Economic Development Policies Central to Lawsuit

By Steller, Tim | AZ Daily Star, April 27, 2016 | Go to article overview

Economic Development Policies Central to Lawsuit


Steller, Tim, AZ Daily Star


Those who try to recruit companies to Arizona are choking on a bone these days -- the Goldwater Institute's lawsuit over Pima County's deal with World View Enterprises.

Locally, the questions are relatively clear: Did Pima County adhere to state law and Arizona's constitution when passing the $20 million incentive package for this local near-space balloon company? That will be answered in court.

From a statewide perspective, the questions are bigger. Gov. Doug Ducey has made recruitment of companies to Arizona one of the highest priorities of his administration. Now, for the first time during his term in office, his putative allies at Goldwater are suing to stop an incentive deal.

"This lawsuit casts doubt on what can be done from an economic development standpoint," Steven Zylstra, the president and CEO of the Arizona Tech Council told me from Germany, where he's attending the Hannover Messe technology fair.

Space travel and research, he said, "seems to be an up and coming industry, and too often AZ seems to be left behind on these kind of things. Here we have an opportunity to be in the driver's seat, and obstacles are put in the way."

Now, it isn't the first time the Goldwater Institute has become an "obstacle" to incentive deals for private companies. Goldwater brought the successful suit, Turken vs. Gordon, by which the Arizona Supreme Court in 2010 established the current case law over the constitution's gift clause and government incentives for private companies.

And in a visit to the Arizona Daily Star on Monday, attorney James Manley argued that Goldwater's interest in the Pima County deal and the whole economic-incentive world is simply one of principal.

"We don't think these sorts of deals are a good idea, period," Manley said. "The better way to encourage business is to have a level playing field and have a good business environment for everyone -- strong infrastructure, good education, good tax and regulatory policy."

So true, so true. And yet, so divorced from reality.

We live in a region where Nevada just gave a $1.25 billion -- yes, billion with a B -- tax-break to Tesla Motors to build a battery plant near Reno. In Texas, under previous Gov. Rick Perry, the New York Times found that state gave out the equivalent of $19 billion per year in incentives to companies.

Certainly Goldwater knows that's what we're competing against.

I challenged Manley on this point, and he said incentives alone aren't inherently illegal or unconstitutional in Arizona, even with the gift clause, which limits government aid for individual companies.

In the context of the World View deal, for example, he pointed to state law requiring counties to get an appraisal for properties they plan to lease and to hold an auction for the lease. That can be done even in the context of an incentive deal, he argued. …

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