CityNorth developer, city of Phoenix sue Goldwater Institute for legal fees

The developer of the CityNorth mixed-use development and the city of Phoenix filed claims in Maricopa County Superior Court on Tuesday, requesting that the court order the Goldwater Institute to pay legal fees they incurred fighting a lawsuit filed by the nonprofit policy organization.

Developer Thomas J. Klutznick Co. is asking for almost $381,000 for reimbursement of legal fees. The city is asking for more than $300,000.

The filing follows a decision in early April by Superior Court Judge Robert Miles to dismiss the Goldwater Institute's lawsuit, which claimed a $97.4 million tax subsidy the city awarded Klutznick toward the construction of the north Phoenix development violated the Arizona Constitution.

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The Goldwater Institute has said it will appeal that decision.

Goldwater's attorney, Clint Bolick, said the claims are "ludicrous" and, if approved, would stifle other public interest lawsuits. He said Arizona courts traditionally have ruled against such fee claims for that reason.

The conservative think tank originally filed its lawsuit arguing that the city's decision to subsidize infrastructure improvements at CityNorth violates provisions of the state Constitution, which forbids corporate subsidies.

Judge Miles disagreed in his April 3 ruling: "The benefits of the agreement (between the city and Klutznick) serve a public purpose and, therefore, the first prong of the (state Constitution's) gift clause analysis has been satisfied."

The city has long contended that CityNorth -- which is under construction near 56th Street and Loop 101, near Desert Ridge Marketplace -- will result in millions of dollars in tax revenue when it is completed. The first phase of the retail, office, hospitality and residential development is scheduled to be completed this fall.

In their filings, submitted separately Tuesday by Klutznick and the city, attorneys argue that the Goldwater Institute should reimburse them for legal fees based on primarily on the contention that court proceedings were delayed and expanded without merit, resulting in significant costs.

According to the Klutznick filing, "the Institute routinely shrouded its legal positions in double-talk, took one position in court and the opposite position everywhere else, compounded the length and complexity of the litigation with irrelevant 'experts' who hadn't even read the agreement, and displayed a reckless disregard for the enormous fiscal and business interests with which it was interfering."

Meanwhile, the city argued similarly: "Not only did the Goldwater Institute proceed with this action knowing that it might be ordered to pay the city's fees and costs, it litigated this case in a manner that increased its scope and expense far beyond that which was required to fully litigate the dispositive issues therein."