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Giles: Building ASU downtown campus without raising taxes receives most votes in Imagine Mesa initiative

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Mayor John Giles explains Imagine Mesa on June 29, 2017, a new program designed to engage residents in shaping a vision for the city's future. (City of Mesa)

Mesa is in an enviable position. Our downtown is ready to take a significant step up and the next few years will be exciting. A great path forward was identified in the city’s recent Imagine Mesa community engagement initiative. Over 67,000 people participated in the program. The idea proposed by the public to build an Arizona State University campus in our downtown without raising taxes received the most votes.

Mesa Mayor John Giles. (City of Mesa)

This idea has obvious merit. West Mesa and downtown have an authentic character that can’t be duplicated and must be protected, but they are clearly in need of reinvestment. At the same time, ASU has developed into one of the nation’s leading universities, launching successful programs and using new methods other schools haven’t thought of, earning it the distinction for several years running as the nation’s most innovative school. Coincidently, its crowded main campus sits only minutes away from our downtown via light rail.

Last month, the prestigious Brookings Institution did an assessment of Mesa’s downtown and determined that it already possessed many of the assets essential for redevelopment using the Innovation District model that has been successful in other cities. The missing piece is an anchor institution. Such an anchor could include tech companies or research institutions like universities or hospitals. These assets would attract and create additional businesses downtown. ASU is the perfect solution.

Given the requirement to not raise taxes, how can this be accomplished? First, ASU is willing to be a significant financial partner in the development of a new large building in our downtown. The new technology programs they propose to create in Mesa will require tens of millions of dollars of equipment, which ASU will provide. One of the programs will focus on creating new technology to help the brain interact with computers using 3-D animation and modeling of real world environments and problems. The technology has application across multiple disciplines which has caught the interest of several major companies. Boeing, for example, is interested in the program for its flight simulators. Downtown Mesa would be one of the few locations in the world where this cutting-edge technology is being developed. The economic ripple effect for the area would be significant.

In addition to the investment in equipment, ASU will be bringing new faculty and staff. They will assume all financial responsibility for maintaining, repairing and improving the building, pay the salaries of maintenance personnel and will pay rent to the city of $100,000 per year. Mesa’s responsibility will be to construct the building shell and Mesa will retain ownership of the building.

How can Mesa pay for construction costs without raising taxes? Mesa is heavily involved in providing utility service to hundreds of thousands of residential and commercial customers throughout the city and beyond. Several new, large commercial utility users have recently joined Mesa’s utility system. Several others are breaking ground soon. Each new data center that joins Apple on the Elliot Road Tech Corridor contributes over $1 million each year in electric sales tax alone to the city’s revenues.

The importance of the city’s utility enterprises is particularly evident in our downtown where we provide all services, including electricity. In short, additional development downtown creates additional utility revenue for the city. Some of that revenue can, and should be, reinvested in the area to attract new customers.

Specifically, in recent years Mesa has used enterprise funds to finance improvements to downtown buildings leased to colleges and universities including Benedictine University and the Center for Higher Education. These investments have attracted more people and new development. Last week, developers announced a new $60 million residential and commercial project, anchored by Co+Hoots, national leaders in co-work space, on Main Street next to Benedictine. The project was attracted downtown by the university and is partnering with them on multiple levels.

The proposed ASU building’s construction costs will be financed by the same process used to pay for Benedictine University and the Center for Higher Education buildings, bonds paid from the city’s economic development fund which is funded by revenues from the city’s enterprises. These bonds do not create or raise any taxes. Additionally, it is not expected that this project will necessitate any utility rate increase to fund the annual amount due on the bond debt service.

If the proposed Intergovernmental Agreement is approved, the city will begin working with ASU to develop a construction budget for the building. As soon as those numbers are developed, the Mesa City Council will be able to weigh the costs and the returns, before committing to construction. The city has already commissioned an economic impact report that estimates the financial return on the building would be in excess of $1 billion over 10 years.

Even more compelling than the economic returns tied to a thriving Innovation District in our downtown, are the societal benefits. Mesa has a significantly lower higher education attainment level than our neighboring cities. Predictably, we also have a significantly lower per capita income. These statistics are particularly true in west Mesa and trending downward. Should ASU come downtown, both Mesa Community College and Northern Arizona University have indicated that they are interested in expanding their facilities and programs, and participating along with Benedictine, in the new higher education district. The expected outcome will be increased education attainment, a better prepared workforce, and increased prosperity in west Mesa and throughout the city.

Mesa is a fiscally conservative and low taxed community. We like it that way and will continue that tradition. We are the largest city in the nation that does not have a primary property tax. We are one of the few that does not collect a tax on groceries. Our sales tax is among the lowest in the region. Mesa uses bond debt sparingly for long-term capital improvements. Our current bond debt is less than half of the limit set by the Arizona Legislature. The remaining debt incurred for the construction of the Chicago Cubs spring training facility will be retired next year when the final payment on the sale of farm land in Pinal County is received.

An announcement that ASU is coming to downtown Mesa will launch an avalanche of private investment into our city. In a few short years, downtown will again be the economic and social hub of the region. Alternatively, if we fail to invest in ourselves, our children will be compelled to leave for cities that offer them the opportunities they deserve. I’m committed to moving Mesa forward.

– John Giles is the mayor of Mesa.

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