University administrators in another state reportedly agreed to a deal that enabled a 330-guest room hotel to be built on university property. Hotel owners agreed to lease the land and paid close to $6 million upfront. The state Attorney General filed a formal complaint after learning that the deal included a clause allowing the hotel owners to pay $1 million annually as rent in lieu of property taxes. Anyone facing similar construction problems in California may want to follow this case.
The president of the university in question issued statement saying that the Attorney General’s allegations that the hotel project is nothing short of a tax evasion scheme are baseless and easily discredited. Another university representative stated that the school is not involved in any way in the construction of the hotel, which continues at this time and has been unaffected by the legal proceedings. The agreement to build the hotel was signed in 2016, and its doors are scheduled to open in 2023.
State Supreme Court affirmed lower court rulings
The Arizona State Supreme Court reviewed the case between Arizona State University, the Omni Hotel and Attorney General Mark Brnovich, affirming two lower-court rulings that stated that the land where the hotel is being built is tax-exempt property. The court unanimously ruled, however, that one aspect of the case – whether the deal benefitted the University or the state of Arizona — may be reheard in tax court. The Attorney General says the primary goal of his case is to protect taxpayers from having their hard-earned dollars used in private business dealings.
Construction litigation support is often the key to a fair solution
In California, Arizona or elsewhere, construction litigation is often complex. It pays to have someone well-versed in construction laws and building codes thoroughly review a contract in conjunction with any regulations or state laws that apply to a particular project. Time will tell what the result of the tax court hearings will be in Arizona. In the meantime, builders continue to work while ongoing issues are addressed in court.