Thursday, May 21, 2009

Nonprofit Sues Arizona Claiming New State Law Emptied Government Fund Benefiting the Nonprofit

Faced with budget problems, Arizona swiped $22.5 million from its 21st Century Competitive Initiative Fund, leaving Science Foundation Arizona with $18.4 million in unpaid reimbursements, the nonprofit claims in Maricopa County Court. The nonprofit, which uses research and development to diversify the state's economy, says Arizona Senate Bill 1001, signed into law on Jan. 31, emptied the fund of $22.5 million and dumped it into the general fund. The plaintiff argues that Arizona failed to make payments of $6.2 million and $10.7 million in November and December 2008, noting that the state had a cash flow problem,  forcing the plaintiff to advance "the private portion of grant payments to pay for the research work needed early." 

Science Foundation Arizona seeks a writ of mandamus ordering the state to pay it $18.4 million. The Arizona 21st Century Competitive Initiative Fund was established in 2006 to create "a partnership between Arizona and the business community to fund various research and development programs in partnership with private entities throughout the state, in an effort to diversify the state's economy and create higher paying jobs," according to the complaint. The contract between the Arizona Commerce and Economic Development Commission and Science Foundation Arizona outlined what would happen if the state "needed to either suspend or terminate the contract because of a lack of funding or if the State wanted to terminate for convenience," according to the lawsuit. The contract allowed the state to terminate "for convenience" upon 30 days written notice, but provided that the contractor "[would] be entitled to receive just and equitable compensation for that work completed prior to the effective date of termination." The foundation had $7.6 million from grants that were awarded in 2007 and continued in 2008 and 2009. The foundation says it spent the money but was not reimbursed by the state.

SS

http://lawprofessors.typepad.com/nonprofit/2009/05/nonprofit-sues-arizona-claiming-new-state-law-emptied-government-fund-benefiting-the-nonprofit.html

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