Monorail, monorail, monorail!!

My Mesa readership is fairly tiny, but Joanne thought I should still breakdown the Mesa Waveyard vote next week.

First a reading list:

• City of Mesa Waveyard site (of no importance, the Project Manager for Mesa for Waveyard was in my MPA prgram and I even partnered with him on a project. I don't recall him doing much of anything to help)
  
• Waveyard site
• Summary analysis from Applied Economics
  
• 10/12 AZ Rep: Pro editorial
• 10/6 Trib: Waveyard "myths"
• 10/21 Trib: Overview
• 10/3 Trib: City of Mesa details benefits
• 10/26 AZ Rep: Tourist magnet
• 10/24 AZ Rep: Bob Robb anti op-ed
• 10/26 AZ Rep: Matt Salmon responds to Bob Robb
• 10/28 Trib: Engineering problems
  

OK. That's a lot of links no one is going to look at. So let me summarize...

Mesa is essentially selling 121 acres to a Scottsdale developer who hasn't really built anything for $10 million to build a first-of-its-kind waterpark with scuba diving, kayaking, surfing, etc. So not Big Surf. It will have a resort hotel, more retail, and make Mesa a destination(!)

To be fair, the developers must pay $30 million for the land, but the other $20 million will be repaid at 4.4% interest over, at most 30 years.

Oh wait, no, it will be deducted from the sales tax generated from the project. The developer gets a refund of ~half the sales tax and half the bed tax as a means to make the payment on the $20 million promissory note.

And from a City perspective it gets even better--Mesa is obligated to relocate the softball fields, as they were built with federal funds. Cost of that land is estimated at $9 million and the building of the fields is $5 million. The City is looking at city-owned property because it can't find 25 acres for less than $15 million in West Mesa.

The Applied Economics estimate, which is by no means independent (because these things never are), is an accrual of ~$50 million in tax revenue (in 2007 constant dollars) for the City over 30 years. So that totals a $45 million benefit ($10 upfront + $50 in taxes - $15 to redo the fields) to Mesa over 30 years.

Or they could just sell it on the market now for $30 million, and likely a lot more as comps have it at $65 million, and some estimates have it around $90 million.

This just smacks of a Monorail like boondoggle, it boggles the mind. The conspiracy theorists note the extra retail, office space and residential buildings in the design plan (the developers are allowed to build 4 10-story residential type buildings, one of which is the resort class hotel) is a precursor of what is to come when the waterpark flops. And those elements are not there for their "mixed use" cache--they are there to generate the necessary revenue to support the project until the developer gets the land in the clear. The developer then basically has 120 acres practically for nothing to develop as it sees fit, based on applicable zoning restrictions.

So as a straight real estate deal, this stinks like a year old's diaper (or so I've been told). But would it actually make Mesa a destination if the waterpark succeeds in practice? I have a tough time seeing it. If a family is going to spend the money for a resort, wouldn't it look for some level of authenticity? Scuba diving with no fish or natural sea life, what's the point? Surfing in a wavepool. Seriously? I can see it as a local amenity on par with a regular theme park, ie local residents use it as a day experience, but that doesn't really create the projected economic impact promoters are touting.

The problem with Mesa (other than a long history of political ineptness) is, like most other local municipalities, that its incentive structure for economic development is short sighted, being wholly focused on generating sales tax. Real economic growth doesn't happen from giving artificial support to retail business. Greater Phoenix's population is an automatic spur to retail growth--more customers means a bigger market that business will look to fill. Retail growth invites low wage employment and generally moves money around, rather than creating new money. Look at the Riverview project. I don't have any numbers on how "successful" it's been so far, but by most accounts part of its impact has been to further depress the Fiesta Mall area, which negates its usefulness.

Cities rarely become destinations for one place. Scottsdale and Tempe are not 'destinations" because of any single resort--it's a general culture. So yes, Mesa has to start "somewhere", but not every city is going to be attractive to tourists--there are only so many of them to go around. But all cities see this as free money--tax dollars generated by visitors mean more revenues without a commensurate increase in necessary city services. That doesn't mean it's worth giving away 121 prime acres to make it happen.