PHOENIX — The state Court of Appeals on Tuesday rejected efforts by Attorney General Mark Brnovich to challenge what he contends is an illegal deal by the Arizona Board of Regents to build a hotel and conference center.
In an 11-page ruling, the judges sidestepped the attorney general’s contention that the deal violates the gift clause of the Arizona Constitution. They also did not address whether the deal was creating an improper tax exemption for the hotel because it is being built on tax-exempt university property.
What the judges did say is that Brnovich waited too long to file his claim.
In doing so, however, the appellate court left unresolved the question of whether the regents can engage in similar deals in the future. That means Brnovich might be able to sue to block similar deals in the future at any of the state’s three universities — if he files suit on time.
At the core of this lawsuit is a plan to exempt from taxes a parcel that Arizona State University owns on the southeast corner of Mill Avenue and University Drive. A pending deal would create a 330-room Omni hotel and a 30,000-square-foot conference center.
The regents have defended the policy they have approved for such deals as bringing money to help underwrite the costs of running the university system.
Central to Tuesday’s ruling is the fact that lawsuits of this kind must be filed within a year of someone learning about a questionable legal practice.
Brnovich did file suit on Jan. 10, 2019. He argued that was timely as it was not until Jan. 20, 2018, that the city of Tempe reached a final agreement with Omni to develop the hotel and conference center.
That agreement also includes $21 million in sales tax relief.
But the original lawsuit dealt only with the questions about the authority of the regents to enter into the deal. It was not until April 3, 2019, that Brnovich amended the complaint alleging that the deal violates the provision of the Arizona Constitution that makes it illegal to make gifts of state resources.
Appellate Judge Jennifer Perkins, writing for the unanimous court, said that came too late.
She pointed out that internal memos show the Attorney General’s Office actually began raising questions about the deal and the issue of the gift clause in January 2018.
Perkins also said the paperwork outlining the transactions were publicly accessible at that time and that a finalized option agreement, executed in February 2018, “contains all the provisions the Attorney General’s Office would later challenge.’’
And what all that means, she said, is that Brnovich had all the information he needed long before April 3, 2018, a year before he actually filed suit.
The appellate judges also rejected Brnovich’s claim that he has separate and independent authority to bring suit at any time against the regents for making a deal to evade taxes and for exceeding the board’s authority to enter into leases.
They noted state law specifically empowers the regents to enter into leases for real and personal property. Anyway, they said, he was improperly trying to use a statute that deals with people holding office illegally to instead claim they were illegally exercising that power.
There was no immediate response from Brnovich on whether he will seek Supreme Court review.
