On December 3, 2013, the Town of Florence was served with a claim for damages by Florence Copper, Inc., formerly known as Curis Resources (Arizona) Inc. The claim is based entirely on an allegation that Curis has the right to conduct mining operations, involving the injection of billions of gallons of sulfuric acid into the drinking water supply, on residentially zoned property in the geographic heart of Florence. The Town disputes that Curis has any legal right to conduct such operations on residentially zoned land, regardless of the impact to the aquifer.
On December 3, the same day it filed its claim, Curis filed a “Notice of Removal” to transfer the pending lawsuit from Pinal County Superior Court to Federal District Court, claiming that it is a Canadian company that has only minimal ties to the State of Arizona, and cannot be considered a citizen of Arizona for jurisdictional purposes.
In 2003, the property was annexed into the Town at the request of its owner at that time. Curis argues that the 2003 pre-annexation agreement and PUD (Planned Unit Development) which was part of that agreement included a “mine overlay” that would have permitted mining on the property. In 2007, at the request of the property’s owner, the Town again changed the zoning to residential under an amended PUD, in which all references to a “mine overlay” were removed.
Curis acquired the property in 2009 for approximately $8.5 million knowing that mining on the property was illegal. In 2011, Curis requested that the Florence Town Council change the Town’s General Plan to allow mining on its property. The Town Council denied the request in a public hearing. In its 2011 submittal, Curis admitted:
“In 2007, the PUD (Planned Unit Development) was amended and the mining overlay was removed.”
Curis now says that the “mining overlay” was never removed, and that it has a nonconforming or “grandfathered” right to mine the property in spite of the residential zoning. The Town believes the PUD was effectively amended to remove any “mine overlay,” to the extent it ever existed, and that Curis has no legal right, “grandfathered” or otherwise, to mine on the property.
In an effort to resolve these differences, the Town has asked the Pinal County Superior Court to make a declaration as to the permitted uses of the Florence Copper property, and the rights and obligations of the Town and Curis with respect to these issues. To the extent the Court determines there is any merit to Curis’ claim, State law encourages and authorizes the Town to use its right of eminent domain to eliminate any nonconforming uses determined to exist.
Jess Knudson, Florence Assistant Town Manager, dismissed the notice of claim as grandstanding: “The whole point of the existing lawsuit is to determine whether Curis has any right to compensation, and, if so, in what amount. The only reason to file a $403 million notice of claim to say you have a right to compensation in that amount is to grab headlines.”
Curis paid approximately $8.5 million for the property it now claims is worth $403 million. The Town’s independent appraisal on the property came in at $8.91 million.
Regarding the claimed $403 million dollar price tag, Knudson said: “That has nothing to do with market value, even assuming mining is legal. It’s pretty obvious. No one is going to pay $403 million today to get back that same $403 million by operating a mine, with all the risks and uncertainties that would entail.”
Knudson noted that the last time Curis made a notice of claim, February 15, 2013, Curis claimed its operation was worth between $88 and $139 million based on an appraisal from the same appraisers who came up with the $403 million number. “The fact that their conclusions vary so dramatically suggests unreliable or inconsistent information. The numbers appear to be based entirely on assumptions that will need to be tested in Court, the foremost of which is that Curis has a legal right to mine on this residential property. The Town believes that assumption to be wrong.”
Assuming Curis can prove it has a legal right to mine under existing zoning, it must prove that it would have gotten all applicable permits. Those permits are not yet in place. The appraisal assumes the permits can be timely and successfully obtained in the face of stern opposition, which Curis characterizes as a conspiracy.
“The last time I read the Constitution, it was not a violation of anyone’s rights to oppose a project you believe is bad for you or your community, or to join with like-minded people to do so” said Florence Mayor Tom Rankin. “I disagree with Curis, and that is my right. The fact that others agree with me doesn’t make it a conspiracy. Curis gambled that it would be able to change the zoning to allow mining, and lost,” he said. “To its credit, Curis admitted to us [the Town Council] and warned its investors that they would need the Town to approve a change in zoning in order to mine the property. They knew the risks. Now Curis is trying to get by intimidation what it could not obtain through the rezoning process.”
Curis must also prove that a mine is economically viable. Curis has claimed that the results of tests conducted in the late 1990s by its predecessor, BHP Copper, proved the viability of its proposed copper leaching operation. After refusing to turn over the results of those tests, Curis was ordered to do so by an administrative law judge late last month. The draft reports submitted to BHP analyzing those test results indicate that in situ copper leaching on the site may not be economically viable, contrary to Curis’ many statements to the contrary.
There has never been a mine on the property. Various owners have explored the possibility of mining over the years, but no one has ever gone beyond exploratory activities. Even assuming that Curis has vested rights under the 2003 PUD, as they now claim, those rights would be limited to the footprint of past exploratory operations, and could not be moved or expanded, according to the terms of that document. In addition, Curis would have no right to enlarge or erect any new structures related to any “grandfathered” use on the property. “Even if Curis is right and the 2003 PUD gives them the right to mine on the property, it is difficult to see how a viable mine can operate within the footprint of the test facility, without new settling ponds, recovery facilities, ancillary structures or wells. The Deloitte appraisal wrongly assumes that Curis has an unlimited right to do whatever it wants anywhere on the property,” said Knudson.
Curis has paid for economic studies and repeatedly claimed that the Town would receive revenues from the project based on the copper production at the proposed mine. This is simply not true. If the proposed mine was in full or partial production, the only revenues received by the Town (and by the school district) would be through property taxes collected. Curis is aware that the Town would only receive revenues from property tax and not revenues based on the production of copper, but they continue to disseminate the inaccurate information.
The costs to the Town to provide municipal services to the proposed mine would exceed any property tax revenues received from the proposed project. Increased costs to the Town if the mine was in full or partial production would include increased fire protection services and equipment needed to handle large scale chemical fires, increased police services, and the costs associated with the increased wear and tear on local roads due to the large number of heavy trucks required to transport resources to the proposed mine site.
Any dollars that would be raised through royalties paid to the State Land Department would go towards the Pioneer Home in Prescott, Arizona and the Arizona Department of Corrections. None of these dollars would go towards the education system in Florence or anywhere else in the State of Arizona.
In addition, the Town has zero confidence in the ability of Curis to mitigate any environmental accidents, should they occur. If any environmental accidents occurred at the proposed mine site, including the tainting of the water supply or a tanker full of sulfuric acid spilling on a local street, it would likely mean the Town and its taxpayers would be financially responsible for the clean-up.
There is reason to believe that Curis’ plans don’t include the actual mining of the property, but instead their plans may include selling the assets of the company after acquiring the permits for the operation of a mine. If this is true, then all the goodwill and promises made by Curis would be nothing more than empty promises. Also, this would provide further confusion into how any environmental accidents would be addressed, including the contamination of Florence’s water supply.
Florence is Pro-Business
The Town has heard many allegations that because of its stance on Florence Copper, the Town is not business friendly. In fact, the Town is business friendly and will do what it takes to attract and retain businesses in Florence. The Town is not opposed to business. The Town is opposed to businesses, like Florence Copper, that could do irreparable harm to Florence and its surroundings and potentially cost the Town and its taxpayers tens of millions of dollars.