Attorney General sues ABOR over ASU real estate projects

Brnovich claims ABOR-approved real estate deals allow the University to help favored companies avoid paying taxes

Attorney General Mark Brnovich sued the Arizona Board of Regents on Thursday, targeting ASU's practice of leasing tax-exempt public land to private businesses.

Brnovich filed the lawsuit on Thursday morning in Arizona Tax Court, claiming that the real estate deals and the tax breaks they provide are illegal.

He said in the lawsuit that the practice is "inappropriate" for a public university, and seeks to force the forthcoming Omni Hotel on a University-owned corner of University Drive and Mill Avenue to pay property taxes. If that land was privately owned, it would be on the property tax rolls. Property taxes pay for public schools, libraries and other government services.

Brnovich's suit cites statute that says ABOR may only buy, sell and develop land "for the benefit of this state and for the use of the institutions under its jurisdiction," prerequisites he says the Omni and other real estate deals do not fulfill. 

In a statement issued by ASU, the University criticized Brnovich's decision to file the lawsuit against ABOR, calling the attorney general "confused and confusing."

"Brnovich is suing the Arizona Board of Regents and Arizona State University over a real estate deal because he has decided he wishes the law was different than it actually is," the statement said. "This frivolous lawsuit is a huge waste of taxpayer money, time and energy, and it saps the public's faith in our elected officials.

Crow has publicly disputed the lawsuit's reasoning, claiming that the University needs to be entrepreneurial in response to a penny-pinching fundraising environment. 

"By law, university property is exempt from property taxes," he wrote in a December 2017 op-ed in The Arizona Republic.  "And Arizona statute authorizes the university and its governing board — the Arizona Board of Regents — to acquire, dispose, lease and/or hold real property, or property rights or interests."

The lawsuit marks the second time Brnovich sued ABOR. Brnovich launched another case against the board in September 2017 over tuition costs. The case is now on appeal.

Read more: Arizona Attorney General files appeal in ABOR tuition lawsuit

"Brnovich seems to think that his role as attorney general is to petition the courts to make law not enacted by the legislature," the University said.

However, Brnovich said the real estate deals take away from funds that would otherwise be allocated to public services, such as schools and parks. 

"ABOR’s mission is to run our state public universities, not extend government tax-exempt status to private corporations," Brnovich said. "ASU is a public university, not a commercial enterprise or an urban development authority."

Brnovich is not alone in the criticism against the University's practice of renting land to for-profit businesses. The Arizona Tax Research Association spoke against the practice in a special report released in 2017. The Marina Heights development, which houses the largest office development in Arizona history and is valued at $608 million, avoids $12 million in annual property taxes through its agreement with ASU, according to the report.

Between UA and ASU, the report stated that 50 companies on four million square feet of university land are exempt from property taxes. 

"As attorney general, my job is to be in the corner of hard-working Arizona taxpayers and to make sure everyone plays by the same rules,” he said. 

The ABOR did not respond for request to comment by the release of this article. This story will be updated as more information becomes available.


Reach the reporter at goldham@asu.edu and follow @graceoldham123 on Twitter. 

Like The State Press on Facebook and follow @statepress on Twitter.


Get the best of State Press delivered straight to your inbox.