Sponsored by

What the Devil won't tell you

Out of the Death Star: County needs to snatch victory from defeat on World View

Legal appeal may not be Pima's best option

Absolutely everything about Pima County's landlord-tenant deal with high-altitude tech company World View shatters the looking glass.

Down is up. Up is down. The local business community stands against the state Republicans and the conservative Goldwater Institute. The Democrats are the pro-business boosters. And it leaves me standing shoulder-to-shoulder with Supervisor Ally Miller thinking appeal isn't the county's best option.

Oh. Good. Lord. What is happening?

The Board of Supervisors voted 3-2 Tuesday to appeal Superior Court Judge Catherine Woods' ruling, which voided the lease with World View because the county never solicited a public bid based on an independent appraisal to determine the agreement's market value.

Last year, the county built World View a $15 million corporate headquarters and launchpad for the company to send balloons to the edge of space carrying advanced instruments. Someday, “Spaceport Tucson” is slated to float paying customers into sub-orbital space. Under the deal, World View will pay $24 million in rent over the span of 20 years.

Then Pima County lost a court battle launched by the Goldwater Institute, which sued to void the deal, calling it an illegal gift to a private business. That's forbidden by the Arizona Constitution. Woods' ruling risks 400 good-paying jobs planned for World View, and the county's reputation to be able to deliver on deals with future businesses seeking to set up shop here.

Woods ruling was a pre-trial judgment and the case will proceed for now on two tracks. One count will be appealed and three more counts alleged by Goldwater will progress toward its first day in court coming up on a year after it was filed.

So there's a whole lot more of this legal mess to wade through before any resolution for the taxpayers, the county or the business in question. Or the county could simply declare victory and move on.

Thanks to our donors and sponsors for their support of local independent reporting. Join David Knawa, Lucy Del Giorgio , and Kathryn Nunn and contribute today!

Debate before the party-line vote Tuesday left room for new Republican Supervisor Steve Christy to wonder aloud if there was a way to settle the case and not just keep litigating.

“When you get involved with a court case, the best option is stay the hell out of court," Christy said.

A-men, brother. And it just so happens that while Christy was with the rest of the supervisors in a closed-door executive session getting geared up by attorneys to keep the fight going, I was on the phone with Goldwater Institute's senior attorney, Jim Manley, finding a way out of this imbroglio.

I've got one and it's a bit creative. Start the bid process right now and – if the rent price reflects market value as well as County Administrator Chuck Huckelberry says it does – Goldwater's lawyers will let the case drop,

This is where anyone familiar with economic development – or ever ran a business – just spat their drink out on their screen because my idea sounds crazy.

Consider, though, that part one of the bid process will start as part of the court case proceeding because both the county and Goldwater Institute will hire independent consultantss to do appraisals of the land. If the county is right and the price turns out to be within the legal range, then the county should just moot the case and let the bidding begin.

Balloons and Kechikan

Woods' decision reasoned that the county could get the appraisal, put the contract out to bid and hold an auction without jeopardizing a business deal.

It's not as easy as it sounds but it's also not completely bonkers.

Imagine you are buying a house and you got the deal down to where you come up in price but they pay for the engineering report, if they throw in the gargoyle on the front yard and the couch that goes with the carpet. You and the seller have been back and forth for a few days but you have a deal. Then the seller says, “hold on, I'm going to put this up on Craigslist for 58 days and see if I anyone beats it by a buck.”

Huh? What?

Support TucsonSentinel.com today, because a smarter Tucson is a better Tucson.

On the other hand, what if you are negotiating the house sale 20 miles outside of Ketchikan, Alaska?

The county and World View have aces in their pockets because the law requiring appraisals, public notice and auctions includes a kicker at the end:

“Such land or building shall be leased or subleased at a public auction to the highest responsible bidder, provided that the amount of bid is at least ninety per cent of the rental valuation as determined by the appraiser or the market analysis, and subject to such other terms and conditions as the board may prescribe.”

The county can prescribe terms and conditions. Wanted: Tenants on a county parcel at such-and-such rent, and adding at least 400 jobs in a field that builds on the major economic engine of the local economy: aerospace. The successful bidder must also maintain our shiny new space balloon launch pad.”

Okay, all you space balloon companies – cowboy up.

For more than a century, the Arizona State Land Trust has sold off lands to developers. The way it works is, the developer comes up with a development plan. It bounces it off the State Land Department. They work out the particulars. Then the land goes up for auction but it's based on the development deal worked out.

Feasibly, someone could come in and swipe the land from the developer. It hardly ever happens and that's with land developers roving the Arizona countryside like wild herds of deer. The space balloon firm is kinda like an endangered species from another continent with a hankering for Vegamite. I suppose it could happen … if some bird gets blown 12,000 miles off course.

PR trouble for Goldwater

The county is fully within its rights to narrowly tailor a request for bids that wouldn't threaten World View unless some other company we don't know about aswooped in promising the region the same economic development boon at a better price. On this even Manley agrees that the county can specifically ask for a company that fits within the aerospace industry. He and the Goldwater Institute just want the process to be open and above board.

Manley had one caveat … sort of. The end deal must be done at a fair-market price as prescribed by law and disputes Huckelberry's argument that the lease satisfies the requirement. The property was built to the specifications of World View. So it's not just a move-in job, where a firm would have to make do with the space. That would carry a premium.

Let's assume Huckelberry is right about the market price give or take 20 percent. State law allows the county to charge 90 percent of the rate. So World View's rent doesn't change.

I asked Manly directly “if after an open bidding process, the county kept the price, would you continue the lawsuit over the rental rate?” He wouldn't commit. There are two good reasons for him to equivocate. First, lawyers avoid hypotheticals (other than one he just addressed). Second, that's a different lawsuit.

As it stands, the Goldwater Institute is fighting for a noble cause – making sure taxpayers aren't on the hook for corporate giveaways that turn into a gravy train without end. A lawsuit about the exact rental rate and what constitutes comparables looks like Goldwater is going to litigate any case they can make about an economic development deal it doesn't like.

That will drive a semi through a whole bunch of applecarts from a lot of business types all over Arizona. It's worth pointing out that prior to the Board's vote to appeal, a host of Tucson business leaders took the speaker's lectern urging the county to keep fighting Goldwater. I wonder if any of Goldwater's Southern Arizona donors called them up and said “pardon me but ...”

Lawsuits like these by advocacy groups get fought as much in public opinion as in a court of law. The World View case has seen a lot of that, with Manly conjuring up and questioning the cartoonish image of floating the super rich into space. The county has ignored Goldwater's jihad in defense of the gift clause and claimed we're the victim of Phoenix busting Tucson's chops yet again.

What's the PR value in dickering about a few bucks a month in rent – give or take a few percent – when jobs are on the line? Not a lot.

The county could go out to bid right now and end the whole case. Why not? World View is stuck without certainty, holding a voided lease. The legal wranglings ahead include the state Appeals Court and perhaps the Arizona Supreme Court. The county can meet the notification requirements and resubmit the bid in less time than the courts operate.

Two laws, one truth

When the deal was getting done, speed was of the essence because Tucson had major competitors for World View's affections. Now? The company is kind of stuck. It's headquartered in the building. It lives there now.

Sponsorships available
Support TucsonSentinel.com & let thousands of daily readers know
your business cares about creating a HEALTHIER, MORE INFORMED Tucson

The county would have to do the one thing it absolutely does not want to do: It must admit defeat. Parties in lawsuits so often just want to appeal.

But let's look at the legal terrain:

There are two controlling statutes. There's the one approved in 1939 requiring appraisals, bids and auctions for all county property of more than $5,000. That's ARS 11-256. Then there's a second passed 45 years later that gives counties the authority to sell or lease land for economic development purposes. Call it ARS 11-254.04. The lawyers do.

The county argued the latter specifically gives it the right to “acquisition, improvement, leasing or conveyance of real or personal property” for a project like World View's and can do it without going out to bid. Therefore the new law could only be an exemption to the preceding one.

So it's about how you define “conveyance of ...” The county said the 1994 statute serves no purpose other than to exempt it from the bid and auction rules of the 1939 law. The Goldwater Institute said “nuh-uh, they exist side-by-side.” The court agreed with Goldwater. The county can turn land over to private companies but still must comply with the bid process.

God bless the County's Attorney's Office. They trotted out an interlocking argument making their case, but Judge Woods just couldn't get past the fact that 11-254.04 wasn't a specific exemption to 11-256 because it didn't say “this is an exemption to the prior statute.”

The county now gets to roll the dice again with a three-judge appeal panel or the state Supreme Court.

If all of this sounds weedy and dense, there's a reason why Dick Wolfe never created “Law and Order: Real Government Property.”

Get on with it

Count me as a devilish fellow traveler with the folks up at Goldwater when it comes to the kind of bribery/extortion that often masquerades as economic development.

The framers of the Arizona Constitution were with us, too. They wrote into the state's founding document a bright line prohibition against public money for private business.

Then came the late 20th century and the whole game changed. Today, there are all sorts of exemptions, exceptions and court precedent that take the teeth out of Article 9, Section 7 of the state Constitution. They make way for the modern economic development game.

Pima County supervisors want the deal done. World View, presumably, wants to get going up, up and away from this suit.

You don't escape the Death Star by killing every storm trooper on board. You gun down the ones between you and the Millennium Falcon. The “Millennium Falcon” is getting the deal done with certainty. In more ways than one, the county is on the launch pad. Stow your egos and make the jump to hyper space.

Blake Morlock covered Arizona government and politics for 15 years, including 11 in the Tucson Citizen. He also worked on Democratic Party campaigns in the field of political communications. Now he’s telling you things that the Devil won’t.


- 30 -
have your say   

2 comments on this story

2
17 comments
Feb 9, 2017, 7:29 pm
-0 +0

Desert Sunrise,
Thanks for reading but the county has said the rent exceeds market rate.

That’s why I wrote right up top:

Start the bid process right now and – if the rent price reflects market value as well as County Administrator Chuck Huckelberry says it does – Goldwater’s lawyers will let the case drop,

1
11 comments
Feb 8, 2017, 5:10 pm
-1 +0

Blake recommends an appraisal war instead of a day in court to clarify an existing law’s application to the County’s business?  What a formula for disaster.

First, the judge in the initial case got her legislative intents mixed up, at least according to the respective accounts of her verdict.

Second, getting into this crazy kind of a bidding war would only generate more political and probably legal headaches for the County.

Third, it’s time to call out the Goldwater Institute as a highly partial actor when it comes to Arizona’s future, not a friendly collaborator in justice. GI, in the employ Maricopa’s Republican political and business “mafia”—big donors all—works to keep the rest of Arizona down while Maricopa scoops up the largesse of private deals and state-government giveaways. 

Goldwater Institute doesn’t meet the IRS test for a tax-exempt designation.  That is has one is just another bit of legal legerdemain. 

Rather than cutting a deal with this organization of legal assassins for hire, it would be so much more rewarding for an investigator to run down the facts and demonstrate that for all its posturing, the Goldwater Institute is a partisan player that primarily benefits one political party and one community of business people, thus jeopardizing its 501(c)3 status. 

It would cost little, a lot less than a court case, to enlist all those jurisdictions and public interests that have been hurt by the Goldwater Institute in a group complaint to the IRS, thus forcing the Goldwater Institute to rethink its smug approach to partisan politics—supposedly conservative, actually Putinesque—and simply bow out of the World View and other cases that serve as examples of its poor judgment.

Sorry, we missed your input...

You must be logged in or register to comment

Click image to enlarge

World View

A rendering of a World View balloon.

Categories

news, politics & government, business, sci/tech, local, arizona, opinion, analysis, breaking, columnist

TucsonSentinel.com publishes analysis and commentary from a variety of community members, experts, and interest groups as a catalyst for a healthy civic conversation; we welcome your comments. As an organization, we don't endorse candidates or back specific legislation. All opinions are those of the individual authors.