Achen-Gardner, Inc. v. Superior Court In and For County of Maricopa
| Decision Date | 14 August 1990 |
| Docket Number | ACHEN-GARDNE,CA-SA,INC,No. 1,1 |
| Citation | 809 P.2d 961,167 Ariz. 536 |
| Parties | , an Arizona corporation, Petitioner, v. SUPERIOR COURT of the State of Arizona, In and For the COUNTY OF MARICOPA, the Honorable David L. Roberts, a Judge thereof, Respondent Judge, CITY OF CHANDLER, a municipal corporation; and Jeri-Co Group, Inc., an Arizona corporation, Real Parties in Interest. 90-089. |
| Court | Arizona Court of Appeals |
Achen-Gardner, Inc., (Achen-Gardner) brought this special action against the Superior Court, in and for Maricopa County, and real parties in interest the City of Chandler (Chandler) and Jeri-Co Group, Inc. (Jeri-Co). Achen-Gardner asks this court to consider whether the public street improvement project undertaken by Chandler and Jeri-Co, through a development agreement under the provisions of A.R.S. § 9-500.05, is subject to Arizona's competitive bidding statutes, A.R.S. §§ 34-201 to -226. We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, A.R.S. § 12-2101 B, and Rule 8, Arizona Rules of Procedure for Special Actions. See Big D Constr. Corp. v. Court of Appeals, 163 Ariz. 560, 789 P.2d 1061 (1990). On July 13, 1990, we entered our order to the Superior Court to comply with the directives set forth in our conclusion in this opinion.
In 1988, the Arizona Legislature enacted A.R.S. § 9-500.05, which provides in pertinent part as follows:
A. A municipality, by resolution or ordinance, may enter into development agreements relating to property in the municipality....
. . . . .
F. In this section, unless the context otherwise requires:
1. "Development agreement" means an agreement between a municipality and ... a landowner or any other person having an interest in real property that may specify or otherwise relate to any of the following:
. . . . .
(g) Conditions, terms, restrictions and requirements for public infrastructure and the financing of public infrastructure and subsequent reimbursements over time.
The purpose of this legislation is to permit the expeditious construction of needed or desired public improvements in order to facilitate a proposed private development. The initial capital outlay for the costs of the public improvements is provided by the developer who is assured of reimbursement by the municipality pursuant to an agreed upon repayment schedule. This procedure permits the developer to have the public improvements ready for use when the development is opened to the public; permits the municipality to avoid the risk of performing improvements for a project that might not materialize; and further permits it to factor repayment into the municipal budget over a period of time, and upon such contingencies as the parties may specify.
In June 1989, Chandler entered into a development agreement pursuant to A.R.S. § 9-500.05 with D.W.C. Commercial Properties (D.W.C.) to develop the Sun-Tech Center, a retail commercial development located on the northeast corner of Alma School and Warner Roads. The agreement required the developer to modify certain existing public streets as off-site improvements necessary for the private development of the site. In return, Chandler was to reimburse the developer for the full cost of these off-site improvements from a portion of the sales taxes collected from the development's retail tenants. The agreement also provided that "Developer awards contract to lowest reasonable bidder; if for some reason Developer rejects bid, then Developer pays the difference between lowest bid and bid selected." This agreement was recorded in the Maricopa County recorder's office on June 15, 1989. D.W.C. subsequently assigned its rights and obligations under the development agreement to Jeri-Co.
In November 1989, Achen-Gardner received the "Notice of Call for Bids" for the Sun-Tech Center's off-site improvements on Chandler city letterhead, designating Chandler and Jeri-Co/Walmart Stores, Inc., as "Joint Developers." Interested contractors were invited to submit bids to the Chandler purchasing office, where a pre-bid conference was also held, at which Chandler officials described the development agreement and informed bidders that Jeri-Co, not Chandler, would award the street improvement contract.
Achen-Gardner submitted a timely bid proposal ($394,553.87) and bid bond to Chandler officials. On December 18, 1989, after publicly opening the bids, Chandler officials announced that Achen-Gardner was the lowest bidder by almost $31,000. On December 21, the Chandler city engineer sent a letter to Jeri-Co recommending that they award the project contract to Achen-Gardner as the lowest bidder, and stated that Chandler would reimburse Jeri-Co only up to the $394,553.87 amount.
Early in January 1990, Achen-Gardner contacted Jeri-Co and identified itself as the low bidder and requested a meeting to discuss the street project. Jeri-Co informed Achen-Gardner that the decision to award the contract had not been made. Achen-Gardner later learned that Jeri-Co would not award it the contract and instead would perform the street improvements themselves, even though Jeri-Co had not submitted a bid. 1
Achen-Gardner then requested Chandler's help in awarding the contract, but a representative of Chandler told Achen-Gardner that, under the development agreement, Chandler was powerless to award the contract. Achen-Gardner thereafter met with the Chandler city attorney, who told Achen-Gardner that the Chandler city council would recommend to Jeri-Co that it award the street improvement contract to Achen-Gardner. Jeri-Co, however, refused. Consequently on February 1, 1990, counsel for Achen-Gardner sent a demand letter to Chandler's mayor and city attorney, Jeri-Co, and D.W.C., demanding that Chandler and Jeri-Co award the contract to Achen-Gardner immediately. Jeri-Co again refused.
On April 6, 1990, Achen-Gardner filed a special action in superior court, claiming that Chandler's development agreement violated Arizona's competitive bidding laws, and seeking an order (1) enjoining the actions of Chandler and Jeri-Co, and (2) awarding the street improvement contract to Achen-Gardner. After a hearing, respondent trial judge granted Chandler's and Jeri-Co's motions for directed verdict and denied Achen-Gardner's requested relief, concluding that Achen-Gardner had constructive notice that Jeri-Co and not Chandler would award the contract, that ... "No reason has been shown as to why the developer must comply with the competitive bidding statutes in awarding the contract," and that ... "The City and the public are protected by the bidding procedures used because reimbursement is limited to the amount of the low bid." Achen-Gardner filed a petition for special action, asking, inter alia, that this court review whether development agreements pursuant to A.R.S. § 9-500.05 are subject to Title 34, Arizona's competitive bidding statutes. Subsequently, we granted leave to the Arizona League of Cities and Towns to appear and file a brief as amicus curiae, urging this court to find that public street improvements are not "structures" and, therefore, are not subject to competitive bidding statutes. We also allowed the Associated General Contractors of America--Arizona Building Chapter to appear and file a brief as amicus curiae, urging this court to hold (1) that all public work projects are subject to Arizona's bidding laws; and (2) that development agreements pursuant to A.R.S. § 9-500.05 are not exempt from the restrictions imposed by Title 34.
Because this case is one of first impression in Arizona and has state-wide impact, we granted special action jurisdiction. Our conclusions lead us to grant the relief requested.
The first issue we address is whether this public street improvement is a "structure, addition or alteration" under A.R.S. § 34-201 and, therefore, subject to competitive bidding statutes.
According to the record before us, this off-site street improvement project calls for reconfiguring Warner, Mariposa, and Alma School Roads, installing traffic signals and signs, and restoring the landscaping. The work contemplated is precise and detailed. The plans and specifications require the contractor to cut and remove 2,381 square yards of pavement, 2,134 linear feet of curbs and gutters, and 8,642 square feet of sidewalks, along with existing storm drains, basins, and drain pipes. Fire hydrants and electronic traffic signals with 2,455 linear feet of conduit must be relocated. After the existing roadways are realigned, the project requires constructing 2,302 linear feet of integral concrete curb and gutter, 13,558 square feet of concrete sidewalk with ramps, 4,100 square feet of curb return, and new curb openings for spillways. The contractor must then regrade 4,189 square yards of roadway area enclosed by these improvements, and pave it with layers of ABC material and asphalt. The plan also requires construction of 1,844 linear feet of concrete median curbing and median landscaping.
Contracts for public improvements and the applicability of competitive bidding to public works are governed by Title 34 of the Arizona Revised Statutes. The Arizona legislature...
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