In its much-spun, much-anticipated ruling on economic development agreements, the Arizona Supreme Court has clarified state law regarding gifts by government to the private sector, has enforced the power of local governments to make spending decisions, and has looked forward, rather than backwards.
The high court's ruling in Turken v. Gordon is an interesting read for newspaper guys. It provides history, perspective and sense. The opinion keeps decisions about the people's money in the proper place, while making sure those decisions are carefully weighed.
In its ruling, the Arizona Supreme Court is looking forward … and thank goodness, giving the snarl it could have created. It acknowledges the CityNorth case at the heart of Turken v. Gordon "quite likely violates" Arizona's gift clause, but says previous high court opinions "could well have led the city to conclude that the agreement was constitutional. … we today clarify our gift clause jurisprudence and apply our decision prospectively only."
In other words, it's not retroactive. Deals that are done are done. Move ahead. Let's all move ahead. If the people don't like the economic development decisions made by the elected, they can act at the polls.
Is this the end of "economic development agreements?" Perhaps not. The court clarifies previous rulings that find a governmental expenditure does not violate the gift clause if "it has a public purpose," and if "in return for its expenditure, the governmental entity receives consideration" that is equitable and reasonable.
In other words, if a developer builds roads and infrastructure, as is planned in Marana's agreement with developers of a future Marana Road commercial project, and the developer is reimbursed equitably and reasonably for those public improvements, such agreements are acceptable.
That may be the only way things get done now. Does government have the cash to build infrastructure right now? Not really.
The court writes that Arizona court cases "emphasize that although determining whether governmental expenditures serve a public purpose is ultimately the province of the judiciary, courts owe significant deference to the judgments of elected officials."
In other words, it's up to the people's elected representatives — and not the courts — to fundamentally decide whether a public investment yields a public return. There are reasonable limits, of course — the court suggests a city purchase of a garbage truck would "undoubtedly serve a public purpose. Purchasing the truck for twenty times its fair value, however, would constitute a subsidy to the seller."
Clearly, checks and balances apply. But it's not appropriate to run to the courts whenever someone doesn't like how the people's money is spent.
"In taking a broad view of permissible public purposes under the Gift Clause, we have repeatedly emphasized that 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 writes.
Accountable to the public. What more could be asked? Competitive bids, the court suggests. "The potential for a subsidy is heightened when, as occurred" in the CityNorth instance, "a public entity enters into the contract without the benefit of competitive proposals."
Oro Valley community leaders have correctly moved ahead, and resumed payments to economic development agreement partners. It's done. Let the complaints about those agreements recede. There is much hard work ahead.