Most claims dismissed in attorney general lawsuit over ASU property deal

AG Brnovich's lawsuit over ASU's deal with Omni Hotels was dismissed except for claim over "gift clause" violation

Many of the claims in Attorney General Mark Brnovich's lawsuit against the Arizona Board of Regents over ASU's practice of leasing tax-exempt public land to private businesses were dismissed by the Arizona Superior Court Tuesday.

However, Brnovich's claim that ASU's deal with Omni Hotels violates the "gift clause" of the Arizona constitution will continue. The clause prevents public entities from giving public gifts to private entities.

Brnovich sued ABOR in January for entering a lease agreement with Omni Hotels and Resorts to build a hotel on University land without having to pay property taxes. 

At the time, ASU issued a statement claiming that the lawsuit was "frivolous" and "a huge waste of taxpayer money, time and energy, and it saps the public's faith in our elected officials."

In March, ABOR filed motions to dismiss the lawsuit claiming that it “targets legal real estate transactions intended to benefit the university, as permitted by state law,” according to a statement released by ABOR.  

In a statement, ASU said that it welcomes the most recent ruling and that “the attorney general’s gift clause claim barely survived a statute of limitations argument and we look forward to a favorable resolution."

ABOR Chair Larry Penley said in a statement that the court's decision "reaffirms the trust placed in the board by the Arizona Constitution." 

However, in his own statement, Brnovich said that he was confident in his gift clause claim against ABOR. 

This is the second time Brnovich has taken ABOR and ASU to court. The first lawsuit, which was later dismissed, was over claims that tuition hikes by the Arizona public universities were unconstitutional and that providing in-state tuition for DACA student was unlawful. 

The Omni Hotel deal is under scrutiny over the amount paid for the land and the ability for Omni to avoid paying taxes because it will be located on ASU's campus. ASU asserted in a statement that Omni paid a fair market value for the property.

A hotel across the street from the Omni location was assessed at $212 per sq. foot a day before the Omni deal was announced. For the Omni Hotel, the private assessor permitted a sale cost of $85 per sq. foot which could amount to up to $8.9 million in discounted property valuations, according to the lawsuit.

Omni will also be receiving $21 million from the City of Tempe in tax incentives, $19.5 million from ASU to build a conference center that the University will have use of seven days each year and $8 million from ASU to build parking exclusively for hotel use. Omni will then have the option to buy the entire property for only $10 in 60 years. 

In lieu of paying taxes, Omni Hotels is expected to pay about $1 million per year in rent to ASU.


Reach the reporters at cbudnies@asu.edu and abpotter@asu.edu and follow @Chase_HunterB and @alexispotter_ on Twitter. 

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