In 2015, the city of Peoria, Arizona made a deal to persuade Huntington University, an Indiana-based private Christian university, to open a satellite campus in Peoria. The agreement involved $2.6 million in subsidies; most went to Huntington, but $700,000 dollars also went to a private company that renovated a building for the university.

The specifics here may be unique, but cities make deals like this all the time to lure businesses to town, in the name of “economic development.” So what makes the case in Arizona so interesting?

Well, earlier this month, that state’s supreme court determined Peoria's Huntington deal violated the Arizona constitution’s gift clause. In an unanimous decision, the court ruled that state and local governments must ensure the public receives real benefits in exchange for subsidies. Bob Christie of the Associated Press wrote that the case will have “wide ramifications” for state and local governments that feel the need to cut deals to lure new business. Henceforth in Arizona, “providing subsidies must do more than provide greater economic activity, they must bring the city some real return on its investment or they are illegal.”

This story out of Arizona is the topic of this week’s episode of Upzoned, with host Abby Kinney, an urban planner in Kansas City, and regular cohost Chuck Marohn, the founder and president of Strong Towns. Abby and Chuck discuss the ways cities often use subsidies now, which more closely resembles gift-giving than investing. They also talk about a Strong Towns approach to incentives, why cities really do have to function like families, and how this ruling in Arizona may make room for projects so long relegated to the sidelines—the ones that are less flashy, but much more likely to generate real wealth.

Then in the Downzone, Chuck talks about a book he’s reading about a pragmatic, non-alarmist response to climate change. And Abby describes how battling frigid temperatures have kept her too busy to read or watch much.

Additional Show Notes:

“Arizona high court says cities must benefit from subsidies,” by Bob Christie

Abby Kinney (Twitter)

Charles Marohn (Twitter)

Gould Evans Studio for City Design

Theme Music by Kemet the Phantom (Soundcloud)

Recent Strong Towns content on economic development“Building Strong Local Economies (without Cheesecake Factory),” by Charles Marohn

“Chris Bernardo: Filling the Gaps to Support Local Businesses” (Podcast)

“This Is How You Grow a Local Economy” (Podcast)

“Fighting for Small Businesses and Local Economies” (Podcast)

“How Does Your Economic Garden Grow?” (Podcast)

“How should my town be doing economic recovery right now?” By Rachel Quednau