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Fri, Oct. 18

Attorney General moves to block universities from leasing property

Attorney General Mark Brnovich speaking to media. (Howard Fischer/Capital Media Services, file)

Attorney General Mark Brnovich speaking to media. (Howard Fischer/Capital Media Services, file)

PHOENIX — Attorney General Mark Brnovich is moving to block state universities from leasing out their land to commercial businesses.

In a new lawsuit filed Thursday in Arizona Tax Court, Brnovich contends the practice of removing property from the tax rolls is not only unfair to other taxpayers but also unconstitutional. He said the net result is that everyone else in the taxing district, whether city, county, school or community college, has to pay more to make up for what is avoided by the businesses that benefit.

Most immediately, Brnovich wants a judge to block any move that would exempt a parcel that Arizona State University owns on the southeast corner Mill Avenue and University Drive from taxes. A pending deal would create a 330-room Omni hotel and a 30,000-square-foot conference center.

Officials from the Arizona Board of Regents have defended the policy that they approved for such deals as bringing money to help underwrite the costs of running the university.

But if Brnovich wins it would undermine similar deals where universities lease out their tax-exempt property for commercial development.

In the new lawsuit, Brnovich acknowledges that state lawmakers have allowed some situations where property can be taken off the tax rolls in exchange for excise tax payments by the commercial entity. And he said that universities are specifically authorized to operate research parks where private companies engaged in educational or research activities on university campuses pay a reduced property tax.

“ABOR is not, and has never been, authorized to rent out its tax-exempt status so that private real estate developers can build large buildings for private tenants while evading property taxes,’’ he said. And he said ASU, as a public university, is not supposed to operate as a commercial enterprise or urban development authority.

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