A lawsuit filed against Pima County in April over a multi-million-dollar deal it made with a balloon spaceflight company can proceed, a judge ruled Monday.
Pima County Superior Court Judge Catherine Woods denied the county’s attempt to have three of four counts in a suit brought by the conservative Goldwater Institute dismissed. Woods said she would rule later on the remaining count, which alleges the county violated the Arizona Constitution’s gift clause.
That clause bars state government entities from giving their “credit in the aid of … any company or corporation,” among other prohibitions.
Earlier this year, the Board of Supervisors approved a $15 million deal in which the county would build a manufacturing center, headquarters and balloon launch pad for the for-profit firm World View, which makes helium-filled balloons for space tourism and research. Regina Nassen, a deputy county attorney, argued that the company would pay back that sum and more over the course of a 20-year lease, according to the terms of the deal.
“The county gets back at least what it spends,” she said. “It is not giving anything away.”
In addition to violating the gift clause, Goldwater claims the deal, paid for with bonds called certificates of participation, also violates county code and state law regarding county leasing and competitive bidding, resulting in below-market rents and unfair awarding of contracts. It was the counts regarding those allegations that Woods allowed to proceed.
“We’re happy the case will go forward and taxpayers can hopefully be protected from deals like this in the future,” James Manley, one of Goldwater’s attorneys on the case, said after the ruling.
In a written statement provided by a county spokesman, County Administrator Chuck Huckelberry points out that Woods’ ruling was not on “the merits” of Goldwater’s allegations and simply allows the three counts to move forward.
“We remain confident that after all the evidence has been presented, it will be apparent that Pima County acted fully under the authority of state law and within the discretion of the Board of Supervisors,” he said, before going on to criticize the suit as “an ideologically motivated campaign to damage Pima County’s efforts to grow our economy.”
During the proceeding, Nassen told Woods that the county pursued the deal as allowed by state law. Specifically, she argued that state statute that generally requires competitive bidding for leases does not apply when counties enter into such agreements to promote economic development.
Additionally, state procurement law also requires competitive bidding, unless it is “impracticable” or “contrary to the public interest,” according to a copy of the county’s motion to dismiss.
Construction on the roughly 120,000-square-foot facility, located south of Tucson International Airport on Aerospace Parkway, began this summer and is expected to be completed before the end of the year.
According to the terms of the lease, World View is required to employ 400 people by the 15th year of operation at an average salary of $60,000, according to an October letter written by Huckelberry.
Additionally, the facility is expected to generate $3.5 billion in economic activity over the lease’s 20-year life, according to a study commissioned by the county and Sun Corridor Inc.
Those economic benefits, in the view of the county, are sufficient to constitute a so-called public purpose, as required by previous Arizona Supreme Court rulings on the gift clause.
In contrast, Goldwater argued that even if the company is successful, which it raises doubts about, “The benefits received by Pima County from the project … are grossly disproportionate to the payments Pima County has obligated itself to make and the risks it has undertaken in aid of World View,” according to a copy of its April complaint.
