Tax subsidy fight could cost institute $688,000 - East Valley Tribune: East Valley Local News

Tax subsidy fight could cost institute $688,000

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Posted: Friday, April 25, 2008 12:25 am | Updated: 9:50 pm, Fri Oct 7, 2011.

A conservative think tank whose litigation arm plans an appeal in a suit challenging a multimillion-dollar government subsidy could be forced to pay $688,000 in legal fees to Phoenix and developers.

The fees represent legal costs incurred by Phoenix and the Thomas J. Klutznick Co. to defend a recent Maricopa County Superior Court action filed by the Goldwater Institute's Center for Constitutional Litigation. The institute unsuccessfully challenged the nearly $100 million subsidy to the CityNorth mixed-use project in north Phoenix.

If a judge awards the city and the developer their fees, the institute would have to pay them as well as its own legal costs.

Earlier this month, a Superior Court judge upheld the deal between the city and the developer to build parking areas at the $2 billion CityNorth project. CityNorth is to be a 144-acre luxury development of commercial and residential space at the northwest corner of Loop 101 and 56th Street.

Clint Bolick, director of the center, said in a statement Thursday that his organization plans to appeal the decision.

"We hope the Court of Appeals will see it for what it is: A subsidy of a private business on terms unavailable to other businesses, and paid for by ordinary taxpayers," Bolick wrote.

Phoenix officials have offered Klutznick Co. a 50 percent rebate in sales tax each year for 11 years.

Those rebates could add up to $97.4 million. In exchange, Phoenix would be able to lease up to 8,000 free public parking spaces in four or five garages around the project.

The move is meant to free up surface space for more stores, Phoenix officials have said.

Lisa Hauser, lawyer for the Klutznick Co., said the appeal could take a year or more.

"We expected that they would appeal, and they'll probably see the same kind of result," she said.

She said the issue of attorneys' fees and court costs could be decided this summer. Phoenix is seeking to recover nearly $307,000 in legal fees from the Goldwater Institute, while Klutznick is requesting nearly $381,000.

Bolick said the total is more than an entire year's budget for Goldwater's litigation center.

"Courts almost never have awarded attorney fees against firms seeking to vindicate public rights," according to Bolick. He cited a court decision involving the Paradise Valley Unified School District that held "it would have a chilling effect on other parties who may wish to question the legitimacy of the actions of public officials."

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