.”

The tax, approved by Maricopa County voters in 2000 and designed to raise more than $1 billion over 30 years, led to the construction of State Farm Stadium (previously University of Phoenix Stadium).

“We are pleased the court has affirmed that voters in Maricopa County had full legal authority to help fund State Farm Stadium, tourism promotion, Cactus League facilities and youth and amateur sports grants when they passed Proposition 302,” said Scarlett Spring, Arizona Sports and Tourism Authority board chairwoman. “The decision recognizes that these facilities benefit both Arizona residents and out-of-state visitors.”

The funds were from a 3.25 percent rental-car sales tax and 1 percent hotel bed tax to make debt payments on what is now State Farm Stadium. All money also funded the Arizona Sports and Tourism Authority, as well as paid for Cactus League stadiums.

City spokespeople were in full support of the ruling.

“Tourism will always be a huge economic engine for Arizona and Peoria. The City is grateful that the Court has made such a strong and positive ruling that both promotes and protects our economy,” Adkins said.