Pima County responds to lawsuit on space balloon deal

Pima County has responded to a lawsuit filed by the Goldwater Institute over the county’s lease agreement with a high-altitude balloon company.

The institute filed the lawsuit this week in Pima County Superior Court, asking a judge to halt an agreement between the county and World View Enterprises, a Tucson-based company that specializes in high-altitude tourism and scientific research.

County Administrator Chuck Huckelberry said in a statement released Friday that the county followed state law in drafting the economic agreement with World View.

The Board of Supervisors approved the agreement with World View in January, agreeing to spend $15 million to build facilities for use by the company in exchange for 20 years of lease payments.

Institute lawyer Jim Manley alleged in the lawsuit that county residents will bear the tax burden of the agreement’s “unlawful expenditures.”

The lawsuit alleges the county violated the state’s gift clause by extending its credit to a private company without a public purpose, that World View is paying less-than-market value for the facilities and that the county declared an emergency to avoid a competitive-bidding process.

Huckelberry said in his statement that World View’s rent will be “lower initially,” but that it increases every five years over the term of the 20-year lease.

“In total, World View will pay $4.2 million more than the County is spending on the building, even with borrowing costs and the value of the land included,” Huckelberry wrote. “So, no gift.”

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He said the county will own the facility and the land. World View has the option to buy the building and the land before the lease ends, in which case World View will pay the county any principal amount still owed on the bonds issued to finance the facility.

In addition, World View would pay all of the principal and interest payments the county already made on the bonds, minus the rent already paid and the interest the county could have earned on the bonds.

If World View defaults, the county would take possession of the building and lease it to another company or use it for a county purpose, he wrote.

With regard to the competitive-bidding process, World View told the county the company had a “forecast for demand that required completion of their facility by November 2016 and that both Florida and New Mexico, as part of their incentive packages, had committed to meeting that delivery date,” Huckelberry wrote.

Barker Morrissey Contracting and Swaim and Associates worked directly with World View, without compensation, to define the details of the project, he wrote.

With regard to declaring an emergency, state statute defines an emergency as a threat to public health or safety, as well as a situation that makes the normal procurement process “impractical, unnecessary or contrary to the public interest,” he wrote.

The Board of Supervisors found that the need to meet the November deadline and capture the economic-development opportunity made compliance with the provision impractical and contrary to the public interest, he wrote.

Had the county initiated a competitive-bidding process, “It is likely that both the architect, Swaim and Associates, and the contractor, Barker Morrissey, would have been selected given their prior uncompensated work helping to define the size, scope and extent of the facility required by World View.”