Trine University closed its Peoria campus in June after getting $2.4 million in city funds. But Huntington University, also with city funds, now gears up for growth. Wochit
(Photo: Loren Townsley/The Republic)
Peoria didn’t err in offering up to $2.6 million in subsidies to Huntington University and its landlord, a county judge ruled last week.
Lawyers for the Goldwater Institute, which sued Peoria in 2016, called the funds illegal handouts because Peoria taxpayers are not served by the private university — a violation of the Arizona Constitution’s gift clause. The clause prohibits governments from giving money to private companies without a public purpose proportionate to the funds paid.
Peoria argued residents benefit from the economic development spurred by the university and building renovations. The university opened in a building vacated by a spa in the city’s P83 district, which is a hub of entertainment and dining in Peoria.
The ruling siding with Peoria means the city can continue making payments to the university under a 2015 agreement, set to expire in 2022.
Peoria spent nearly $260,000 fighting the lawsuit brought by the Phoenix-based conservative think tank, according to city spokeswoman Jennifer Stein. The city won’t ask the court to order Goldwater to reimburse the costs, she said.
Goldwater considering appeal
Judge Sherry Stephens explained in the ruling that local governments in Arizona have discretion to determine what constitutes a public purpose. Courts weigh in if that discretion has been "unquestionably abused."
Stephens said Peoria didn’t abuse that discretion.
Stephens added that Goldwater lawyers failed to establish why the subsidies are "grossly disproportionate" to the touted benefits.
"There is no requirement that every taxpayer must benefit from an economic development agreement in order for there to be a public purpose," Stephens wrote. "Benefiting a single company does not violate the Gift Clause."
Veronica Thorson, attorney for Goldwater, said her clients are considering an appeal. She disagreed with the judge and said the Peoria subsidies are disproportionate.
"Paying a business to open up shop in the city does not produce any direct benefit for taxpayers," Thorson said. "If the city is allowed to pay the university just to locate in the city, then why wouldn’t it be able to pay any business at all just to be in the city? When, of course, businesses open all the time without subsidies from the government."
The Huntington University deal
In 2015, Peoria agreed to pay up to $1,875,000 to the private Christian university based in Indiana to operatea satellite campus in the P83 district.
The city makes annual payments if the university meets certain criteria, including growing and maintaining enrollment.
Huntington University, which opened in 2016, committed to spend $2.5 million to develop programs at its Peoria campus during the first three years of operation.
The university promised to enroll at least 150 students after its third year or reimburse the city for the student deficit at a rate no more than $2,206 per student.
The university’s programs focus on digital media arts, including majors in animation, broadcast media, graphic design and film production, which is the largest program.
The city also agreed to reimburse up to $737,536 to Arrowhead Equities LLC to renovate the space for Huntington.
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