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Our View: Arizona State University should have no business in real estate

January 22, 2019

With a few exceptions, Arizona State University shouldn’t be in the real estate business.

Arizona Attorney General Mark Brnovich is bringing attention to an unfair practice by the state university system that involves cutting real estate deals on tax-exempt land for private businesses.

To be fair, universities do have to have some flexibility in this department. For example, state law specifically authorizes universities to operate research parks where private companies engage in educational or research activities on college campuses — and pay a reduced property tax. However, the subject of Brnovich’s lawsuit against ASU is a 330-room Omni hotel and 30,000-square-foot conference center proposed for a parcel of land the university owns near the Tempe campus. The attorney general argues that such deals remove property from the tax rolls and shifts the overall tax burden to other local and state agencies.

University officials contend that the policy allows the institution to earn money that helps underwrite the cost of running the university. While it’s true that the cost of providing world-class education is by no means an inexpensive undertaking, and we generally applaud outside-the-box thinking that keeps costs down for both students and taxpayers, it’s clear that the university is simply taking advantage of a loophole that shouldn’t exist.

ASU’s chief argument against Brnovich’s claim is that the lawsuit “a huge waste of taxpayer money.” (This is an interesting statement coming from an institution that can hardly be accused of pinching taxpayer pennies. It was only in August that ASU inked a deal to lease an old newspaper office in the heart of downtown Los Angeles, but declined to make public the costs of renovation or intentions about how the space would be used.)

The Omni project is hardly the first commercial deal for ASU. The university is home to the relatively new Marina Heights Project, which involves about 20 acres of land along Tempe Town Lake for private office space, including offices for State Farm Insurance. That deal leases out the land to a private, commercial party for 99 years.

It doesn’t require a graduate degree to understand that, legal or not, these are not appropriate agreements. ASU ought to get out of the real estate business and sell off land if it’s no longer necessary for instructional purposes.

— Today’s News-Herald

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