Pima County’s deal with a local near-space balloon company is inspirational.
It inspires hopes for a better economic future.
It inspires ridicule from skeptics.
And before long, it will likely inspire a lawsuit or two.
For months, I’ve questioned the process by which the county came to the January deal with World View Enterprises. The public process was too fast and not transparent enough, I’ve argued. For example, it took my filing a public-records request after the contract was approved to find out exactly how many jobs the company must create to fulfill its side of the deal.
This week, though, we’ve become engaged in a different type of questioning — whether the agreement to keep World View in Tucson and help it expand is constitutional. The Goldwater Institute brought up these questions last week in a cease-and-desist letter that was surprisingly political in its tone.
And on Monday, county Administrator Chuck Huckelberry rebutted the claims in kind — going beyond the facts to speculate about Goldwater’s motives. Considering the tenor of the exchanges, this will end up in court soon.
In the background lurks Pima County’s most polarizing politician, Supervisor Ally Miller. She denied to my colleague Curt Prendergast that she contacted Goldwater’s lawyers. But her fingerprints are all over a conflict that could end up costing county taxpayers.
But let’s start with the legal question: Is the deal a violation of the Arizona Constitution’s restrictive Gift Clause?
This deal is different from most Arizona economic-development contracts in that it involves the county building a facility for a company, rather than forgiving taxes or paying the company back for job-training and similar activities. The county is to spend $14.5 million on a headquarters and manufacturing facility for World View, as well as $500,000 for a spaceport pad where the balloons can be launched.
With interest, the cost to taxpayers is to be about $20 million. World View will be making lease payments on the building, and by the 18th year, those payments are scheduled to give Pima County a profit. By the end of the 20-year deal, if all goes well, taxpayers get around a $3 million profit, and World View gets the building.
Goldwater lawyer James Manley alleges in his letter that the deal “serves no public purpose” and the county does not receive adequate financial consideration in return.
Having gone through the ruling in Turken vs. Gordon, the 2010 case filed by Goldwater that decided what the Gift Clause allows, I can’t see how this deal violates the adequate financial consideration factor. Basically, we either make a profit on the deal, or if World View doesn’t fulfill its requirements, we keep the building, then sell it or lease it.
I asked Grady Gammage Jr., an attorney who often represents businesses in government-incentive deals, how it’s determined whether taxpayers are getting fair consideration. He listed these questions:
“Is the thing they’re going to wind up owning worth what they spent? Are they going to get a return on investment?”
There is no evidence that we are subsidizing someone by overpaying for the building, which is what the Supreme Court ruling prohibits. I’m surprised Goldwater is even trying to make that sort of claim.
“Public purpose” seems to be a stickier subject for this particular project, since it mostly benefits a private company, but it may actually be an easier test to meet under the language of the Arizona Supreme Court’s Turken ruling.
“The primary determination of whether a specific purpose constitutes a ‘public purpose’ is assigned to the political branches of government, which are directly accountable to the public,” the court ruled. “We find a public purpose absent only in those rare cases in which the governmental body’s discretion has been ‘unquestionably abused.’”
You could try to make an argument that the Pima supervisors were abusing their discretion in making this deal. I certainly didn’t like the process. But I have a hard time believing that a court will find they “unquestionably abused” their authority. That’s for voters to decide.
What was strange in Goldwater’s letter to the county was that it ventured into political territory when it said local people would likely be unable to afford rides on World View’s balloons — ignoring the fact that the company’s principal business is research contracts — and that “these factors are doubtless why the county’s voters overwhelmingly rejected public subsidies for economic development and tourism promotion in November.”
When it brought up last year’s failed bond election, I smelled local politics wafting from the Goldwater letter. So I was surprised that Miller denied to our reporter that she had any contact with Goldwater’s attorneys. Clearly she did: Miller made social media posts March 15 about attending an event at the Goldwater Institute and even posted a picture of herself with its general counsel.
“I spent the day at Goldwater Institute yesterday,” she wrote. “We are so lucky to have this organization protecting our liberties! Stay tuned!!”
Now, Goldwater and Miller aren’t the only ones apparently playing politics. I was also surprised that Huckelberry accused the Goldwater Institute of getting involved with the case to try to influence November’s county-supervisor election. I see no evidence of that. He also accused Goldwater of timing the letter to interfere with the county’s sale of bonds to finance the World View deal. The letter did have that effect, but there’s no evidence that was the intention.
What we’re left with is a politically risky conflict. Miller has long argued she knows what policies are best for business, but has opposed almost all of the county’s economic-development initiatives, preferring to “damage the brand” of the county to seek control of the board. Her risk is mitigated, though, by the fact that any economic benefits from the World View deal will occur over years, not before the next election.
The other supervisors and Huckelberry are taking a risk with the public’s money, and they won’t be able to show it was worthwhile for a long time, if ever. They’re banking, though, on this project sparking the economic engine of the Sonoran Corridor.
As much as I disliked the process, I’m tempted by the promise of World View and this aerospace corridor. But it’s not just columnists who get to register our opinions on this done deal. We all get to, not in court but on our ballots in August and November.
