Neptune Swimming Foundation v. City of Scottsdale

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

NEPTUNE SWIMMING FOUNDATION,
Plaintiff/Appellant,

v.

CITY OF SCOTTSDALE,
Defendant/Appellee.

No. CV-23-0076-PR
Filed February 6, 2024

Appeal from the Superior Court in Maricopa County
The Honorable Joseph P. Mikitish, Judge
No. CV2019-007172

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

Memorandum Decision of the Court of Appeals, Division One
1 CA-CV 21-0053
Filed March 9, 2023

VACATED

COUNSEL:

Timothy Sandefur, Jonathan Riches (argued), Scott Day Freeman,
Scharf-Norton Center for Constitutional Litigation at the Goldwater
Institute, Phoenix; Dennis L. Hall, Dennis L. Hall, Attorney PLLC,
Scottsdale, Attorneys for Neptune Swimming Foundation

Scot L. Claus (argued), Vail C. Cloar, Holly M. Zoe, Alexandra Crandall,
Dickinson Wright PLLC, Phoenix; Eric C. Anderson, Scottsdale City
Attorney’s Office, Scottsdale, Attorneys for City of Scottsdale

NEPTUNE V. SCOTTSDALE
Opinion of the Court

Kory Langhofer, Thomas Basile, Statecraft PLLC, Phoenix, Attorneys for
Amicus Curiae Arizona Free Enterprise Club and Grand Canyon Legal
Center

Joshua Bendor, Alexander W. Samuels, Luci D. Davis, Office of the
Attorney General, Attorneys for Amicus Curiae State of Arizona

Linley Wilson, Arizona House of Representatives; Rusty Crandell, Arizona
State Senate, Phoenix, Attorneys for Amici Curiae Speaker of the Arizona
House of Representatives Ben Toma and President of the Arizona State
Senate Warren Petersen on Behalf of the 56th Arizona Legislature

VICE CHIEF JUSTICE TIMMER authored the Opinion of the Court, in
which CHIEF JUSTICE BRUTINEL and JUSTICES BOLICK, LOPEZ,
BEENE, MONTGOMERY, and KING joined.

VICE CHIEF JUSTICE TIMMER, Opinion of the Court:

¶1 This case involves private swim clubs vying for exclusive
rights to use the City of Scottsdale’s (the “City”) four public aquatic centers
to operate competitive youth swimming programs. To decide whether
Scottsdale Aquatic Club (“SAC”) or Neptune Swimming Foundation
(“Neptune”) should receive an operating license commencing in 2019, the
City used a request-for-proposal (“RFP”) process outlined in its
procurement code. It later canceled the RFP after evaluating the clubs’
proposals and declined to award a license to Neptune, which had
submitted the proposal most financially lucrative to the City. Instead, the
City exercised an option to extend an existing license agreement with SAC,
which had operated programs at the centers for over fifty years.

¶2 We are asked two questions. First, did the court of appeals
err in holding that a qualified bid from the higher bidder should not be
considered when deciding whether the City violated article 9, section 7 of
the Arizona Constitution (the “Gift Clause”)? Second, did the City fail to
follow its own rules by canceling the RFP and therefore abuse its discretion

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in deciding which club should be awarded the license? As to the first
question, we answer that the higher bid in the RFP process was relevant,
but not conclusive, in determining the fair market value of the license. A
public entity does not necessarily violate the Gift Clause by choosing the
less profitable arrangement. As to the second question, we find that an
issue of material fact exists about whether the City violated its own
procurement process, thereby precluding summary judgment for the City
on that issue.

BACKGROUND

¶3 The City provides recreational facilities and programs
“believing that the provision of leisure . . . is necessary to meet significant
social, physical, informational and mental health needs of the community.”
Scottsdale Revised Code, ch. 20, art. IV, div. 1, § 20-51(a). To that end, the
City allows open public swimming at its aquatic centers, provides
recreational and learn-to-swim programs for all ages, and rents remaining
pool time to outside groups, charging fees to offset costs rather than to
maximize profit. The Scottsdale City Council (the “City Council”)
establishes fees and rental rates for using its parks and recreational
facilities, including the aquatic centers. Scottsdale Revised Code, ch. 20,
art. IV, div. 1, § 20-52(a).

¶4 From 1966 until 2016, the City and SAC, a non-profit
corporation, entered into annual agreements, which granted SAC exclusive
rights to conduct a competitive youth swimming program at the City’s
aquatic centers. From at least 2006, Neptune unsuccessfully sought to
replace SAC in operating this program.

¶5 The events culminating in this lawsuit started on July 1, 2016,
when the City and SAC entered into a revocable license agreement (the
“2016 License”) for three years with two, one-year options to extend the
license term. Under that agreement, SAC agreed to (1) “support, promote,
operate and administer” a competitive youth swimming team for City
youth and provide swimming competitions sanctioned by USA Swimming,
Inc.; (2) pay hourly rates unilaterally set by the City Council to use pool lap
lanes ($3.00 per hour for short-course lanes and $7.00 per hour for
long-course lanes), as adjusted from time to time by the City Council;
(3) pay other fees, including rental fees for office and storage space; and
(4) assist the City with its summer recreational swimming programs. In
return, the City gave SAC access to the aquatic centers when pool space was

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not being used for other City programs. The City could unilaterally
increase or decrease SAC’s usage hours and schedule other public activities
during the same hours.

¶6 The City provided the 2016 License because it wanted to offer
a competitive youth swimming team “for the benefit of City residents, in
the most economical and efficient manner,” and SAC could achieve that
goal by operating a team “sponsored by the City” and by providing
competitions. Because the City desired “to provide recreational
opportunities for residents,” it required SAC to primarily train and coach
City residents and encourage their participation by implementing tactics
like reducing participation fees. The 2016 License acknowledged that
SAC’s operation would “foster the development of the youth of the City,
promote the development of competitive swimming skills and bring
national and international visitors to the City for multiple day periods when
attending competitions, which encourages shopping, eating and staying in
the City.”

¶7 More than one year later, on August 8, 2017, Neptune
objected to the 2016 License. Neptune complained that the 2016 License
was granted “at significantly below market rates and without compliance
with open bidding” in violation of the Gift Clause. 1 Consequently,
Neptune demanded that the City rescind the 2016 License and use an open
bidding process to determine which club should be granted the exclusive
right to use the aquatic centers to conduct a competitive youth swimming
program.

¶8 The City defended its decision to grant SAC the 2016 License.
Nevertheless, to give other groups like Neptune an opportunity to obtain
access when the 2016 License’s initial term expired in 2019, the City initiated
a procurement process.

¶9 In early 2018, the City issued the RFP, inviting non-profit
organizations to submit sealed proposals “for an Established Aquatic Youth
Competitive Swim Team.” The RFP sought proposals for a three-year

1 Neptune also asserted that the 2016 License might violate the Scottsdale
City Charter’s Gift Clause. See Scottsdale City Charter, art. 1, § 3(O).
Because Neptune did not pursue that argument with the City or in the
courts, we do not mention it further.

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contract with two, one-year extension options; set out proposal
specifications; and provided that the procurement process would comply
with the ordinances, rules, and procedures described in the Scottsdale
Procurement Code (the “Code”). 2 Like the 2016 License, the RFP required
the winning club to favor City residents and assist the City with recreational
swimming events. The Code required the City to award the license to “the
responsible offeror whose proposal is . . . the most advantageous to the
[C]ity[,] taking into consideration the evaluation factors set forth in the
[RFP].” See City of Scottsdale Procurement Code § 2-188(c)(5) (eff. Feb. 1,
2016) [hereinafter Code].

¶10 The RFP set out proposal components, each of which was
assigned a weight for evaluation purposes: firm/organization
qualifications (20%); key personnel qualifications (10%); team and facility
use/tentative project schedule exceptions (20%); revenue/lap lane hours
(30%); membership-residency requirements plan (20%). For the
revenue/lap lane hours component, the RFP required clubs to propose “lap
lane fees” of at least $4.00 per hour for short-course-lane use and $8.00 per
hour for long-course-lane use and provide the anticipated number of lane
hours to be used annually. The City required the winning club to use at
least 25,000 lane hours per year.

¶11 The RFP also required the winning club to maintain between
300 and 550 team members, mostly comprised of City residents or students
attending schools within the City’s public school system (collectively,
“Residents”). The club was required to charge discounted club fees for
Residents and pay the City at least $60 per non-Resident swimmer. The
City would deposit all fees into a fund used to maintain and repair aquatic
facilities.

¶12 Only Neptune and SAC submitted proposals. As relevant
here, Neptune offered to pay $12 per hour for 32,000 hours of
short-course-lane use and 3,000 hours for long-course-lane use. It also
offered to pay $120 per non-Resident participant and estimated 150 such
participants. Neptune’s proposal would have netted the City $438,000 in
annual revenue. SAC offered to pay the RFP minimum rates of $4.00 per

2 The Scottsdale Procurement Code is codified at Scottsdale Revised Code,
ch. 2, art. IV, div. 4, §§ 2-180 to 2-219. It contains adopted ordinances,
implementing rules, and approved procedures. See id.

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hour for 33,100 hours of short-course-lane use and $8 per hour for 1,120
hours of long-course-lane use. It also offered to pay the RFP minimum of
$60 per non-Resident participant and estimated 200 such participants.
SAC’s proposal would have netted the City $153,360 in annual revenue.
Together with other fixed fees, Neptune offered to pay $284,640 more per
year than SAC in the revenue component of the RFP.

¶13 The City established a committee comprised of three City
employees (the “Committee”) to evaluate and score the proposals on all
components, except expected revenue. The City’s purchasing department
separately evaluated and scored the expected-revenue component. Both
the Committee and the purchasing department assigned points on a scale
from one to five, with five being the highest. After all points were added,
SAC’s proposal scored 31.75 more points than Neptune’s proposal. Thus,
the City’s purchasing department recommended SAC’s proposal, and on
March 26, the City announced it intended to award SAC the license on
April 3.

¶14 On March 30, Neptune formally protested the RFP results
pursuant to the Code § 2-213, claiming a suspected Gift Clause violation.
It asked the City to delay awarding the license and undertake an additional
review. A few days later, on April 3, Neptune asked for a hearing
pursuant to the Code § 2-212 and submitted a formal public records request
for all documents relating to the RFP.

¶15 The City dismissed the protest on April 5 pursuant to the
Code R2-213.3, stating Neptune could only challenge the award based on a
violation of the Code, and no violations had occurred. The City concluded
SAC was “the most advantageous Contractor” and that the recommended
award complied with “all [Code] rules and procedures.” In another letter
to Neptune that day, the City represented it had handled the protest “in
compliance with the City’s [Code].” The City separately provided
Neptune with the RFP’s scoring matrix reflecting the points awarded for
each proposal.

¶16 Neptune discovered that the scoring matrix contained a
tabulation error and that Neptune had actually received 0.75 more total
points than SAC. Therefore, on April 6, Neptune informed the City of the
error and asserted that the City should award Neptune the license.

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¶17 Prompted by Neptune’s protest, an assistant City manager
examined the RFP process. He agreed that a scoring error had occurred,
“result[ing] in a virtual tie between Neptune and SAC based on pure
arithmetical scoring.” The manager also indicated he had found
anomalies in the RFP process, including the RFP’s failure to clarify whether
the per-lane hourly fee included City staff time charges. Notably, he
expressed concern whether “using revenue as the primary factor in
determining the award could result in significant fee increases for
swimmers without going through a public process,” like the City Council’s
annual fee-setting process. He also questioned whether one club’s
lap-lane use estimate (presumably, Neptune’s estimate) was realistic in
light of the historic availability of lane hours. For all these reasons, he
decided the Committee should interview Neptune and SAC and then make
a new recommendation for awarding the license. The City therefore asked
Neptune and SAC to make presentations.

¶18 Both Neptune and SAC declined the City’s request.
Neptune maintained it should be awarded the license as the successful
bidder under the RFP process. SAC acknowledged the Committee’s
tabulation error but asserted that the corrected total still showed that SAC
scored higher than Neptune. SAC also asserted that “a further analysis of
points would be rendered moot by the fact that Neptune cannot qualify as
a responsive or responsible bidder.”

¶19 On May 11, the City canceled the RFP and rescinded its
previous notice of intent to award SAC the license. For the first time, the
City stated that because it was not “purchasing materials, services or
construction” and competitive youth swimming “is not a City-mandated or
City-sponsored program,” the Code did not govern the licensing
proceedings. Instead, the City asserted that the Code served as a “guide”
for determining which proposal was most advantageous to the City.
Consequently, it rejected Neptune’s arguments that the Code required the
City to award Neptune the license. The City concluded that canceling the
RFP would be in its best interests.

¶20 About eleven months later, on April 8, 2019, before the 2016
License issued to SAC was set to expire, the City exercised the option to
extend that license for an additional year. Soon thereafter, the City set
per-hour lane fees at $4.00 for short-course lanes and $8.00 for long-course
lanes, subject to future revision by the City Council. The City set those
fees after “benchmarking” fees charged by other Arizona cities for pool use

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by sponsored or partnered teams, although the comparisons were not
perfect because the cities had different populations, were located in
different parts of the state, and had different fee schemes.

¶21 Neptune filed this lawsuit claiming the City violated the Code
by not awarding the license to the most advantageous proposer. It
alternatively claimed the City violated the Gift Clause by awarding SAC
the 2016 License at below-market rates. Neptune sought to invalidate the
2016 License and compel the City to grant Neptune a license as the
successful proposer under the RFP. Alternatively, Neptune sought
declaratory relief. The superior court ultimately granted summary
judgment for the City, and the court of appeals affirmed. Neptune
Swimming Found. v. City of Scottsdale, No. 1 CA-CV 21-0053, 2023 WL
2418546 (Ariz. App. Mar. 9, 2023) (mem. decision).

¶22 We accepted review of Neptune’s subsequently filed petition
for review. Although the matter is moot because any license awarded
under the RFP would have expired, and the 2016 License has been fully
performed, we nevertheless address Neptune’s challenge because the
petition presents questions of great public importance that are likely to
recur. See In re Pima Cnty. Mental Health No. 20200860221, 255 Ariz. 519,
523–24 ¶ 8 (2023). We have jurisdiction pursuant to article 6, section 5(3)
of the Arizona Constitution.

DISCUSSION

¶23 We review the superior court’s grant of summary judgment
for the City de novo. Glazer v. State, 237 Ariz. 160, 167 ¶ 29 (2015).
Summary judgment was appropriate if the material facts were not
genuinely disputed and the City was entitled to judgment as a matter of
law. See Ariz. R. Civ. P. 56(a). Also, we review the interpretation and
application of the Gift Clause and the Code de novo as issues of law. See
Cheatham v. DiCiccio, 240 Ariz. 314, 317–18 ¶ 8 (2016), overruled in part on
other grounds by Schires v. Carlat, 250 Ariz. 371, 378 ¶ 23 (2021); Rollo v. City
of Tempe, 120 Ariz. 473, 474 (1978).

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A. Did The Court Of Appeals Err In Holding That Qualified Bids From
A Higher Bidder Should Not Be Considered When Deciding Whether
The City Violated The Gift Clause?

1. General Principles

¶24 We lay the groundwork for answering this question by
describing the Gift Clause and our framework for determining a violation.
The Gift Clause provides, in relevant part, that “[n]either the state, nor any
county, city, town, municipality, or other subdivision of the state shall ever
give or loan its credit in the aid of, or make any donation or grant, by
subsidy or otherwise, to any individual, association, or corporation.”
Ariz. Const. art. 9, § 7. The provision exists to prevent “depletion of the
public treasury or inflation of public debt by a public entity engaging in
non-public enterprises . . . or by giving advantages to special interests.”
Schires, 250 Ariz. at 374 ¶ 6 (first quoting State v. Nw. Mut. Ins. Co., 86 Ariz.
50, 53 (1959); then quoting Wistuber v. Paradise Valley Unified Sch. Dist., 141
Ariz. 346, 349 (1984)) (cleaned up).

¶25 Our courts use a two-pronged test to determine whether a
public entity has violated the Gift Clause. See id. at 374 ¶ 7. “First, a court
asks whether the challenged expenditure serves a public purpose.” Id. If
the answer is “no,” “the expenditure violates the Gift Clause, and the
inquiry ends.” Id. at 374–75 ¶ 7. If the answer is “yes,” “the court
secondarily asks whether the value to be received by the public is far
exceeded by the consideration being paid by the public.” Id. at 375 ¶ 7.
That inquiry “focuses on what the public is giving and getting from an
arrangement and then asks whether the ‘give’ so far exceeds the ‘get’ that
the government is subsidizing a private venture in violation of the Gift
Clause.” Id. at 376 ¶ 14. Thus, courts must identify the “objective fair
market value of what the private party has promised to provide” and then
determine its proportionality to the public entity’s consideration. Id.
(quoting Turken v. Gordon, 223 Ariz. 342, 350 ¶ 33 (2010)); accord id. at 378
¶ 23. The party alleging that a public entity violated the Gift Clause bears
the burden of proving it. See id. at 375 ¶ 7.

2. Application

¶26 Neptune does not contest that the 2016 License serves a public
purpose, and we agree. As the City declared, dedicating parts of the City’s
aquatic centers for competitive youth swimming enriches the lives of the

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City’s youth and their families, and it generates tourism dollars for local
businesses. See id. at 375 ¶ 8 (noting that a public purpose generally
“promotes the public welfare or enjoyment”). The 2016 License satisfies
prong one of the Gift Clause inquiry.

¶27 The question here concerns the court of appeals’ application
of the inquiry’s second prong, which we call the “consideration prong.”
Before addressing Neptune’s challenge, we briefly address the City’s
argument that the consideration prong is inapplicable because the 2016
License does not cost the City anything. The City asserts that if an
arrangement does not require a public entity to either spend money or
forego collecting it, the consideration prong cannot apply as no public
“expenditure” exists to measure against the private entity’s consideration.
In those circumstances, the City maintains, as long as an arrangement
serves a public purpose, it does not violate the Gift Clause.

¶28 The consideration prong applies here. An expenditure
governed by the Gift Clause is “any donation or grant, by subsidy or
otherwise,” and is not limited to monetary expenditures or debt
forgiveness. See Ariz. Const. art. 9, § 7; accord Ariz. Ctr. L. Pub. Int. v.
Hassell, 172 Ariz. 356, 367 (App. 1991) (“The framers did not restrict their
prohibition [in the Gift Clause] to the grant of public money.”). Granting
a private enterprise exclusive use of City-owned property, even absent a
monetary cost to the City, constitutes an expenditure for Gift Clause
purposes. See Schires, 250 Ariz. at 376 ¶ 14 (“The state may not give away
public property . . . .” (quoting Yeazell v. Copins, 98 Ariz. 109, 112 (1965)));
City of Tempe v. Pilot Props., Inc., 22 Ariz. App. 356, 362–63 (1974) (applying
the consideration prong to a long-term lease of public property for use as a
major league spring training complex).

¶29 Contrary to the City’s argument, such arrangements are not
like the tax credit challenged under the Gift Clause in Kotterman v. Killian, 193 Ariz. 273 (1999). There, the Court reasoned that because the state does
not own untaxed taxpayer income, foregoing collecting some of that income
by applying the credit could not be a “gift.” See id. at 288 ¶ 52. Here, the
City owns the property access rights granted by the 2016 License, and we
can determine the proportionality of the consideration given and received
by the City for those rights. See Pilot Props., 22 Ariz. App. at 363.

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¶30 We now address whether the court of appeals properly
applied the consideration prong. The court found that Neptune’s
willingness to pay more for a license than SAC in the RFP process was
irrelevant in determining the objective fair market value of what SAC
provided under the 2016 License because Neptune’s offer concerned a
“failed RFP process resulting in no agreement.” See Neptune Swimming
Found., 2023 WL 2418546 at *5–6 ¶¶ 32–35. The court instead examined
the 2016 License in isolation and concluded that the fees charged by other
cities for similar licenses provided sufficient evidence for the superior court
to determine as a matter of law that the City’s “give” did not far exceed its
“get.” See id. at 6 ¶¶ 35–36.

¶31 Neptune argues that the court of appeals erred because
competitive bidding establishes fair market value by demonstrating what a
knowledgeable, willing party would pay for a license in an arm’s-length
transaction. It contends that if the court of appeals had properly
considered Neptune’s bid, the court should have valued the license at
$284,640 more per year than what the City charged SAC, thus
demonstrating that the City’s “give” far exceeded its “get.”

¶32 As the court of appeals correctly found, the consideration
prong focuses on the challenged arrangement alone and does not ask the
court to consider whether the public entity could have made a better deal.
See id. at *5 ¶ 32. Thus, whether the City could have entered into a more
financially profitable arrangement with Neptune does not resolve whether
the “give” and the “get” from the 2016 License were grossly
disproportionate. See Schires, 250 Ariz. at 376 ¶¶ 13–14. As amicus State
of Arizona correctly stated, the Gift Clause “is simply a check on the
proportionality of the deal that was chosen.”

¶33 Nevertheless, we agree with Neptune that its failed
competitive bid is relevant to determining the objective fair market value of
what SAC promised to provide under the 2016 License. Neptune’s bid
reflects what one qualified organization was willing to pay for a
substantially similar license. See Bus. Realty of Ariz., Inc. v. Maricopa
County, 181 Ariz. 551, 553 (1995) (defining fair market value as “that
‘amount at which property would change hands between a willing buyer
and a willing seller, neither being under any compulsion to buy or sell and
both having reasonable knowledge of the relevant facts’” (quoting Fair
Market Value, Black’s Law Dictionary (6th ed. 1990))); see also Appraisal
Institute, The Appraisal of Real Estate 341 (15th ed. 2020) (“In addition to

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recorded sales and signed contracts, appraisers may consider offers to sell
(listings) and offers to purchase.”); London Bridge Resort, Inc. v. Mohave
County, 200 Ariz. 462, 464 ¶ 6 (App. 2001) (stating courts generally use an
appraisal approach to determine the fair market value of property).

¶34 But Neptune’s willingness to pay higher fees for a license
does not conclusively establish the fair market value of SAC’s performance
under the 2016 License. First, nonpecuniary benefits also count as
consideration. See Kromko v. Ariz. Bd. of Regents, 149 Ariz. 319, 322 (1986)
(stating that although perpetuating an educational relationship between a
hospital and a university’s medical school is nonpecuniary, “it nonetheless
may be viewed as consideration” for Gift Clause purposes). Here,
collecting user fees was not the primary public benefit from the 2016
License. Rather, the primary benefit was SAC running a competitive
youth swimming program for the City “in an economical and efficient
manner,” which would maximize Resident participation and enjoyment.
The highest bid for a license might not be “the most advantageous” for the
City to realize this benefit. For example, the City might reasonably favor
lower lap-lane fees to encourage a club to charge lower membership fees to
Residents, thereby increasing patronage. Indeed, the City’s 2017 schedule
of program charges, rental fees, and fines reflected lower fees for individual
Residents and for commercial youth programs operating at City
recreational facilities as compared to fees charged to other users.
Therefore, perhaps counterintuitively, an arrangement with the most value
could be one that produces less revenue for the City.

¶35 Second, the Gift Clause does not require public entities to
maximize profit at the cost of other considerations. Through the 2016
License, the City contracted with a private enterprise to provide public
recreational services. This was unlike a sale of property to the highest
bidder or a contract to build a facility awarded to the lowest qualified
bidder. An agreement to provide recreational services to the public
concerns more than revenue production. For example, in addition to
keeping fees low for the public, the City might legitimately favor a club that
proposes fewer lap-lane usage hours to ensure sufficient time at the aquatic
centers for other City recreational programs and open swimming time.

¶36 In short, the Gift Clause does not prevent a public entity from
considering nonpecuniary factors in deciding what arrangement terms are
most advantageous, even if more financially profitable deals exist. The
Gift Clause is triggered only when the chosen arrangement either serves no

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public purpose or the public is disproportionately short-changed. See
Schires, 250 Ariz. at 374–75 ¶ 7.

¶37 On this record, Neptune failed to prove that the City’s “give”
was “grossly disproportionate” to its “get” under the 2016 License. See id.
at 376 ¶¶ 13–14. The City gave SAC limited, exclusive use of its aquatic
centers in return for SAC running a competitive youth swimming program
for Residents, assisting the City with operating its own recreational
swimming programs, and paying user fees. The user fees were set after
benchmarking fees charged by other Arizona cities for comparable uses.

¶38 Although Neptune offered to pay higher fees to provide
substantially the same services and on the same terms, that evidence alone
does not necessarily establish disproportionality. Because the City never
accepted Neptune’s bid, the higher offer is simply evidence of what
Neptune was willing to pay. See The Appraisal of Real Estate 341 (“[O]ffers
generally provide less reliable data than signed contracts and completed
sales because they represent what a buyer was willing to pay rather than
the price both a buyer and seller were willing to agree to consummate a
sale.”). And, as explained, the objective fair market value of SAC’s
promised performance under the 2016 License involved nonpecuniary
factors that minimized the importance of user fees. Notably, in the failed
RFP, Neptune scored less than a point higher than SAC even though
Neptune’s proposal was much more lucrative, evidencing the value of
nonpecuniary factors. Thus, even if Neptune’s proposal was the better
financial choice for the City, the proposal did not establish that what the
City gave far exceeded what it got from the 2016 License.

¶39 Finally, Neptune points out that, because the City charges
other commercial users $10 per hour for short-course lap lanes and $23 per
hour for long-course lap lanes, the user fees charged to SAC under the 2016
License are grossly disproportionate to the usage value. But this is an
apples-to-oranges comparison. Commercial use for corporate parties and
the like concerns only pool space rental for private purposes. As
explained, the 2016 License enables a sponsored team to bring competitive
swimming to the City and charge lower fees to Residents, thus maximizing
the number of Residents who wish to participate. Lower lap-lane fees for
SAC are also justified by its commitment to using the lanes for thousands
of hours and its obligation to assist the City with recreational swimming
programs.

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¶40 In sum, the Gift Clause serves to check mismanagement of
public resources, but it does not require a public entity to maximize profits
in every transaction. In applying the consideration prong of the Gift
Clause inquiry, courts may consider unsuccessful offers and canceled bids
in identifying fair market value. But here, Neptune’s failed bid was not
sufficient to prove that what the City gave in the 2016 License far exceeded
what it received in return. The superior court therefore correctly entered
summary judgment for the City on Neptune’s Gift Clause claim.

B. Did The City Fail To Follow Its Own Rules By Canceling The RFP
And Therefore Abuse Its Discretion In Deciding Which Club Should Be
Awarded The License?

¶41 Neptune argues the City failed to perform a nondiscretionary,
ministerial act. Alternately, Neptune argues the City acted arbitrarily and
abused its discretion by failing to follow the Code and award Neptune the
license as the most advantageous bidder. It therefore asserts it was
entitled to mandamus relief. The City responds it did not violate the Code
by canceling the RFP and then extending the 2016 License. 3 The court of
appeals agreed with the City. See Neptune Swimming Found., 2023 WL
2418546 at *3 ¶ 18, *4 ¶ 26.

¶42 We disagree with Neptune that after the City determined
Neptune had scored the most points under the RFP, the City had a
ministerial duty to award a license to Neptune. Neptune relies on City of
Phoenix v. Wittman Contracting Co., 20 Ariz. App. 1, 2 (1973), wherein a
contractor sought to enjoin the City of Phoenix from awarding a public
works project to a competing bidder. The court concluded that once the
city determined that the contract should go to the lowest bidder, the city
completed the exercise of its discretion. Id. at 5. If the bidders were
qualified, the city did not retain discretion to choose the lowest bidder
because that was “a question of pure mathematics.” Id. According to the
court, the city had a ministerial duty to award the contract to the lowest
bidder, and its failure to do so there was arbitrary and capricious. Id. at 6.

3 The City initially argued the Code, by its terms, did not apply to the RFP.
See Neptune Swimming Found., 2023 WL 2418546 at *3 ¶ 18. At oral
argument here, the City conceded it was bound by the Code because the
RFP represented the City would follow the Code in the RFP process.

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¶43 This case is distinguishable from Wittman Contracting because
the City never determined that the license must be awarded to the club that
scored the most evaluation points or proposed the most financially
lucrative arrangement. It is useful to consider the difference between an
invitation for bids, as occurred in Wittman Contracting, and a request for
proposal, like the one here. An invitation for bids sets out “all contractual
terms and conditions applicable to the procurement,” see Code § 2-188(b),
and requires the City to award the contract “to the lowest responsible and
responsive bidder,” see id. § 2-188(b)(5). A request for proposal results in
a contract based on “price and other evaluation factors.” See id.
§ 2-188(c)(3). The City must award the contract to the party whose
proposal is “the most advantageous to the city taking into consideration the
evaluation factors set forth in the request for proposals.” See id.
§ 2-188(c)(5).

¶44 Contrary to a bidding process, the RFP did not require the
City to accept the proposal with the most evaluation points or the best
financial terms. The Code only required that the City take the evaluation
factors into consideration when deciding which proposal is “most
advantageous.” See id. § 2-188(c)(5). Similarly, the RFP provided that the
Committee would evaluate proposals using the established evaluation
criteria and recommend an award “to the Proposer that best meets the
City’s needs and provides the best value to the City.” Also, the Committee
was empowered to divide responsibilities between proposers if doing so
was “most advantageous to the City.” Thus, unlike the city in Wittman
Contracting, the City here could exercise discretion in choosing the most
advantageous award after scoring the proposals. Awarding a license
under the RFP was not “a question of pure mathematics.” See Wittman
Contracting, 20 Ariz. App. at 5; see also Hertz Drive-Ur-Self Sys., Inc. v. Tucson
Airport Auth., 81 Ariz. 80, 85 (1956) (rejecting argument that financial terms
in offers should be considered alone rather than in relation to other terms).

¶45 Neptune’s argument that the City acted arbitrarily and
abused its discretion in canceling the RFP is more persuasive. Brown v.
City of Phoenix, 77 Ariz. 368 (1954), is the seminal case here. In Brown, the
City of Phoenix was leasing airport space to a single car rental company
(“Avis”) when a competing company (“Hertz”) asked to bid on the lease.
Id. at 370. Although initially hesitant because Avis “had been operating
satisfactorily,” officials eventually opened the lease for bidding at a public
auction. Id. It asked bidders to propose monthly rent as a percentage of
gross monthly sales with a guaranteed minimum of $200 per month. Id.

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Opinion of the Court

at 370–71. The charter required the city to award the lease “to the highest
responsible bidder at the highest monthly rent,” although the city council
could “in its discretion reject any and all bids.” Id. at 370. Although
Hertz was the highest bidder at the auction, the city awarded the lease to
Avis that same day as “the highest and best bid when all factors [were]
considered of service and experience of airport operations.” Id. at 371.

¶46 In the lawsuit that followed, the superior court found that the
city did not act arbitrarily in awarding the lease to Avis and therefore
denied Hertz’s request for mandamus relief. Id. On appeal, this Court
acknowledged that the city had discretion to decide who was a “responsible
bidder” and whether “any and all bids” should be rejected. Id. at 373.
But this discretion was not limitless. Id. The Court pointed out that the
charter required the city to accept the highest responsible bid “to benefit the
taxpayers and citizens of the city.” Id. Consequently, “officers
[e]ntrusted with the public duty in question are not free to act arbitrarily
through caprice, favoritism, by collusion, and in bad faith, thereby abusing
the discretion reposed in them.” Id. (quoting State ex rel. J. Printing Co. v.
Dreyer, 167 S.W. 1123, 1130 (Mo. App. 1914), overruled on other grounds by
State ex rel. Johnson v. Sevier, 98 S.W.2d 677 (Mo. 1936)).

¶47 The Court examined the record and concluded that the city
had awarded the lease to Avis solely out of favoritism. Id. at 375.
Although the city had discretion to award the lease to the less favorable
bidder, the Court determined it could only do so after conducting a “due
investigation into the facts” and then finding that the award was in the
city’s best interests. Id. But comments from city council members and
the public works director at the time of the award revealed they favored
Avis out of a sense of loyalty because it had performed responsibly in the
past. Id. at 374–75. And the city admitted it had not investigated
whether Hertz was responsible, later conceding that the person owning the
franchise “could perform the contract and that his personal integrity and
business ability are the finest.” Id. at 375. Because the city’s decision to
award the lease to Avis over Hertz was unjustified, and the record
“conclusively indicates a fixed intention to award the lease in question to
[Avis],” the Court reversed and instructed the superior court to issue a
judgment directing the lease award to Hertz. Id. at 377.

¶48 Neptune argues that like the City of Phoenix in Brown, the
City favored SAC throughout the RFP process and when Neptune pointed
out it had actually scored the most evaluation points, the City acted

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arbitrarily by canceling the RFP and extending the 2016 License. The City
highlights other evidence showing it acted properly under the RFP and in
the public interest. We conclude that disputed issues of material fact exist
as to whether the City acted with a “fixed intent” to award the license to
SAC throughout the RFP process and engaged in favoritism by canceling
the RFP after Neptune submitted the more advantageous proposal.

¶49 Several anomalies occurred in the RFP process, all of which
favored long-time licensee SAC, which could lead a factfinder to reasonably
find that the City acted arbitrarily and abused its discretion by canceling
the RFP so it could favor SAC by extending the 2016 License. First, the
City incorrectly tabulated the evaluation points, which resulted in the
purchasing department recommending SAC for the license. After
Neptune pointed out the error, rather than award it the license, the City
instead questioned the RFP terms and asked for presentations.

¶50 Second, the City relied on the Code when it worked against
Neptune but disavowed the Code when Neptune invoked it. After SAC
was initially awarded the license and Neptune protested, the City rejected
the protest as it did not raise an error under the Code. Yet when Neptune
later demanded that the City award the license to Neptune because it, in
fact, scored more evaluation points, the City, for the first time, asserted the
Code did not apply but served only as a “guide.”

¶51 Third, questions exist whether canceling the RFP was, in fact,
advantageous to the City as required by the Code. See Code R2-193.3(A).
The assistant City manager determined the RFP lacked clarity on whether
staff time was included in the per-lane hourly rates only after Neptune was
revealed as having the most evaluation points. Why wasn’t that issue
raised before the City originally gave notice it intended to award the license
to SAC? Also, although the assistant City manager questioned whether
offered lap-lane hours were realistic, nothing shows the City investigated
the issue further or even asked Neptune or SAC about it before canceling
the RFP.

¶52 Fourth, a question exists whether the City passed its deadline
for choosing to cancel the RFP after opening the proposals. The Code
authorizes the City to cancel an RFP in that circumstance only if it has not
yet made an award. See id. On the one hand, although the City gave
notice of its intent to award the license to SAC, nothing reflects the City
formally made the award and it denies doing so. On the other hand, the

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Opinion of the Court

City released the sealed proposals, which the Code authorizes only “[a]fter
contract award.” See Code R2-188.23(D). Thus, absent other facts, the
City either improperly canceled the RFP after the award was issued, see
Code R2-193.3(A), or improperly released sealed bids before an award was
issued, see Code R2-188.23(D).

¶53 In sum, disputed issues of material fact exist as to whether the
City abused its discretion to act in the public interest by canceling the RFP
so the City could favor SAC by extending the 2016 License. Summary
judgment was therefore inappropriate on that issue.

C. Attorney Fees

¶54 Neptune asks for fees under the private attorney general
doctrine. The private attorney general doctrine grants fees to “a party
who has vindicated a right that: (1) benefits a large number of people; (2)
requires private enforcement; and (3) is of societal importance.” Cave
Creek Unified Sch. Dist. v. Ducey, 233 Ariz. 1, 8 ¶ 26 (2013) (quoting Arnold v.
Ariz. Dep’t of Health Servs., 160 Ariz. 593, 609 (1989) (internal quotation
marks omitted)). Because Neptune has not vindicated a right at this stage,
we decline its request.

CONCLUSION

¶55 For these reasons, we vacate the court of appeals’ decision.
We affirm summary judgment on the Gift Clause claim, reverse summary
judgment on the procurement code claim, and remand to the superior court
for additional proceedings.

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