PHOENIX - Attorney General Mark Brnovich today filed a Petition for Special Action asking the Arizona Supreme Court to declare the City of Tempe is violating state law when it improperly gives a tax break to private developments. State law was amended in 2010 to prohibit such tax breaks.
“The City of Tempe needs to be held accountable for not following state law,” said Attorney General Mark Brnovich. “Deals like this unfairly shift the tax burden to other hardworking taxpayers. I am asking the Supreme Court to act to prohibit future illegal use of these old tax rates that were rejected by our legislature 8 years ago.”
On January 2, 2018, Representative Vince Leach submitted a formal SB 1487 request for an investigation into the City of Tempe’s use of property tax breaks. Rep. Leach claimed property tax schemes provided by Tempe were contrary to the state's government property lease excise tax (“GPLET”) statutes. GPLETs are levied in lieu of property taxes when local governments lease publicly owned property to private businesses. A GPLET allows cities to exempt private developments from paying property taxes in favor of potentially lower excise taxes.
The Arizona Attorney General’s Office investigation concluded that one of the GPLET deals offered by Tempe and identified by Rep. Leach may violate state law by improperly using a lower GPLET rate that was mostly eliminated by the Arizona Legislature in 2010. State lawmakers amended the GPLET statute to stop perceived abuses.
By law, the Attorney General is required to file a Petition for Special Action at the Arizona Supreme Court if a 1487 investigation concludes a local government has adopted an ordinance that may violate state law or the Arizona Constitution.
AG Brnovich is asking the Supreme Court to end Tempe’s prohibited tax loophole scheme, which reduces the tax revenue flowing from leased property to the city’s schools, Maricopa County, the Maricopa County Community College District, and the State of Arizona. An Arizona Supreme Court ruling is important because the Attorney General’s Office recently learned of two additional development agreements approved by Tempe that are set to impose the prohibited tax rate. The deals are moving forward despite the Attorney General’s SB 1487 investigative report and warnings given to Tempe concerning its likely violation of state law.
View a copy of the Petition for Special Action.