Court Ruling Supports CityNorth Incentive.

Goldwater Institute Lawsuit Found to Be without Merit

PHOENIX -- Maricopa County Superior Court Judge Robert Miles ruled today in favor of the City of Phoenix and Thomas J. Klutznick Company, developer of the CityNorth project. Denying the Goldwater Institute's claims that CityNorth's development incentive package violates the Arizona Constitution, Judge Miles said, "The Court concludes that the benefits of the Agreement serve a public purpose and, therefore, the first prong of the Gift Clause analysis has been satisfied."

Additionally, the Court responded to Goldwater Institute's claims that the value to the public is illusory, "The Agreement was designed to ensure that the project that is built provides the contemplated benefits - particularly the substantial tax revenues - on a schedule and at a level that is more advantageous to the public than some other, differently configured project that might be built at the site."

"This is the ruling we were expecting," said Lisa Hauser, counsel for Thomas J. Klutznick Company. "The Goldwater Institute's suit had no legal merit. The developers are investing all the capital up-front to build CityNorth, and will only be reimbursed to the degree that the project is successful. The Goldwater Institute's claims that the gift clause of the Arizona constitution was violated were more media hype than legal substance."

"Today's ruling reaffirms that Phoenix acted correctly and smartly in making development pay for itself," said Phoenix Mayor Phil Gordon. "The revenue generated by CityNorth will allow us to better serve our community with more police officers and fire fighters. In fact, we've already seen $2 million in new revenue from CityNorth, long before its completion."

The Goldwater Institute initiated a lawsuit in August of last year, claiming that the City of Phoenix's incentive package for CityNorth violated three provisions of the Arizona Constitution.

"We are pleased that the Goldwater Institute's legal claims were found to be as irresponsible as their public statements," said John Klutznick, vice president, Thomas J. Klutznick Company. "CityNorth is the realization of more than 20 years of planning and investment to deliver an urban core for the Desert Ridge community and the Northeast Valley of Phoenix. We will continue to invest and partner with the City of Phoenix to ensure the vision for CityNorth is brought to fruition."

When CityNorth's first phase opens in October, it will transform a site that had no infrastructure to a unique mixed-use development that eventually will comprise 5.5 million square feet of retail, commercial and residential uses. The project will include more than 2.5 million square feet of Class A office space that is designed to attract corporations with exactly the kind of high-paying jobs Phoenix needs.

"CityNorth will generate $1.9 billion in annual economic activity and 19,000 new jobs to benefit the City and its residents," said Peggy Neely, Phoenix Vice Mayor. "The CityNorth project guarantees that it will pay for itself with the revenue it will generate. There are no tax dollars at risk. We are pleased with the Court's ruling, and excited to welcome a project of this magnitude to Phoenix."

CityNorth is a one-of-a-kind, city-within-a-city creating living, working, shopping and recreational environments unequaled in the Desert Southwest. It offers what Arizonans and Phoenicians have yet to experience - an all-inclusive urban lifestyle created for a distinctive desert environment. CityNorth is located at Loop 101 and 56th Street in Northeast Phoenix. For more information visit www.CityNorthAZ.com.