Nothing in the Arizona Constitution bars the City of Phoenix from charging fees to for-profit companies like Uber and Lyft for conducting business at Sky Harbor International Airport, attorneys for the city said in a letter this week to the attorney general.
In a 19-page response to a legal challenge from a Republican legislator, attorney Jean-Jacques Cabou argued that the constitution gives cities a right to perform business functions. The argument from Rep. Nancy Barto and other Republicans opposed to the increased fees, including Gov. Doug Ducey, cherry-picks a few words from a constitutional ban on fees for services in order to comport to their view, Cabou added.
“For the City and its Airport to conduct business activities—as they have a constitutional right to—they must be able to charge reasonable fees for the use of their property,” Cabou wrote.
Barto last month formally challenged the city’s increase of fees for airport pick-ups and drop-offs by rideshare companies. She filed a complaint with Attorney General Mark Brnovich, alleging that the fees violate a provision of the Arizona Constitution barring new taxes, fees or assessments on services. Voters approved the prohibition in 2018 when they passed Proposition 126.
The challenge is known as an SB1487 complaint, named after the 2016 law that permits any legislator to ask the attorney general to review an action by any municipality or county if they believe that action violates state law. If the attorney general finds a violation, the offending law must be repealed or the violator loses 10 percent of the money it receives from state tax revenues.
In his response to Barto’s complaint, Cabou argued that the increased fees aren’t covered by the constitutional ban for several reasons.
First, the airport is allowed to charge businesses to use “valuable, limited” airport resources – in this case, roadways and curb space. Similarly, the city charges airlines fees for each flight and restaurants rent to operate inside the terminals. The fees aren’t necessary for the companies to do business in the city, but are “a charge for the use of specific City-owned property—the roadway system and other infrastructure at the Airport—for profit-making commercial purposes.”
And the fees aren’t “transaction-based,” one of the criteria for banned fees in the constitution. Rather than charging the companies fees for every ride conducted in the city – which Cabou said would be unconstitutional – the fees only trigger when a vehicle conducts a pick-up or drop-off at the airport.
“They apply only when a (rideshare company) vehicle enters and uses valuable, scarce property for profit,” he wrote.
Cabou also argued that the fees aren’t “imposed on” the companies – another constitutional requirement – because Uber and Lyft have each voluntarily entered into an agreement with the city to pay fees in order to use airport property.
He also pointed to the history of the constitutional provision in question. When it was put before voters in 2018, there was no mention of barring cities from increasing fees for the use of city property. Instead, voters were told that the intent was to bar sales taxes on services, like daycare or automotive repair.
“The ballot itself said nothing about ‘fees’ at all and nothing about charges for the use of publicly owned property for commercial purposes,” Cabou wrote.
There’s also a potential conflict with federal law if the AG or the courts rule that the fee increase is unconstitutional. Cabou argued that federal laws require the city to impose charges to “make the airport as self-sustaining as possible.” The increased fees seek to do that, he notes, because rideshare vehicles now account for two-thirds of all pick-ups at the airport, which strains airport infrastructure and congests roadways.