City of Apache Junction, et al. v Doolittle – 3/17/2015

March 23, 2015

Arizona Court of Appeals Division One holds that county treasurer is not required to distribute tax increment financing revenue to finance redevelopment projects adopted by cities before the repeal of A.R.S. § 36-1488.01.

In May 1999, the Arizona Legislature repealed a statute that had enabled municipalities to fund redevelopment projects with tax increment financing (“TIF”).  Despite the repeal, which was effective retroactively to December 31, 1998, the county treasurer distributed TIF revenues to Apache Junction and Casa Grande for certain redevelopment projects until 2010.  The county treasurer thereafter refused to make any additional TIF distributions.  The cities filed the present lawsuit against the county treasurer seeking a writ of mandamus ordering the treasurer to distribute TIF funds.  The superior court granted summary judgment to the county treasurer and the cities filed a timely appeal.

The court of appeals affirmed summary judgment in favor of the county treasurer.  The court of appeals held that when the Legislature repealed A.R.S. § 36-1488.01, it revoked the county treasurer’s duty to allocate, collect and pay TIF distributions after the effective date.  Although the cities argued that the repealing act left intact their right to TIF distributions adopted in redevelopment plans before the repeal, the court found that the straightforward language of the repealing act did not support this argument.

The court of appeals also rejected the cities’ argument that the repeal of A.R.S. § 36-1488.01 abrogated their right to TIF distributions in violation of A.R.S. § 1-249, which provides that “no right accrued is affected by the repealing act.”  A statutory right accrues when all conditions necessary for enforcement have occurred before the effective date of the repeal.  The cities argued that their right to receive TIF distributions accrued when they promulgated their redevelopment plans prior to repeal.  The court held, however, that the right to TIF distributions was contingent on taxes actually being levied, allocated and collected.  The right to TIF distributions arising from taxes levied after the repeal of A.R.S. § 36-1488.01 had not accrued and was not enforceable when the cities approved their redevelopment plans.

Judge Norris authored the opinion; Judges Downie and Howe concurred.