Gaylord Resort Project Up To Voters
–For the sixth time in as many years, voters are being asked to help define the future of Mesa.
This time may be the most consequential by far. In terms of the money involved, in terms of Mesa’s decades-old struggle to build an identity, in terms of how a vast and economically vital swath of the city will develop over the next half-century, it could be the granddaddy of them all.
Only time will tell, of course, whether two big, super-fancy hotels and a convention center will really jump-start the kind of development Mesa is hoping for. But the city and two big-money developers are begging for the chance to find out.
The developers:
• DMB Associates of Scottsdale, which owns the northern portion of the General Motors Desert Proving Ground and hopes to turn those 5 square miles into a high-end urban business center. The land is directly east of Phoenix-Mesa Gateway Airport.
• Gaylord Entertainment Co. of Nashville, which wants to buy about 100 acres of DMB’s land to build an opulent hotel and convention center to pull in visitors from around the nation and world. The hotel – at least 1,200 rooms – would be the biggest in Arizona.
Voters are involved because tax money is involved.
Unhappy over several controversial development projects, Mesa voters in 2004 approved a charter amendment requiring an election whenever the city wants to spend $1.5 million or more for a sports or cultural facility, including a convention center.
The Gaylord convention center falls under that provision.
Tax breaks
It’s not that Mesa is actually spending public money up-front to build it. But City Attorney Debbie Spinner said that under terms of a development agreement among the city, DMB and Gaylord, Mesa will use tax breaks totaling far more than $1.5 million to help finance the project.
Those tax breaks will come in two ways:
• Over time, the Gaylord and a second resort will retain control of up to $51 million in bed taxes to be generated by the properties, as long as they use that money to promote Mesa tourism.
• The properties also will save millions in property taxes under a lease agreement with the city.
(Details of those arrangements will be spelled out in Mesa Republic stories Thursday and Friday.)
Geoffrey Woodward, vice president of development for Gaylord, said two independent economic analyses concluded the tax breaks are essential.
“For a project of this scale and magnitude, a public-private partnership incentive package is imperative,” Woodward said.
If voters reject the package, Woodward said, there are no alternatives on the table.
“Gaylord, DMB and the city of Mesa, under the constraints of Arizona and Mesa law, have spent countless man-hours, time, energy and resources to come up with this plan that we believe is the best strategy to bring this economic engine and catalyst not only to Mesa but to the region,” Woodward said.
“We’ve thought about many other plans but this is the best plan,” he said.
$1 billion investment
Mesa believes the benefits will far outweigh the costs.
For starters, there is the sheer size of the initial investment. City Manager Chris Brady has estimated that both hotels, the convention center, a championship golf course and other amenities, including retail, will cost at least $1 billion. Woodward estimated the project will create more than 8,000 construction jobs.
The initial cost estimate may be conservative; Gaylord estimates the final cost of its newest hotel and convention center, the Gaylord National near Washington, D.C., was $1.05 billion.
Even bigger than the one-time construction windfall would be the ongoing impact on Mesa’s bottom line.
To gauge that impact, Mesa commissioned an independent economic analysis by Phoenix-based Applied Economics. The report, dated Oct. 22, assumed that a second, 490-room resort would be built as planned, and said if the Gaylord hotel is built only to the minimum of 1,200 rooms Mesa can expect, over the next 50 years:
• $576.4 million in general-fund revenues, mostly sales taxes.
• $150 million in sales taxes for Mesa’s special Quality-of-Life program and street maintenance.
If the Gaylord is built with 1,500 rooms, the report said, Mesa’s total sales-tax collections will jump to $838 million over 50 years.
For a city faced with perpetual budget crises, that’s like pitching red meat into a lion’s den.
Mesa’s day at last?
But mere dollars and cents could not explain the jubilation last Sept. 3 when the city, DMB, Gaylord and other interested parties staged a triumphant announcement at the Mesa Arts Center with hundreds of people on hand.
It was the sense that after decades of obscurity in the shadows of Valley neighbors who were either bigger or, for various reasons, more famous, Mesa had finally arrived.
“This is where dreams intersect with reality,” Mayor Scott Smith said that morning.
The dream has long existed.
It sees Gateway Airport as the epicenter of a 21st century “aerotropolis,” an urban center teeming with education, high-end jobs and various kinds of housing, much of it high-density units intermingled with retail and other businesses.
Since buying the GM property in late 2006, DMB has worked with Mesa to develop a radical new zoning scheme for the area, much of which was codified last year in a series of historic City Council votes.
Grady Gammage Jr., a Valley lawyer and land-use expert who has worked closely with DMB, has said for years that a massive, upscale resort would be the ideal way to jump-start Gateway.
Gaylord already operates four huge hotel-convention centers, and its business model is to rotate groups from one property to the next year by year.
Gaylord, DMB and Mesa see it as the perfect match: Gaylord gets its longed-for destination in the American Southwest; DMB gets a property designed to attract other well-heeled businesses to its development; and Mesa gets not only all that tax money but, finally, a cachet befitting its big-city status.
If voters say yes and the ambitious project survives the withering economic storm, the two resorts are projected to open no later than Dec. 31, 2014.
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