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PHOENIX — Some Arizona businesses are launching a legal attack on a $100 million tax break by the city of Phoenix to lure a new development — a lawsuit that eventually could ban similar incentives statewide.

The lawsuit, scheduled to be filed today in Maricopa County Superior Court, contends these programs amount to an unconstitutional gift of public funds to selected retailers and developers. Attorney Clint Bolick of the Goldwater Institute, who is representing the business owners, also said the incentives illegally favor some firms over others, giving recipients a financial advantage over competitors.

This lawsuit specifically seeks to void a vote by the Phoenix City Council to provide $100 million for CityNorth to build a $2 billion project of upscale retail, residential and office space in northeast Phoenix. It was designed to convince the developer to build there — and let Phoenix collect sales tax revenues from the stores — rather than in nearby Scottsdale.

But Bolick said that if he succeeds and the case is upheld on appeal it will void similar arrangements by cities around the state. That's what happened with a lawsuit several years ago successfully challenging Mesa's use of its eminent-domain laws: The Court of Appeals ruling set a precedent that put restrictions on what other cities can do.

The lawsuit comes two months after the Legislature voted to put some limits on retail incentives. That new law, however, came too late to stop the CityNorth project, which is why this lawsuit seeks to overturn that specific incentive.

But Bolick also said HB 2515, signed by Gov. Janet Napolitano, does not go far enough to end the practice.

First, he noted that it does not ban incentives but merely says that cities that offer them will lose state shared revenues. Bolick said city officials still might find it financially advantageous to lure businesses with the tax breaks.

And the new law affects only cities located wholly within Maricopa and Pinal counties. Legislative backers acknowledged that was strictly a political decision to get the votes necessary for approval.

Incentives usually take the form of sales-tax rebates: Cities agree to refund at least part of new sales taxes generated from the store or the shopping center to the developer.

Cities have defended the incentives as necessary to convince businesses to locate there. While many of these are for shopping centers, some are aimed at luring unique firms that are putting their first shops in Arizona.

That's what happened when Tempe provided incentives to lure trendy furniture retailer Ikea to locate there and not in Mesa. But Bolick said that doesn't make it legal.

"If Ikea doesn't want to come here, then somebody else is going to come here to sell their goods to Arizona residents," he said.

And Bolick said the problem is not limited to just one part of the state.

For example, Oro Valley agreed to rebate part of the city's "bed tax" to the Hilton El Conquistador resort. And a pact with Vestar Development Co. will give that company back 45 percent of sales taxes collected at its Oro Valley Marketplace, for a maximum of 10 years or $23.2 million.

The lawsuit, if successful, still would allow incentives that are available on an equal basis to all.

Bolick noted that communities can set up "enterprise zones" in areas of high unemployment. Bolick said a city could offer incentives to any retailer who locates within one of those zones because there would be a legitimate governmental purpose behind the tax breaks.