ASU Real Estate Deals In Tempe Get More Attention / Here in Mesa No Tempest At All

Let's be clear here: Your MesaZona blogger always raised  questions here over the conniving by Mayor John Giles and his closely-connected cohorts of "family-and-friends" [aka Michael Crow/Crony Capitalists] to make behind-the-scenes deals that appeared suspicious from the start. Somehow the appearance of conflicts-of-interest got drowned-out. Deals sparked rampant real estate speculation downtown by AZ State Senator Bob Worsley.
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That's my take on what's going on here in Mesa, while the Arizona Attorney General is concentrating on Tempe. 
Last year's General Election in November 2018 was the tipping-point to change TAXPAYER REJECTION of an earlier public relations gambit with privately-financed campaign by the mayor and a political action committee to make a sales pitch for an ASU campus downtown - it turned into a major screw-up, then got 're-packaged' with public safety to sell it. 

Taxpayers fell for that trick to finance a satellite campus for one new building [it's more than that] when ASU could have paid for the expansion itself - 'a gift' of city-owned land on a parking lot for the new building + the renovation of an existing city-owned empty building served as the cover-up for the ASU deals here in downtown.
Throw in "The Rise of Mesa's Innovation District" and . . . 
Follow along - it definitely could get more interesting
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Proposed Omni Hotel/Convention Center

Here's the headline yesterday from Arizona Daily Independent 
AG Amends Complaint Against ABOR, Claims Gift Clause Violation In ASU Deal
"PHOENIX – The Arizona Attorney General’s Office filed an amended complaint against the Arizona Board of Regents and Arizona State University in Arizona Tax Court seeking to end the University’s practice of using the Regent’s tax-exempt government status to facilitate special property deals for favored corporations. . . "
Special deals for favored corporations
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Blogger note: Here in Mesa the sweet deals are on city-owned land using about $165,000,000 in taxpayer-funded debt obligations for an ASU Campus @ Mesa City Center. One new construction to start with, and City Manager Chris Brady says he will do three - those items were on the Agenda for the Mesa City Council Study Session Thursday, April 4, 2019 in proposed budgets FY2019/2020 and FY2020/2014. Mesa taxpayers rejected that spending of $200M in 2016, but nonetheless Chris Brady has stated his intention to finish "the plan" in the behind-the-scenes real estate deals with ASU no matter what.
These public investments - using debt obligations foisted on the backs of taxpayers - on city-owned land and properties around City Hall - started a stampede in real estate speculation on Main Street. "Wealth-Creation" for a favorite few in downtown commercial/residential real estate can then get leveraged for private investments by cohorts that are closely-connected to capitalize their own profits from gains in gambling - gaming Mesa taxpayers to underwrite their speculative investments.
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“I am pleased that our Attorney General has decided to file a complaint related to the questionable practices of the Arizona Board of Regents in their pursuit of private development of the Arizona State campus,” said Senator Leach. “While serving at the Legislature, I have had concerns over the appropriateness of this practice of picking winners and losers in property development through the use of ABOR’s tax-exempt status. I look forward to the findings of this investigation.”
The Attorney General’s Office (AGO) previously alleged that (Arizona Board of Regents) ABOR and Arizona State University (ASU) lack the statutory authority to grant tax exemptions to private businesses and development projects such as the Omni Hotel deal located at the south east corner of University and Mill. In the latest filing, the AGO amended its complaint to claim that ABOR is also violating the Gift Clause ban in the Arizona Constitution by giving the Omni Hotel almost $37 million dollars in discounted property valuations and funding a conference center and parking garage for the private corporation.
ASU representatives have stated publicly that Omni Hotel paid a “fair market value” for the land located at the highly desirable corner in Tempe, but records show that ABOR waived its policy of requiring public auction and allowed ASU to use private assessors to determine a sale price of $85 per sq. ft. Alarmingly, a hotel property located across the street reportedly sold for $212 per sq. ft., just a day before the Omni Hotel deal was announced.
The AGO complaint alleges that the improper tax scheme is a mechanism for recouping money ABOR is gifting to the private business in the first place . . .
Here are the details from the article:
The facts of the Omni deal are as follows:

• ABOR waived its formal policy of requiring a public option for a property sale at ASU’s request and instead sold the land for a fraction of the market value.
• Omni purchased the land for $85/ sq. ft., while a property across the street sold for $212/ sq. ft. This constitutes a potential gift of $8.9 million in the form of undervalued land.
• ASU agreed to pay the full cost of construction – up to $19.5 million – to build a conference center, but ASU has the contracted right to use the center only seven days a year.
• ASU agreed to pay approximately $8 million to construct 275 parking spaces that Omni can use exclusively and keep the revenue from.
• ASU gave Omni an option to buy the land and improvements (including the conference center) for a purchase price of only $10 after 60 years.
• The deal gives Omni the authority to depreciate on its taxes the value of the assets that ABOR purportedly “owns,” even prior to Omni exercising its option to purchase.
• All of this comes on top of the $21 million in economic incentives (in the form of tax rebates over 30 years) that Tempe is providing Omni for the deal.
• There are at least five other private conference centers within 6 miles of the Omni project.

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Compare those we what we know here in Mesa . . .
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Here's a headline from Phoenix New Times  yesterday

Updated: AG Says ASU Sweetened Hotel Deal by $28M; School Says It's No Gift

Stephen Lemons | April 4, 2019 | 3:06pm

"Arizona Attorney General Mark Brnovich launched yet another salvo against the Arizona Board of Regents and Arizona State University late Wednesday night with an amended civil complaint claiming that ASU violated the Arizona Constitution's ban on gifts by promising $28 million up front to Omni Hotels as part of a lucrative deal to build a four-star hotel and conference center on prime university land in Tempe. . .

Blogger Note: One leasing detail: Omni will lease the land from ASU at a "pre-paid rent" of $85 per square foot," or approximately $5.9 million, with an added $1.09 million per year in "additional rent" to ASU for the duration of the 60-year lease. Omni will retain the option to purchase the hotel and convention center, as well as the land its on land and any improvements, for a token $10.
What do the regents and ASU get in return? The right to use the conference center for seven days a year, as long as isn't already booked. Also, "ASU" will be used as part of the name of the center, and "a display wall in the conference center highlighting ASU achievements and research."

Brnovich is fighting a two front war against the ASU-regents axis, which he also has accused of not fulfilling the state constitution's mandate to make in-state tuition “as nearly free as possible.” A superior court judge dismissed an AG lawsuit to that effect in 2018, but Brnovich is appealing and seeking review by the Arizona Supreme Court.
> Phoenix New Times is seeking comment from ASU and the regents and will update this story when more information is available.
> New Times is seeking answers from ASU to follow-up questions concerning the source of the $140 million and an explanation of the AG's allegations regarding the fair market value of the property. 
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Don't blink now!

Here's a headline from Phoenix New Times earlier in the day yesterday:

Mark Brnovich Aims to End Michael Crow’s Crony Capitalism, and That’s a Good Thing

Stephen Lemons | April 4, 2019 | 9:02am "Robert Rowling doesn’t need your money. In 2018, Forbes magazine ranked the owner of TRT Holdings, which in turn owns the Gold's Gym and Omni Hotels chains, at number 107 on its 2018 list of the 400 wealthiest Americans, with an estimated net worth of $5.8 billion. Over the years, he’s doled out mega-millions to conservative causes, including $6 million to Karl Rove’s super PAC, American Crossroads.
And yet, Arizona State University president Michael Crow is intent on indirectly gifting the Republican hotelier $21 million in tax breaks as part of a deal allowing Rowling to build a 30,000-square-foot conference center on university land . . .The deal, which both the Tempe City Council and the Arizona Board of Regents have signed off on, allows Omni to take advantage of ASU’s tax-exempt status and rake in the cash . . .
The Omni hornswoggle isn’t a one-off.

Here in Mesa it's a different story . . .
Crow & Giles at State-Of-The-City 2018

Indeed, Crow’s been flipping so much ASU land of late that HGTV should consider giving him his own reality show, Crow’s Campus Tax-Dodge. A whole episode could be dedicated to the gleaming, glass-fronted Marina Heights complex on Tempe Town Lake, which sold in 2017 for $928 million, the biggest real-estate transaction in Valley history. . . Crow claims he needs these sorts of deals to keep ASU afloat financially because the legislature has steadily cut its funding of state universities over the years.
I can’t swallow that whopper, either. ASU’s budget is in the black, with total assets of $4 billion, according to its 2018 comprehensive financial report. Also, Crow has an expensive “expand or die” mentality, . . Nor is Crow, who makes more than $1 million in salary and compensation, cutting ASU’s students a break. He recently proposed a tuition increase for in-state undergrads of 2.8 percent, on top of the $10,822 they already pay for tuition and fees.
There is a sort of cult that has grown up around Crow, one based largely on his expansion of the school and the fact that U.S. News and World Report ranks ASU “No. 1 in innovation.”

However, the very same publication has ASU tied with Alabama’s Auburn University for a ranking of 115 out of 312 national universities.

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Out of 145 “best value schools,” ASU ranks 119. The University of Arizona comes in at 97.