A surprising cheer for Mesa's Gaylord project

February 17, 2009

AZCentral.com

Robert Robb

This column has regularly, and largely futilely, railed against corporate subsidies of every sort, from sales tax rebates for shopping centers, to appropriations for high-tech research, to special tax treatment for solar component manufacturers.

With regard to Mesa, I wrote critically about sales tax rebates for both the Riverview shopping center and Waveyard amusement park.

With a vote coming up on tax rebates for the proposed Gaylord convention project, political leaders in Mesa can take comfort in the fact that Mesa voters have given my criticisms scant consideration. The rebates for both Riverview and Waveyard passed comfortably.

Given that track record, however, they might be mildly worried that I, in fact, have very little critical to say about the Gaylord project. It strikes me as a very different proposition.

Municipal governments shouldn't be in the shopping center or amusement park business, and for the most part, they aren't.

Municipal governments also shouldn't be in the convention and trade show businesses. These are commercial enterprises and those putting them on should pay for the full cost of their parties and merchandizing extravaganzas.

But municipal governments are almost universally in those businesses, including the provision of taxpayer-financed venues.

The Valley is well-positioned to compete for conventions and trade shows. The height of their seasons, fall and spring, occur when we are putting on our best appearance.

Unlike shopping centers, which just move around intra-regional expenditures, conventions and trade shows import new dollars that otherwise wouldn't get spent here. In this case, it makes more sense to play the game even if you don't like part of how the game is played.

The Gaylord project would get Mesa into the convention business big-time, with two convention-oriented hotels, a mid-sized convention center, and a golf course.

All of this would be privately financed. The hotels would get a rebate of some of the bed taxes they generate for marketing, and the hotels and convention center would get a property tax break going forward.

Contrast this with what Phoenix is doing. Phoenix taxpayers have paid for its convention center and statewide taxpayers are helping to pay for the center's expansion. The convention hotel in Phoenix is city-owned and was built without a cent of private capital.

There's also reason to believe that the Mesa project is strategically superior to what Phoenix is doing.

Phoenix is trying to sell a downtown experience, and while downtown Phoenix has improved, its downtown experience just doesn't stack up that well against other places.

Working tabula rasa at the Mesa Proving Grounds site, the Mesa project can project the open-space, open-air, recreational feel that is this place's competitive advantage during the peak of the convention and trade show seasons.

Bed taxes are routinely used for marketing, and if the bed taxes were flowing through the Mesa Convention and Visitors Bureau, it would be unexceptional. Cutting out the middleman is just efficient.

Property tax breaks for hotels are tough to take. But hard to criticize too harshly when Phoenix built its convention hotel completely with taxpayer money.

The best way to look at the Mesa convention project is that the city is contracting out a convention center and related facilities that are often publicly-owned, and attracting private capital for projects that are usually mostly paid for by taxpayers.

Not much not to like in that.

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"I do not typically support projects and struggle with projects that include any sort of incentive package, but in this case I see how this project actually creates more revenue instead of moving it from one place to another."

Senator Russell Pearce