Pima County prevails in World View incentive agreement lawsuit

PIMA COUNTY – Pima County Superior Court Judge Catherine Woods Monday ruled in Pima County’s favor in a lawsuit brought by the Goldwater Institute that alleged the county failed to follow various state laws when it entered into an economic development incentive agreement with World View, a near-space technology company that uses high-altitude balloons.

Woods granted the county’s request for “partial summary judgment” with respect to one of the claims in Goldwater’s complaint, writing that the county did not violate any state laws when it entered into contracts with local architect and construction firms without a competitive solicitation. State law allows counties to forgo standard competition requirements in circumstances in which compliance is “impracticable, unnecessary or contrary to the public interest.” Woods ruled that the circumstances involving the World View agreement met the conditions of the exception.

During 2015, Pima County was one of three locations across the country that World View was considering for a headquarters and manufacturing facility for its disruptive near-space technology. The company needed to be in a facility and manufacturing balloons by the end of 2016 in order to meet contractual deadlines for its clients. The county, in the later part of 2015, put together an incentive package to retain the growing company and its high-wage jobs.

From Superior Court Judge Catherine Woods’ ruling:

“The record before the Court establishes that Pima County determined that it was within the public interest to secure the World View contract as a means of economic development. The record also supports a reasonable inference that Pima County was concerned that it would lose the World View opportunity if it did not agree to World View’s accelerated time frame.”

“Concerning [Goldwater Institute’s] argument that the ‘impracticability’ of competitive bidding was a problem of Pima County’s own making, the Court is not persuaded. It is true that [County Administrator Chuck] Huckelberry learned of World View’s probable accelerated time frame during the Fall of 2015. However, during the Fall of 2015, Mr. Huckelberry also knew that World View was touring potential sites in New Mexico and Florida. It was far from clear during the Fall of 2015 that World View ultimately would choose Pima County. In late November 2015, World View intimated that it probably would accept Pima County’s offer. World View formally accepted Pima County’s proposal on December 23, 2015, and conditioned that acceptance on an accelerated occupancy deadline of ‘approximately November 2016.’ The Pima County Board of Supervisors, the County’s ‘agent,’ received the details of the proposed deal in mid-January 2016. Under these specific and unique circumstances, the Court is unable to find that the ’impracticability’ of competitive bidding was the product of Pima County’s own making.”

The County previously prevailed on appeal on another part of Goldwater’s lawsuit, in which the conservative Phoenix-based think tank alleged the County’s violated certain State-law requirements applicable to leases of county-owned property. The Arizona Court of Appeals, in a unanimous ruling, agreed with Pima County that state statutes grant counties the ability to lease or sell real property for the purposes of economic development without following the usual leasing process.

“I hope this ends Goldwater’s politically inspired assault on job creation in Pima County,” said County Administrator Chuck Huckelberry. “The county is always diligent about compliance with state laws, including when it comes to economic development. These successive court victories bear that out.”

World View is an innovative space technology company developing high altitude balloons capable of lifting various types of payloads to the stratosphere. World View’s clients include numerous companies and agencies, including NASA, defense contractor Northrop Grumman and several universities.

Pima County entered into the economic development agreement with World View to bring hundreds of high-paying jobs to the region. World View now has 90 full-time employees with average annual salaries greater than $78,000. The company expects to eventually have about 400 employees.

While the county spent about $15 million building the 135,000 square-foot administrative and manufacturing headquarters to lease to World View, taxpayers will receive more than $24.8 million in lease payments over the course of the agreement, making a profit of more than $9 million.

In addition, Phoenix-based Applied Economics Inc. in 2015 conducted an economic impact study of World View’s proposed operation and estimated the company could have a $3.5 billion direct and indirect impact on the local economy over the next 20 years.

To learn more, County Administrator’s memo with court ruling here. Appellate court ruling Press Release from December here.