A project that includes a 33-room hotel and a 30,000 square-foot conference center in Tempe, Arizona is being legally challenged by the State of Arizona.
Mark Brnovich, Attorney General for the state, is contending that the project, which will see an Omni brand hotel built on property belong to Arizona State University, violates the gift clause of Arizona’s state constitution.
Brnovitch is arguing that in leasing out property for commercial use, the Arizona Board of Regents, which approved the combined hotel/conference center project in 2016, is essentially providing a subsidy to a private developer.
What is being called the Omni Tempe, slated for just over 2 acres near Mill Avenue and E. University Drive, would also include restaurant and retail space, as well as a fitness center, offices, and meeting rooms.
Omni has said that it will pay $110 million to build the hotel, with ASU committing to nearly $20 million for the construction of the conference center.
Omni and ASU have also agreed to a 60-year ground lease, with Omni paying the school an upfront ground lease payment of $5.9 million.
Bronovich is charging that the hotel is actually getting a tax exemption because it will be built on tax-exempt university property.
Early arguments have now been heard in the Arizona Tax Court, with both sides indicating that the matter may ultimately be decided by the Arizona State Supreme Court.
By Garry Boulard
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