Patricia E. Gentala Robert A. Gentala, Plaintiffs-Appellants-Cross-Appellees v. City of Tucson, Defendant-Appellee-Cross-Appellant , 213 F.3d 1055 ( 2000 )

Opinion by Judge CARTER; Dissent by Judge PREGERSON.

CARTER, District Judge:

These appeals require us to navigate carefully the shoal-infested channel between the Scylla of the First Amendment’s Free Speech Clause and the Charybdis of the First Amendment’s Establishment Clause. In attempting this task, we are fully cognizant of Justice O’Connor’s observation when engaged in a similar judicial endeavor: “Reliance on categorical platitudes is unavailing. Resolution instead depends on the hard task of judging. ... Such judgment requires courts to draw lines, sometimes quite fine, based on the particular facts of each case.” Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819, 847, 115 S.Ct. 2510, 132 L.Ed.2d 700 (1995) (O’Connor, J., concurring).

FACTUAL BACKGROUND

This case arises from the City of Tucson’s rejection of Patricia and Robert Gen-talas’ application to the City’s Civic Events Fund for the coverage of costs for city services for local observances of the National Day of Prayer held in one of the City’s public parks.²

The City established the Fund to encourage civic events and provide a budgetary mechanism for accounting for the costs of in-kind services provided by the City for certain civic events. The Fund provides support for events “that celebrate and commemorate the historical, cultural and ethnic heritage of the City and the nation, or increase the community’s knowledge and understanding of critical issues, with the purpose of improving citizens’ quality of life; generate broad community appeal and participation ...; [or] instill civic pride in the City, state or nation.” In-kind services provided by the City include use of the parks’ event equipment, refuse containers and street sweeping.

As the organizers of the local observance of the National Day of Prayer, the Gentalas applied to the Fund for coverage of the costs of city services. The event organized by the Gentalas was part of the annual observance of the National Day of Prayer. See Lynch v. Donnelly, 465 U.S. 668, 677, 104 S.Ct. 1355, 79 L.Ed.2d 604 (1984). This event was established by a joint resolution of Congress in 1952. Since 1952, each President has marked the Day with a presidential proclamation. For the year in question, President Clinton and the City’s mayor issued a proclamation concerning the event. The Mayor’s proclamation “clearly state[d] how prayer and especially the observance of a national day of prayer is part of the historical and cultural heritage of’ the City and the nation. United States Air Force personnel, pastors from nine of the City’s congregations, and almost one hundred people attended the event. The Gentalas’ application stated that the participants would be led in prayer for various concerns: improved relationships between different segments of society; political leaders; law enforcement and emergency services personnel; youth, families, neighborhoods and the homeless; educators and schools. The application also stated that the event would include patriotic decorations and music. Thus, while the event had a strong sectarian character, as a civic event capable of increasing the community’s knowledge and understanding of critical issues as well as generating broad community interest, support and civic pride, the event fell within the scope of events for which thé Fund had been created.

Prior to holding their event, the Genta-las submitted an application for reimbursement of costs from the Fund to the subcommittee which administers the Fund. After the event had been mounted, the City Council reviewed the subcommittee’s rejection and upheld it. Both groups cited only the Fund’s explicit policy statement that “events held in direct support of religious organizations” are not eligible for the provision of services and concerns about how the Constitution regulates church-state relations in support of the rejection of the Gentalas’ application.

The Gentalas subsequently filed this action alleging that on its face and as applied to their application the Fund’s exception tor “events held in direct support of religious organizations” violated the Free Speech, Free Exercise and Establishment Clauses of the First Amendment.³ The Gentalas sought to enjoin the City from excluding plaintiffs and other religious groups from eligibility for coverage of costs under the Fund. The district court denied the Gentalas’ motions for preliminary and permanent injunctive relief, concluding that the City’s actions did not violate the Gentalas’ free speech rights and that funding the National Day of Prayer activities would have violated the Establishment Clause.

During the proceedings, the City moved to amend their answer to add state-law defenses. The district court denied the City’s motion to amend their answer.

Both the Gentalas and the City have filed appeals challenging the district court’s respective adverse rulings.

STANDARDS OF REVIEW

We review for abuse of discretion the district court’s denial of preliminary and permanent injunctive relief. See Roe v. Anderson, 134 F.3d 1400, 1402 & n. 1 (9th Cir.1998), aff'd, Saenz v. Roe, 526 U.S. 489, 119 S.Ct. 1518, 143 L.Ed.2d 689 (1999); Easyriders Freedom F.I.G.H.T. v. Hannigan, 92 F.3d 1486, 1493 (9th Cir.1996). The district court abuses its discretion when it bases its decision on erroneous legal or factual conclusions. See Roe, 134 F.3d at 1402 n. 1; Easyriders, 92 F.3d at 1493.

[T]o obtain a preliminary injunction, the moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable injury or (2) that serious questions are raised and the balance of hardships tips in its favor. These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the possibility of success decreases.

Roe, 134 F.3d at 1402. To obtain a permanent injunction, the moving party must demonstrate “the likelihood of substantial and immediate irreparable injury and the inadequacy of remedies at law.” Easyriders, 92 F.3d at 1495 (internal quotation and citation omitted). “ ‘The loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury.’” S.O.C., Inc. v. County of Clark, 152 F.3d 1136, 1148 (9th Cir.) (quoting Elrod v. Burns, 427 U.S. 347, 373, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976)), amended by 160 F.3d 541 (9th Cir.1998).

We also review for abuse of discretion the district court’s denial of leave to amend. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir.1995). Although there are strong public policy justifications urging liberality in granting leave to amend, “[futility of amendment can, by itself, justify the denial of a motion for leave to amend.” Id.

ANALYSIS

The Gentalas’Appeal

The Gentalas contend that the City’s rejection of their application for coverage of the cost of city services under the Civic Events Fund violated their free-speech rights guaranteed by the First Amendment. In response, the City argues both that there was not a free-speech violation and that even if the Gentalas’ free-speech rights were infringed, this was justified by the City’s compelling interest in avoiding an Establishment Clause violation.

Free Speech/Public Forum Issue

The Supreme Court’s decision in Rosenberger guides our resolution of the free-speech issues in this case. In Rosenberger, the Court reiterated that the principal evil from the government against which the Free Speech Clause protects the citizenry is discrimination on the basis of viewpoint when regulating expressive activities. See Rosenberger, 515 U.S. at 829, 115 S.Ct. 2510 (citing R.A.V. v. City of St. Paul, 505 U.S. 377, 391, 112 S.Ct. 2538, 120 L.Ed.2d 305 (1992)); Perry Educ. Ass’n v. Perry Local Educators’ Ass’n, 460 U.S. 37, 46, 103 S.Ct. 948, 74 L.Ed.2d 794 (1983). This prohibition on viewpoint discrimination retains its vitality even when government has created the forum in which expressive activities occur. See id.; see also DiLoreto v. Downey Unified Sch. Dist. Bd. of Educ., 196 F.3d 958, 969 (9th Cir.1999).

As an initial matter, we must determine whether the National Day of Prayer event amounted to expressive conduct protected by the First Amendment’s Free Speech Clause. According to the Genta-las’ application, they were inviting people to gather in the park for a time of praise and worship with singing and prayer. Such activity is speech within the meaning of the First Amendment. See Capitol Square Review & Advisory Bd. v. Pinette, 515 U.S. 753, 760, 115 S.Ct. 2440, 132 L.Ed.2d 650 (1995); Widmar v. Vincent, 454 U.S. 263, 265 n. 2, 269, 102 S.Ct. 269, 70 L.Ed.2d 440 (1981).

Having concluded that the Gentalas were engaging in speech within the meaning of the First Amendment, we must next determine the nature of the forum to which they sought access. See Cornelius v. NAACP Legal Defense and Educ. Fund, Inc., 473 U.S. 788, 800, 105 S.Ct. 3439, 87 L.Ed.2d 567 (1985); DiLoreto, 196 F.3d at 964. Before determining the forum’s character, however, we must clearly define the forum in question.

“The relevant forum is defined by the access sought by the speaker.” See DiLoreto, 196 F.3d at 965 (citing Cornelius, 473 U.S. at 801, 105 S.Ct. 3439). The parties and the district court have discussed the issues raised by this case as if both the City’s parks and the City’s Civic Events Fund were relevant fora. The City is correct in its assertion that the Gentalas were never denied access to the public park. They were allowed to hold their event. After having held their event, however, the Gentalas appealed the subcommittee’s rejection of their application for cost-coverage of city services under the Fund to the full City Council. Given this post-event activity, we conclude that the Gentalas sought access to the Fund, not merely to the park. Although the Fund is not a forum for speech in the physical sense, as a government-created source of funding to cover costs associated with engaging in behavior deserving First Amendment protection, the Fund is a forum within the meaning of the First Amendment. See Rosenberger, 515 U.S. at 830, 115 S.Ct. 2510 (stating that a fund created by the University of Virginia to cover the printing costs of student organizations’ publications was “a forum more in a metaphysical than in a spatial or geographical sense, but the same [First Amendment] principles are applicable”).

“‘Forum analysis divides government property into three categories: public fora, designated public fora, and nonpublic fora.’” DiLoreto, 196 F.3d at 964 (quoting Children of the Rosary v. City of Phoenix, 154 F.3d 972, 976 (9th Cir.1998), cert. denied, 526 U.S. 1131, 119 S.Ct. 1804, 143 L.Ed.2d 1008 (1999)); see also Perry Educ. Ass’n, 460 U.S. at 45-46, 103 S.Ct. 948. Because the Fund is not a source of funding for expressive activities held in trust since time immemorial, we conclude that it is not a traditional public forum. See Perry Educ. Ass’n, 460 U.S. at 45, 103 S.Ct. 948. Because the Fund’s implementing policy states on its face that the Fund is limited to certain topics and certain speakers and because the record developed by the parties demonstrates that the Fund has been managed in a selective manner, we cannot conclude that the City has designated the Fund as a forum open to general expressive activity. See Lamb’s Chapel v. Center Moriches Union Free Sch. Dist., 508 U.S. 384, 391-92, 113 S.Ct. 2141, 124 L.Ed.2d 352 (1993); Cornelius, 473 U.S. at 802, 105 S.Ct. 3439; DiLoreto, 196 F.3d at 965. Following the Supreme Court’s lead in Rosenberger, we conclude that the Fund is a limited public forum that has been opened to support the expressive activities of certain groups speaking about certain topics. See Rosenberger, 515 U.S. at 829, 115 S.Ct. 2510; see also DiLoreto, 196 F.3d at 965, 967.⁴

The dissent argues, relying on National Endowment for the Arts v. Finley, 524 U.S. 569, 118 S.Ct. 2168, 141 L.Ed.2d 500 (1998), that because the City makes selective determinations when awarding reimbursements under the Fund that the Fund is exempt from forum analysis. The dissent’s reliance on Finley is misplaced. The policy being challenged in Finley was of a different character than the policy being challenged in this case. As the Supreme Court was careful to point out, the “decency” criterion in Finley was one of several criteria for the NEA to consider when making funding decisions, see id. at 2175-76, whereas the City’s Fund renders any “event held in direct support of religious organizations” absolutely ineligible for reimbursement of costs. Moreover, the nature of the challenges to the respective policies in Finley and this case are of a notably different character. In Finley, the Supreme Court was considering a facial challenge to the NEA’s “decency” criterion. See id. at 2175, 2178. This is relevant for at least two reasons. First, the burden on litigants pursuing a facial challenge is much heavier than the burden on litigants pursuing an as-applied challenge. See id. at 2175. Second, even a policy which is viewpoint-neutral on its face may be applied in a viewpoint-discriminatory manner. The Court in Finley explicitly pointed out that they were not considering “a situation where the denial of a grant may be shown to be the product of invidious viewpoint discrimination” because the litigants had brought a facial challenge. See id. at 2178. In this case, however, we are considering an actual denial by the City and we know the motivation behind the City’s decision. Even if we agreed with the dissent’s analysis that the City could have denied the Gentalas’ application for a number of reasons under the Fund’s implementing policy, in actuality, the record shows — and the City has never contested — that the application was denied due to the religious character of the event for which the Genta-las were seeking reimbursement. These factors — the absolute bar for reimbursement of certain kinds of events in the City’s policy, the character of the Gentalas’ challenge, and the state of the record— make this appeal more like Rosenberger than like Finley.

In maintaining the boundaries and integrity of the Fund, the City will, of necessity, engage in discrimination on the basis of the content of applicants’ speech. In managing this forum,' however, the City’s decisions to exclude speakers must be reasonable in light of the Fund’s purposes. See Rosenberger, 515 U.S. at 829, 115 S.Ct. 2510; DiLoreto, 196 F.3d at 965, 967. Thus, content-based discrimination is legitimate only if conducted consistent with the Fund’s purposes, whereas any discrimination between applicants on the basis of viewpoint is forbidden. See Board of Regents of the Univ. of Wis. Sys. v. Southworth, - U.S. -, 120 S.Ct. 1346, 1356-57, 146 L.Ed.2d 193 (2000); Rosenberger, 515 U.S. at 829-30, 115 S.Ct. 2510; DiLoreto, 196 F.3d at 965, 967.⁵

The Fund’s implementing policy states that the Fund has been created, in part, to “encourage and support [c]ivic [e]vents that: celebrate and commemorate historical, cultural and ethnic heritage of the City and the nation, or increase the community’s knowledge and understanding of critical issues, with the purpose of improving citizens’ quality of life; generate broad community appeal and participation; [or] instill civic pride in the City, state, or nation.” While the Gentalas’ event obviously had sectarian elements, as previously described, it also had a civic character and fits comfortably within the general subject matter of events for which the Fund was created.⁶

The policy explicitly excludes those “events held in direct support of religious organizations” and the City relied upon this exemption-when rejecting the Genta-las’ application. The Gentalas’ application indicates that a free-will offering was to be taken at the end of the event. Although such an offering would probably be small in relation to the cost of mounting the event,⁷ the offering might provide some degree of financial support for the organizers of the event. The requested reimbursement from the City’s Fund, some $340 in costs, is also a meager financial outlay. The record establishes that the National Day of Prayer was publicized and organized in a manner consistent with the Judeo-Christian tradition and counsel for the Gentalas stated at oral argument that the National Day of Prayer event was presented from a Christian perspective. Thus, the event had a clear religious perspective and we must acknowledge that a public prayer service conducted from such a perspective would support members of Jewish and Christian religious organizations more than members of other faith traditions or members of the public-at-large who belong to a non-religious tradition. We cannot conclude, however, that the minimal and diffuse benefits from this event amount to a constitutionally impermissible support of religion.

Although we have concluded that reimbursement of the event’s costs under the Fund was not direct support of religion in a constitutional sense, we cannot conclude that the City acted in bad faith when deciding that the National Day of Prayer event fell within the Fund’s exception. See Cornelius, 473 U.S. at 808, 105 S.Ct. 3439 (“The Government’s decision to restrict access to a nonpublic forum need only be reasonable; it need not be the most reasonable or the only reasonable limitation.”). Even if the exclusion was reasonable, however, the City could not reject the Gentalas’ application based on their viewpoint as speakers. See Rosenberger, 515 U.S. at 830, 115 S.Ct. 2510; DiLoreto, 196 F.3d at 969. In other words, the Gentalas’ application could not be denied merely because it would bring a religious perspective to an otherwise permissible conversation. See Rosenberger, 515 U.S. at 831, 115 S.Ct. 2510; Lamb’s Chapel, 508 U.S. at 393-94, 113 S.Ct. 2141.

As noted previously, the Supreme Court in Rosenberger examined a fund established by the University of Virginia to cover the printing costs for publications from approved student groups. See Rosenberger, 515 U.S. at 824, 115 S.Ct. 2510. The University excluded from its scheme those publications written by groups engaging in “religious activities.” Id. at 825, 115 S.Ct. 2510. Wide Awake Productions, a student group which published a magazine “offer[ing] a Christian perspective on both personal and community issues,” was denied coverage under the policy. Id. at 825-27, 115 S.Ct. 2510. The Supreme Court concluded that the University’s denial of coverage was an unconstitutional form of viewpoint discrimination. See id. at 881, 115 S.Ct. 2510; see also Southworth, 120 S.Ct. at 1356-57. In reaching this conclusion, the Supreme Court relied heavily on Lamb’s Chapel. See Rosenberger, 515 U.S. at 830-32, 115 S.Ct. 2510. In Lamb’s Chapel, a local school board permitted community groups to use its buildings after hours, but denied access to a group wanting to show a film series “that ... would discuss ... the undermining influences of the media that could only be counterbalanced by returning to traditional, Christian family values.” Lamb’s Chapel, 508 U.S. at 386-88, 113 S.Ct. 2141.

The National Day of Prayer event was, in part, a civic gathering drawing the community together to address issues of community-wide concern — e.g., homelessness, education, law enforcement. The nature of the event fits within the general purposes of the forum. Moreover, there is no indication from the record that if a local public school wanted to hold a fund-raiser or if a group of social service providers wanted to hold a rally on behalf of homeless people that the City would have denied their applications to the Fund.⁸ The Gentalas’ application was rejected because of their view that the most relevant manner in which to address these important social concerns was through the expressive acts of worship, singing and prayer. “Religion may be a vast area of inquiry, but it also provides, as it did here, a specific premise, a perspective, a standpoint from which a variety of subjects may be discussed and considered. The prohibited perspective ... resulted in the refusal” to provide access to the relevant forum. Rosenberger, 515 U.S. at 831, 115 S.Ct. 2510.

The record also indicates that the City had approved an application to the Fund by the Tucson Festival Society and Carrillo School for a Las Posadas festival. The festival is a re-enactment of a story from Christian folklore — namely, Joseph and Mary’s search for lodging in Bethlehem prior to the birth of Jesus. The City approved funding for this “religious-related” event because it was “art” and was “not held to directly support a religious organization.” Because the Las Posadas festival re-enacts an event connected with the Christian tradition, it would provide the same kind of diffuse support for Christianity writ large as would the National Day of Prayer event. Thus, the City decided that artistic expression was a sufficiently indirect way of engaging a religious tradition — and therefore an appropriate activity in the forum, but that public prayer was too direct a way of engaging a religious tradition — and therefore an inappropriate activity in the forum.

Although we can sympathize with the difficult judgment calls the City is required to make when reviewing applications to the Fund, we conclude that its rejection of the Gentalas’ application was impermissible viewpoint discrimination in violation of the Free Speech Clause of the First Amendment. See Rosenberger, 515 U.S. at 829-831, 115 S.Ct. 2510; Lamb’s Chapel, 508 U.S. at 392-94, 113 S.Ct.2141. Moreover., in light of our discussion of the Las Posadas application, we conclude that distinguishing between those who speak about religion who are directly supporting a religious organization and those who speak about religion who are not will always require the City to discriminate on the basis of the speakers’ viewpoint. See Board of Educ. of Westside Community Schs. v. Mergens, 496 U.S. 226, 248, 253, 110 S.Ct. 2356, 110 L.Ed.2d 191 (1990); Widmar, 454 U.S. at 272 n. 11, 102 S.Ct. 269.

Establishment Clause Issue

The City contends that its rejection of the Gentalas’ application was justified in light of the City’s compelling interest in obeying the strictures of the First Amendment’s Establishment Clause.⁹ Following the Supreme Court’s lead in Rosenberger, we reject the City’s argument and conclude that reimbursing costs for the Gentalas’ event under the Fund would not have violated the Establishment Clause. See Rosenberger, 515 U.S. at 839, 115 S.Ct. 2510.

A majority of the Justices of the Supreme Court have never agreed as to the precise meaning and relevance of the history of the Establishment Clause. The Court has agreed, however, that the Establishment Clause

means at least this: Neither a state nor the Federal Government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another. Neither can force nor influence a person to go to or to remain away from church against his will or force him to profess a belief or disbelief in any religion. No person can be punished for entertaining or pro- ' fessing religious beliefs or disbeliefs, for church attendance or non-attendance. No tax in any amount, large or small, can be levied to support any religious activities or institutions, whatever they may be called, or whatever form they may adopt to teach or practice religion. Neither a state nor the Federal Government can, openly or secretly, participate in the affairs of any religious organizations or groups and vice versa.

Everson v. Board of Educ. of Ewing Tp., 330 U.S. 1, 15-16, 67 S.Ct. 504, 91 L.Ed. 711 (1947). At the same time, the Supreme Court has repeatedly stated that government may acknowledge the role of religion in the life of its citizenry and incorporate some religious expression into public life. See Lynch, 465 U.S. at 674-78, 104 S.Ct. 1355; Marsh v. Chambers, 463 U.S. 783, 792, 103 S.Ct. 3330, 77 L.Ed.2d 1019 (1983). The “central lesson” of the Supreme Court’s Establishment Clause jurisprudence “is that ... governmental programs” must maintain “neutrality towards religion.” Rosenberger, 515 U.S. at 839, 115 S.Ct. 2510. On a number of occasions, the Court has concluded that governmental programs which distribute benefits on religiously neutral grounds do not run afoul of the Establishment Clause merely because they provide incidental benefits to organizations that seek to engage in religious expression. See id.; Capitol Square, 515 U.S. at 762-63, 115 S.Ct. 2440; Widmar, 454 U.S. at 273-74, 102 S.Ct. 269.

When determining whether the relationship between religious expression and the government is permissible under or violative of the Establishment Clause, “it [is] useful to inquire whether the challenged law or conduct has a secular purpose, whether its principal or primary effect is to advance or inhibit religion, and whether it creates an excessive entanglement of government with religion.” Lynch, 465 U.S. at 679, 104 S.Ct. 1355 (citing Lemon v. Kurtzman, 403 U.S. 602, 612, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971)). At the same time, we are not bound “to any single test or criterion in this sensitive area.” Id.

The City’s Fund, which exists to support and encourage events celebrating the history and culture of the City’s residents, undeniably serves a secular interest. See Lamb’s Chapel, 508 U.S. at 395, 113 S.Ct. 2141; Widmar, 454 U.S. at 271, 102 S.Ct. 269. Insofar as the City seeks to avoid entanglement with religion when administering the Fund, its best opportunity for doing so is to abandon attempts to distinguish between religious expression that directly supports a religious organization and religious expression that indirectly supports religion. See Widmar, 454 U.S. at 272 n. 11, 102 S.Ct. 269.

The City’s Fund also does not have the primary or principal effect of advancing religion. The Supreme Court has concluded that a state university’s provision of a classroom to a student Bible study club for its meetings constituted only negligible aid for such devotional exercise and thus was not constitutionally impermissible. See Widmar, 454 U.S. at 273, 102 S.Ct. 269. In Lynch, Chief Justice Burger, writing for the majority, concluded that a nativity scene, while religiously significant by itself, when placed by the city government among secular symbols such as “candy-striped poles ..., carolers, [and] cutout figures representing such characters as a clown, an elephant, and a teddy bear” in the business district of the City of Paw-tucket, Rhode Island, did not substantially support any religion in a constitutionally problematic manner. Lynch, 465 U.S. at 671, 687, 104 S.Ct. 1355.

The dissent asserts some observers may perceive that the City has aligned itself with the Christian faith by including a Christian symbol in its display and that this serves to advance religion. We can assume, arguendo, that the display advances religion in a sense; but our precedents plainly contemplate that on occasion some advancement of religion will result from governmental action. The Court has made it abundantly clear, however, that “not every law that confers an ‘indirect,’ ‘remote,’ or ‘incidental’ benefit upon [religion] is, for that reason alone, constitutionally invalid.” Committee for Public Educ. and Religious Liberty v. Nyquist, 413 U.S. 756, 771, 93 S.Ct. 2955, 37 L.Ed.2d 948 (1973).

Id. at 683, 104 S.Ct. 1355. Similarly, here, even if the City’s reimbursement of costs for the National Day of Prayer event provided some support for theism over its opposite, or for Christianity over competing world views, the support provided by the City was neither substantial nor direct enough to amount to advancement of religion under the Supreme Court’s Establishment Clause jurisprudence.

In more recent cases involving private religious speech in government-created fora, the Supreme Court has focused on whether the religious expression occurring in the forum has been endorsed or favored by the government when determining whether there is an Establishment Clause violation. See Capitol Square, 515 U.S. at 762-65, 115 S.Ct. 2440; Rosenberger, 515 U.S. at 839-40, 115 S.Ct. 2510; Lamb’s Chapel, 508 U.S. at 393, 113 S.Ct. 2141. In Rosenberger, the most legally and factually analogous case to the one before us, the Court reviewed the constitutionality of the University of Virginia’s refusal to cover the printing costs of a student publication, based on the publication’s religious perspective, due to the University’s concern that covering the costs would violate the Establishment Clause. See Rosenberger, 515 U.S. at 822-23, 115 S.Ct. 2510. The Court concluded that the University would not violate the Establishment Clause by covering the publication’s printing costs when using “neutral criteria and evenhanded policies” to determine which applicants would have their costs covered. See id. at 839, 845-46, 115 S.Ct. 2510.

The first distinction between Rosenberger and the present case urged by the City is that the publication in Rosenberger was not produced by a “religious organization,” see id. at 826 & 844, 115 S.Ct. 2510, and that the event for'which the Gentalas sought in-kind services was. Assuming that the City is correct that the organization responsible for managing the National Day of Prayer is a religious organization, we conclude that this factual difference is an insufficient basis for distinguishing Rosenberger. In Widmar, the Supreme Court reviewed the University of Missouri at Kansas City’s decision to forbid “an organization of evangelical Christian students from various denominational backgrounds” from meeting in “facilities generally available for activities of regisr tered student groups.” Widmar, 454 U.S. at 264-65 & n. 2, 102 S.Ct. 269 (1981). The Supreme Court dismissed the University’s concerns about an Establishment Clause violation for its provision of meeting space for the student group acknowledging that it was “possible — perhaps even foreseeable — that religious groups will benefit from access to University facilities.” Id. at 273, 102 S.Ct. 269. Widmar demonstrates that the mere provision of services or conferral of benefits to a religious organization under an otherwise neutral policy does not, without more, violate the Establishment Clause. See Rosenberger, 515 U.S. at 839, 115 S.Ct. 2510; Widmar, 454 U.S. at 273-74, 102 S.Ct. 269. Moreover, the Rosenberger Court itself stated that even if the organization seeking coverage of printing costs from the University of Virginia was a “church,” there would be no Establishment Clause violation because the scheme at issue was not making “direct money payments to an institution or group that is engaged in religious activity.” Rosenberger, 515 U.S. at 842, 115 S.Ct. 2510 (emphasis added).

In a similar vein, the dissent relies on the Gentalas’ original application for reimbursement from the Fund, and attachments thereto, which state that the National Day of Prayer event was being organized for “Tucson Christians.” The district court stated that the National Day of Prayer event was open to the public and nothing in the record or the comments by the City Council which reviewed the Gen-talas’ application after the event had been held indicates that the event excluded non-Christians from the event. The fact that a government-subsidized event which remains open to the public is organized for and by a particular religious group is insufficient to create an Establishment Clause violation. See Widmar, 454 U.S. at 265 n. 2, 102 S.Ct. 269 (noting that a Christian group’s meetings were “open to the public”). Finally, the dissent notes that all the speakers at the event were Christians to support the charge of an Establishment Clause violation. In Ro-senberger, however, the publication which the University of Virginia refused to subsidize — a decision the Supreme Court rebuked — was a magazine with an explicit and obvious Christian perspective on the issues discussed. See Rosenberger, 515 U.S. at 825-26,115 S.Ct. 2510.

In Widmar and Rosenberger, the Supreme Court was much less concerned about the religious identity or message of the speakers being subsidized by the state than it was about the nature of subsidy being offered. The Court’s concern in these cases is whether the support offered by the state is part of a neutral program available to a large range of speakers or whether it is a program designed and administered to further religious interests in some direct way. The City and the dissent would have us read the Establishment Clause in a way that forbids religious groups and religious speakers from participating in and taking advantage of neutral government programs available to citizens motivated by non-sectarian concerns. Such a theory of the Establishment Clause implicitly denigrates those citizens who seek to operate in the public realm and engage the larger culture in light of their religious convictions and' fails to take seriously the constitutional values enshrined in the Free Speech and Free Exercise Clauses.

The Rosenberger Court focused extensively on whether the payments from the University of Virginia’s fund were being made directly to the student organization. See id. at 842-43, 115 S.Ct. 2510. We agree with the City and the district court that the Rosenberger Court was careful to explain that its conclusion might have been different if the scheme under review had involved “a tax levied for the direct support of a church,” id. at 840, 115 S.Ct. 2510, if the money available could be used for “unlimited purposes,” id. at 841, 115 S.Ct. 2510, or if the program made “direct money payments to ... a group that is engaged in religious activity,” id. at 842, 115 S.Ct. 2510. The City’s own evidence, however, demonstrates that the Fund is not the kind of policy about which the Rosenberger Court expressed suspicion. According to a management analyst from the City’s Department of Budget and Research, money from the Fund is never paid directly to the event sponsors — event sponsors request services from the City; the relevant City departments submit billing statements to the Fund instead of the event sponsors; the costs of the services are charged against the Fund. As its implementing policy states, the Fund is “a budgetary means of detailing the costs City departments incur providing in-kind support to Civic Events.” Moreover, the City maintains control over what services will be covered by the Fund and the amount the Fund will be charged for these services. Although the City’s absorption of costs for in-kind services through the Fund clearly provides a benefit to the National Day of Prayer event, this is not a case where the City “is making direct money payments to an institution or group that is engaged in religious activity.” Id. at 842-48, 115 S.Ct. 2510. Moreover, insofar as the in-kind services made available under the Fund were the provision of physical-plant facilities, the Supreme Court has concluded that such services are “ ‘incidental’ benefits” which can be provided to religious groups by the government without violating the Establishment Clause. See Widmar, 454 U.S. at 273, 102 S.Ct. 269.

The City also argues that this case is different from Rosenberger because the Fund is created through general revenue taxes and the printing-cost fund in Rosen-berger was created through the assessment of student fees. The Supreme Court did state in Rosenberger that its decision “cannot be read as addressing an expenditure from a general tax fund.” Rosenberger, 515 U.S. at 841, 115 S.Ct. 2510. While this is a close question, we conclude that the City presses this difference as a formal distinction whereas the Court used it as a functional one. Both student-fee and general-tax assessments are mandatory on the relevant population. See id. at 840, 115 S.Ct. 2510 (treating the student-fee as a mandatory assessment). Thus, it cannot be the mandatory character of a general tax that would give rise to different considerations under the Establishment Clause. A plurality of the Court distinguished between a student fee and a general tax based on the limited purposes for which the student fees could be used and the neutrality of the program under which the student fees were distributed. See id. at 840-41, 115 S.Ct. 2510. Given that the Fund was used for a limited purpose, that the City maintains a great deal of discretionary control over the Fund, and that the Fund is not administered to favor religion, we conclude that the Fund is more like the student-fee generated fund in Rosenberger than a general-tax generated fund.¹⁰

The Supreme Court’s concern about direct payments to religious organizations and their treatment of the student-fee/general-tax distinction provides a larger perspective on the underlying rationale of Rosenberger. The Court has acknowledged in Widmar, Mergens, and Lamb’s Chapel that programs of the state which provide benefits to groups on a neutral basis may benefit religious groups or religious perspectives when the relevant group meets the criteria of the program. In Rosenberger, the Court once again articulated its view that the Establishment Clause is not violated when religious groups happen to benefit from programs which are, by all accounts, neutral as to religion. See Rosenberger, 515 U.S. at 839, 115 S.Ct. 2510. Only where the programs would provide in-kind or financial benefits which would allow the religious organization to pursue its sectarian goals in an unfettered way on the government’s dole or in the government’s forum is the Establishment Clause possibly violated. Where, as in Rosenberger and as with the Fund, the government does not make direct payments to the organization and maintains control over which activities will be subsidized, the government can ensure that only those activities by sectarian groups which have a sufficient secular import will receive government assistance. Allowing religious groups to participate as beneficiaries of otherwise neutral programs fosters the nation’s commitment to freedom of expression and to religious liberty without raising the specter of a state-sanctioned or state-funded church, which was the historical inspiration of the Establishment Clause. See Lynch, 465 U.S. at 678, 104 S.Ct. 1355.

Finally, the Rosenberger Court noted that “[t]he University has taken pains to disassociate itself from the private speech involved in this case.” Rosenberger, 515 U.S. at 841, 115 S.Ct. 2510. Whether private religious speech would be mistaken for the speech of the government is a central inquiry under the Establishment Clause. See id.; Widmar, 454 U.S. at 274, 102 S.Ct. 269. The City and the district court relied on the presence of City employees operating lighting and sound equipment to establish that the National Day of Prayer event could be mistakenly interpreted as the speech of the City. In light of Widmar’s teaching that allowing religious groups to meet on campus is insufficient to “confer any imprimatur of state approval,” we conclude that the presence of City employees, without more, does not create such an imprimatur. See Widmar, 454 U.S. at 274 & n. 14, 102 S.Ct. 269; see also Mergens, 496 U.S. at 249-50, 253, 110 S.Ct. 2356.¹¹

The record also demonstrates, however, that any event having costs covered by the Fund must “acknowledge through event advertising and an announcement during [the] event that the City has contributed services to the event.” In Capitol Square, 515 U.S. at 763, 115 S.Ct. 2440, a plurality of the Court rejected the government’s argument that a cross erected by a private group and placed in close “proximity to the seat of government” would violate the Establishment Clause because it “may produce the perception that the cross bears the [government’s] approval.” The plurality stated that government endorses religious expression in violation of the Establishment Clause only when the government speaks for itself or manages a forum in favor of private religious expression. See id. at 764, 115 S.Ct. 2440. The plurality observed that “it is no violation [of the Establishment Clause] for government to enact neutral policies that happen to benefit religion.” Id. While the concurring Justices gave a greater role to the conclusions of a reasonable observer in determining whether the government had endorsed the expression of a private speaker than the plurality, see id. at 777, 115 S.Ct. 2440 (O’Connor, J., concurring) and at 784-86, 115 S.Ct. 2440 (Souter, J., concurring), they also rejected the government’s Establishment Clause argument observing that the city could require that a sign be placed on or near the cross explaining that the city did not endorse the expression of the private speaker, id. at 776, 115 S.Ct. 2440 (O’Connor, J., concurring) and at 784, 115 S.Ct. 2440 (Souter, J., concurring). The National Day of Prayer event was not the expression of the City itself and there is no allegation that the Fund was managed in a way that discriminated in favor of religious speech. The City maintained control over the content of the statement in the event’s advertisement and could have modified it to decry any endorsement by the City of the event’s content. Thus, we agree with the district court that the advertisement requirement is insufficient to demonstrate that the City endorsed the expression of the Gentalas. See id. at 764, 115 S.Ct. 2440.

Because we have concluded that the City engaged in viewpoint discrimination in violation of the First Amendment when rejecting the Gentalas’ application to the Fund and that the exception for events which directly support religious organizations is unconstitutional on its face, and that the Establishment Clause does not provide a compelling interest justifying that discrimination, it is now apparent that the district court based its determination that the Gentalas were unlikely to succeed on the merits of this case on an erroneous legal conclusion. See Roe, 184 F.3d at 1402; Easyriders, 92 F.3d at 1493. Moreover, because the Gentalas’ expressive freedoms were violated as a result of the City’s unconstitutional activities, the Gen-talas suffered an irreparable injury. See S.O.C., 152 F.3d at 1148.

Accordingly, we reverse the district court’s denial of the Gentalas’ motions for preliminary and permanent injunctions and we remand for further proceedings. The City’s Cross-appeal

The City has also filed a cross-appeal contending that the district court abused its discretion by denying its motion for leave to amend its answer to assert a defense under the Arizona constitution. In Widmar, the Supreme Court concluded that Missouri’s state constitutional defenses were insufficiently compelling to override free-speeeh interests protected by the Federal Constitution. See Widmar, 454 U.S. at 276, 102 S.Ct. 269. Because we have concluded that the City’s denial of the Gentalas’ application would have violated the Free Speech Clause, we conclude that the City’s proposed amendment would have been futile and that the district court did not abuse its discretion by denying it leave to amend its answer. See id.; Bonin, 59 F.3d at 845.

Accordingly, we affirm the district court’s denial of the City’s motion for leave to amend its answer.

CONCLUSION

While the idea of the government subsidizing a public prayer service raises obvious Establishment Clause concerns, the idea of excluding religious speakers from neutral government programs because of their identity and their message raises equally compelling Free Speech and Free Exercise questions. These principal guarantees of the First Amendment require the government to juggle conflicting obligations toward its citizens. On the one hand, the Establishment Clause obligates government to inspect vigilantly its practices and policies to ensure that they do not create the impression that government is endorsing or favoring religion or any form of religious expression. On the other hand, the Free Speech and Free Exercise Clauses require the government to monitor carefully its policies and practices to ensure that they do not unnecessarily trammel on individuals’ opportunities to engage in expressive conduct, especially expressive conduct which stems from religious faith and belief. As much as we would like to provide local, state and national governmental entities with bright lines and simple tests to simplify the task of making decisions in this complex and" politically charged area, drawing exact lines and articulating formulaic tests is belied by the purposes of the First Amendment guarantees themselves. See Lynch, 465 U.S. at 678-79, 104 S.Ct. 1355.

We do, however, offer some general guidance to the City of Tucson and other governmental decision-makers based on our examination of this appeal and our investigation of the relevant Supreme Court decisions in this area. Where the government has created a forum for expressive activities, and a private speaker meets the criteria for access to the forum, the speaker cannot be excluded merely because the speaker’s expression addresses religion or adopts a religious perspective on an otherwise permissible topic. In addition, where the governmental forum includes the provision of financial subsidies or in-kind services, as long as those services are provided to all speakers in the forum on a religiously neutral basis, provision of such subsidies or services to a speaker with a religious perspective will not violate the Establishment Clause.

Our resolution of the issues in a manner different from the City of Tucson and the district court should not be construed as to cast any doubt that the City and the court took their obligations seriously and carefully considered their conclusions. After reviewing the particular facts of this appeal, we have merely drawn the lines between the guarantees of the Free Speech and Establishment Clauses in a different fashion than did the City and the district court.

The City shall bear the costs on appeal.

AFFIRMED in part, REVERSED in part, and REMANDED.

2 . According to the Gentalas’ application to the Fund, the services for which they sought coverage amounted to less than $500.

3 . Because we conclude that the City violated the Gentalas’ free-speech rights and that the Establishment Clause does not provide a sufficiently compelling reason to justify that violation in the context of this case, we do not address the Gentalas’ other constitutional claims.

4 . As the dissent correctly notes, the terms "designated public forum,” "limited public forum,” and "nonpublic forum” have not always been used with precision. See DiLoreto, 196 F.3d at 965 & n. 4. A "designated public forum” is a forum which the government, through its explicit and intentional conduct, has designated as a forum generally open to the public for expressive activity. See Perry Educ. Ass’n, 460 U.S. at 46-47, 103 S.Ct. 948; Widmar, 454 U.S. at 267-68 & n. 5, 270, 102 S.Ct. 269; DiLoreto, 196 F.3d at 965 & n. 4. The Supreme Court has referred to a forum opened by the government to certain speakers or topics as a "limited public forum,” see Rosenberger, 515 U.S. at 829, 115 S.Ct. 2510; the Ninth Circuit has referred to such a forum as a "nonpublic forum open for a limited purpose,” see DiLoreto, 196 F.3d at 965-66. Because content-based discrimination is not allowed absent a compelling interest in either a traditional or designated public forum, see Perry Educ. Ass’n, 460 U.S. at 54-55, 103 S.Ct. 948, and is permissible in fora opened for more limited purposes to preserve the nature of the forum, see Rosenberger, 515 U.S. at 829, 115 S.Ct. 2510; Perry Educ. Ass’n, 460 U.S. at 46, 103 S.Ct. 948; DiLoreto, 196 F.3d at 965-66, the Ninth Circuit’s terminology may lead to less conceptual blurriness. Regardless of the terminology used to describe the forum, however, the Supreme Court and the Ninth Circuit agree that governmental discretion in managing the more selective forum is bounded by the same considerations— reasonableness in light of the forum’s purpose and viewpoint neutrality. See Rosenberger, 515 U.S. at 829-30, 115 S.Ct. 2510; Perry Educ. Ass’n, 460 U.S. at 48-49, 103 S.Ct. 948; DiLoreto, 196 F.3d at 967, 969. Thus, because the distinction between a limited public forum and a nonpublic forum is a semantic distinction without an analytic difference, and because the Rosenberger Court referred to the fund it was analyzing as a limited public forum, a fund we conclude is most analogous to the Fund at issue in this case, we will continue to use that terminology. See Finley, 118 S.Ct. at 2178 (stating the fund at issue in Rosenberger was a "limited public forum”); Rosenberger, 515 U.S. at 829, 115 S.Ct. 2510 (stating the fund being analyzed by the Court was a "limited public forum”); DiLoreto, 196 F.3d at 965 (noting that the Rosenberger Court had used the term "limited public forum”).

5 . Although the Supreme Court’s decision in Widmar is instructive in our analysis of the issues on appeal, the distinction between discrimination permissible in traditional and designated public fora on the one hand and in limited and nonpublic fora on the other prevents Widmar from controlling the present case. The Supreme Court classified the meeting space in Widmar as a designated public forum. See Widmar, 454 U.S. at 267-68 & n. 5, 270, 102 S.Ct. 269. The Court then concluded that prohibiting groups from using classrooms as meeting space "based on the religious content of the group's intended speech” was content-based discrimination that could only be justified by a compelling interest and a narrowly tailored regulation. Id. at 276, 102 S.Ct. 269. If the Fund were a traditional or designated public forum, the exception for religious speech would be an impermissible content-based discrimination. See id. at 276, 102 S.Ct. 269. Because the Fund is, at most, a limited public forum opened for certain speakers and topics, Wid-mar is inapplicable to the free-speech analysis and we must determine whether the exception discriminates on the basis of viewpoint on its face or as applied to the Gentalas by the City.

6 . For this reason, the dissent's reliance on DiLoreto is misplaced. In DiLoreto, this Court upheld the School District’s refusal to post the text of the Ten Commandments on Downey High School's baseball field fence. See DiLoreto, 196 F.3d at 962. The Court concluded that the refusal was permissible content-based discrimination, not because of the religious character of the posting per se, but because thé forum itself had been limited to business advertising. See id. at 969. (“Mr. DiLoreto’s ad was not a statement addressing otherwise-permissible subjects from a religious perspective....”) Because the Genta-las’ event fit .the religiously neutral criteria for inclusion within the forum created by the City’s Fund, this case is distinguishable from DiLoreto.

7 . The prior year, the free-will offering raised $393.84 and the expenses associated with the event amounted to $404.54.

8 . Although both the Rosenberger and Lamb's Chapel Courts concluded that the government had engaged in viewpoint discrimination, in neither opinion was there any discussion of other speakers being allowed access to the forum to discuss the same issues from a nonreligious perspective. In Lamb’s Chapel, the Court was satisfied that the school board had engaged in viewpoint discrimination where the record was silent on the question of whether the subject matter seeking to be addressed by the religious speaker was forbidden, but the record clearly established that the film series was rejected because of its religious perspective. See Lamb’s Chapel, 508 U.S. at 393-94, 113 S.Ct. 2141.

9 . Obeying the mandate of the Establishment Clause is undeniably a compelling state interest. See Capitol Square, 515 U.S. at 761-62, 115 S.Ct. 2440; Lamb’s Chapel, 508 U.S. at 394, 113 S.Ct. 2141.

10 . In her concurrence, Justice O’Connor identifies two other reasons why a fund created by student fees should be analyzed differently than a fund created by general tax assessments. See id. at 851-52, 115 S.Ct. 2510. Justice O'Connor observes that the fund in Rosenberger "belongs to the students” because it is administered by them and is used to benefit those who paid into the fund. See id. Given that the Fund is administered by a City Council composed of duly-elected representatives of the residents of the City of Tucson to provide civic events for the benefit of the residents of the City of Tucson, we conclude that it belongs to the City in a similar fashion. Justice O'Connor also observes that students may have a First Amendment right to "opt-out” of student-fee assessments not available to citizens who have to pay tax assessments. See id. at 851, 115 S.Ct. 2510. This is a distinction between the Fund in Rosenberger and the City’s Fund, but it is a distinguishing characteristic which only garnered one vote from the Court. Moreover, a majority of the Court has subsequently rejected such an argument with respect to viewpoint-neutral subsidy programs. See Southworth, 120 S.Ct. at 1349-50. Accordingly, we cannot find it a persuasive rationale for why this case should be resolved differently than the majority resolved Rosenberger.

11 . It is important, when considering how the situation of the National Day of Prayer event having costs covered by the City’s Fund would be interpreted by observers, to note that most of the attendees of the event were probably adults. See Marsh, 463 U.S. at 792, 103 S.Ct. 3330 (stating that an adult is "not readily susceptible to 'religious indoctrination,' or peer pressure”) (citations omitted); see also Widmar, 454 U.S. at 274 n. 14, 102 S.Ct. 269 (stating that "[u]niversity students ... are less impressionable than younger students” and should be able to appreciate the government's neutrality toward religion even when a religious group is benefitting under a university program); Mergens, 496 U.S. at 250-51, 110 S.Ct. 2356 (stating that high school students are also able to distinguish between a government endorsement of religion and a neutral governmental policy that happens to aid religion).