The Arizona Supreme Court ruled in favor of Peoria taxpayers, stating that the city of Peoria violated the state Constitution’s Gift Clause after it gave away nearly $2.6 million to two private businesses, with nothing in return to the public.
The taxpayer money was provided to Huntington University and its landlord Arrowhead Properties LLC. In return, the private companies announced their hope that their existence in Peoria would improve the local economy.
Neither company, however, provided anything further to the public in exchange for the millions of dollars they received from Peoria taxpayers. The private, Christian college based in Indiana that offers only a digital media arts program ran its business without benefits to the community such as access to facilities, jobs at the college or reduced tuition.
“The court said very clearly that Peoria can’t give away money to private businesses that promise to do nothing in return for the public but only to run their own businesses for themselves,” said Christina Sandefur, executive vice president at the Goldwater Institute and lead attorney.
Arrowhead additionally agreed to renovate its building to house Huntington University, exclusively for private profit and use.
“This is all about public officials being more accountable to taxpayers and thinking about when you’re spending hard-earned taxpayer dollars they should be thinking about what the taxpayers and the public are getting specifically in return, versus what those elected officials would like to see in a city,” Sandefur said.
The private companies’ ability to secure the taxpayer money without providing anything to the public is considered a “sweetheart deal,” according to Sandefur.
“In this case, it’s a private university that is actually not even operated out of the state. It is operated out of the Midwest and giving them gifts of millions of taxpayer dollars to be able to locate there,” she said. “You can imagine all of the other businesses that would also like to benefit from that sort of subsidy from the government that were not given that same opportunity, simply because they didn’t meet bureaucrats’ specific preference. It’s an unequal footing.”
The Goldwater Institute was presented this case by concerned Peoria taxpayers in 2016. Sandefur said it took five years for the case to make its way up to the Supreme Court.
After the recent decision, Peoria taxpayers will no longer have to continue making payments to benefit Huntington University or Arrowhead.
“Any future payments will be stopped and then of course the city would be prohibited from entering into this type of deal in the future,” Sandefur said.
In exchange for the taxpayer money, Huntington University’s contract stated it had to offer classes and enroll students, all things Sandefur said any university would have to do anyway.
“The Supreme Court looked at that and said this is no different from paying McDonald’s millions of dollars and saying all you have to do is sell hamburgers and you can keep the profit, or paying a Starbucks and saying all you have to do is sell coffee and you can keep the profit. If this type of deal is OK, then what kind of the deal isn’t OK?” Sandefur said.
Moving forward, Sandefur said she hopes this Supreme Court decision sends a message to government officials throughout the state.
“Government isn’t in the business of picking winners. Government is in the business of providing for its citizens. And it needs to do that in a fair way that secures actual goods and services for its citizens,” she said.
—Staff writer Lauren Serrato can be reached at firstname.lastname@example.org