Arizona Judges Reconsider Scottsdale’s Potentially Unconstitutional Move

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by Cole Lauterbach

 

A panel of judges is deliberating whether Scottsdale violated the “Gift Clause” in Arizona’s constitution.

The Arizona Court of Appeals Division One heard arguments for and against a challenge to the city of Scottsdale passing over a higher bid from Swim Neptune to grant the Scottsdale Aquatic Club rights to use city pools.

Swim Neptune, a for-profit club that operates in Phoenix with swimmers age 5 through high school, alleges the city violated the Arizona Constitution and said the club should be made whole. Arguing its case is the Scottsdale-based nonprofit Goldwater Institute.

At issue is whether the city improperly awarded a contract to the Scottsdale Aquatic Club for a lower amount than what Neptune Swimming Foundation offered. This came about after the city rescinded a request for proposals where Neptune appeared to have cast the winning bid.

A lower court sided with the city, saying the procurement process was different from what’s described in the Gift Clause.

Goldwater Senior Attorney Jon Riches said the city is subsidizing one private entity using taxpayer resources.

“You have $438,000 versus $153,000,” Riches said, comparing the higher bid from Neptune compared with what was offered by the Scottsdale Aquatic Club.

Riches argued that, should the courts endorse this type of contract discretion, this type of partial behavior would become widespread.

“If the city of Scottsdale can do this with public resources here in this case with swimming pools, it can do it with any public resource anywhere throughout the … state,” he said.

Scottsdale attorney Eric Anderson argued that, if anything, the city made a mistake and an “abuse of discretion” in canceling the request for bids and didn’t violate the constitution.

“When the acting procurement officer looked at this, he discovered there was an error in the process,” he said, explaining that a former procurement officer should have handed the matter off to a committee to be scored in a way that would have weighted the bids in Scottsdale Aquatic Club’s favor.

Judge Jennifer Perkins questioned Anderson, saying the entire process “looks hinky” and appears to have benefitted a favored customer.

“The Gift Clause seeks to avoid using government resources to benefit or give special advantage to private interests,” she said. “Isn’t Neptune saying this cancelation of the RFP worked to give a special advantage to a private interest and that is why the city canceled the RFP? If they hadn’t canceled the RFP, the winning bidder would have been the non-preferred entity.”

Anderson insisted the reason for the view of impropriety was a mistake in the procurement weighting.

The three-judge panel will deliberate the appeal and issue a ruling at a later date.

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Cole Lauterbach is a regional editor for The Center Square covering Arizona, California, Oregon, and Washington. For more than a decade, Cole has produced award-winning content on both radio and television.
Photo “Pool” by GoldwaterInstitute.

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