Turken v. Gordon (1/25/10)

This is a rare type of constitutional opinion: it makes its subject easier to understand, not harder.

The case arises out of CityNorth, which some of you may be sick and tired of hearing about but which the rest never heard of. To make a long story short (which the opinion admirably does), CityNorth is a huge office/shopping/etc. project that developers got people excited about before announcing that they didn’t have the money for. They asked for government help. Phoenix agreed to split tax revenue with them (to the tune of $97 million a year or so) in return for the exclusive use of 200 parking spaces and the non-exclusive use (i.e., the public could park in the building if they were lucky enough to find open spaces) of another 2980. 

Plaintiffs sued, arguing that the deal violated the Gift Clause. Article 9  §7 of our constitution prohibits government from making “any donation or grant, by subsidy or otherwise, to any individual, association, or corporation.”  Millions for a few parking slots was, Plaintiffs argued, a barely-disguised subsidy to the developers.  The City replied that the money wasn’t just for parking spaces but for more and better business, jobs, tax revenue, happiness, motherhood, apple pie, and all the other things in the standard package of real-estate-developer promises. The trial court ruled for the City; the Court of Appeals ruled for the Plaintiffs; the Supreme Court ruled for both.

The legal point of the opinion is to clarify Gift Clause law, which it does well. The public expenditure must be (1) for a “public purpose”  and (2)  proportional to the consideration received (or at least not “grossly disproportionate”). “Public purpose” is broad; the court agreed that getting public parking spaces met the test. But the consideration must be that actually obtained in the agreement, not the alleged indirect benefits. So, government can’t pay a developer big bucks and receive a pittance plus pie in the sky – that’s a subsidy, not a purchase. The parking spaces themselves have to be worth what Phoenix would pay.

Are they? The court, no doubt wisely, finds that “difficult to believe.” But it finds it even more difficult to say “no” to the City of Phoenix. Instead of remanding for a finding that would kill the CityNorth deal, it announces that its holding will have prospective effect only. This is because its earlier holdings may have “confused” government lawyers and because “various amici [namely, other cities and towns and developers] have claimed that a number of public-private transactions were entered into . . . under a similar misapprehension.”

The court is of course correct to say that the amici “claimed” to have similar projects in the works. Its careful use of the word is a respectful bow to the law of evidence – which the court then head-butts to the ground by quite obviously accepting the claim as fact and basing the resolution on it. (To the court’s credit, though, the opinion is also careful repeatedly to put  the word “panoptic” – which an earlier case had employed – in quotes. We hope this signals that courts should stick to words they understand rather than indulge in others whose only value is impressive mystery.)

Its interesting that all those government types were “confused” in the same direction. Normally, you deny retroactive effect only when you’re changing the law; here, the court makes clear that that’s what its not doing. We trust that no private industry will ever be naive enough to rely on the “mass confusion” defense, no matter how big the industry nor how tangled the law.

This is a political case; almost everyone within 100 yards of it is either a lawyer-politician or a politician-lawyer. (That often happens in constitutional and elections cases – a reason, perhaps, for the legal confusions so often found there.) Political cases tend to have odd outcomes – odd, that is, to plebian lawyer-lawyers – and that’s just life in the big city, or at least in Phoenix.

How odd this one is remains to be seen; the Supreme Court remanded to the Court of Appeals, which had addressed only one of the Plaintiff’s constitutional arguments. In the mean time, we know that the Gift Clause means what it has always meant, except during that period when law was suspended due to confusion.